Lords Sitting of 18 October 2000

Preamble
The House met at half-past two of the clock: The DEPUTY CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Bristol.

London Medical Schools
Lord Clement-Jones Lord Clement-Jones asked Her Majesty's Government:
Whether the recently reorganised London medical colleges can maintain their teaching standards and commitments as envisaged under the national plan for the National Health Service.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, I am confident in the ability of the merged London medical schools to deliver on their commitments and to make an effective contribution towards the increase in medical student numbers set out in the NHS plan.
Lord Clement-Jones: My Lords, I am intrigued by the Minister's confidence. Imperial College has made 120 people redundant, 60 of them medical staff; and Queen Mary and Westfield College is making 90 people redundant. As both colleges have agreed to provide in total a further 100 medical places this year and next year, that does not bode well for medical education in London. Does the Minister agree that the current system of financing for medical schools is rather perverse in that the research assessment exercise provides an incentive to sack medical training staff and to retain and increase the numbers of research staff?
Lord Hunt of Kings Heath: My Lords, I recognise the tension between the desire of universities to increase their research ratings and the impact that that can have on their teaching responsibilities and the position of clinical academics. As regards Imperial College, it is my understanding that the changes it is making arise from three factors: first, the merger and reconfiguration of a number of medical schools within the Imperial umbrella, which in itself has caused a fall-out; secondly, a deficit situation; and, thirdly, as the noble Lord suggested, the desire of Imperial to ensure that it has the highest possible research rating.
I have received assurances that this will not impact on its ability to train and teach medical students. It is worth making the point that most teaching is undertaken by NHS staff. I am informed by the NHS trust concerned that it does not think that that will be put at detriment. This has shown the need for better liaison between universities and the NHS to ensure
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that when such actions take place the NHS is fully involved and informed and can take the necessary measures.
Baroness Gardner of Parkes: My Lords, perhaps I may take the Minister to another part of London. I declare a half interest as a former chairman of the Royal Free national health trust. The Royal Free and the University College medical schools have combined. I believe that, on the whole, it is a happy combination. The Royal Free Hospital has always believed that medical school and hospital should work closely together. Can the Minister assure me that there is no question of empire building between the two branches? Can he further assure me that any academic posts which become vacant are advertised and interviewed in the same way as they would be if they were national health posts?
Lord Hunt of Kings Heath: My Lords, it would be very unwise of me to assure the noble Baroness that organisations will not empire build. Clearly it is very important that these mergers are made to work effectively, both in terms of the quality of the teaching and the research undertaken. Perhaps I may write to the noble Baroness with the detail she requires. I suspect that this is a matter more for the university than for the National Health Service. I can assure her that we recognise that, to make the relationship work, much more has to be done in terms of liaison—both at national level between the Department of Health and the funding authority on the one hand and at local level between the individual medical schools and the local NHS community on the other.
Lord Winston: My Lords, there are rumours that the Government intend to shorten the medical curriculum, which is currently five years. Can the Minister give reassurances that that is not the case? Clearly, as I am sure he is aware, medical students do not work a normal university term like non-clinical students but work during the summer vacation, the spring vacation and the winter vacation. To further shorten the term would result in doctors who are under-trained when they start work in the NHS.
Lord Hunt of Kings Heath: My Lords, I am interested in my noble friend's comments. I am not aware—I will check—of proposals in regard to the point he has raised. I am aware that some medical schools have been investigating whether, for a certain number of students, there may be opportunities for the qualification period to be shortened. I shall be happy to follow up that matter with my noble friend.
Lord Roberts of Conwy: My Lords, is the Minister satisfied that the national plan provides for sufficient medical students for the UK as a whole to meet future NHS needs?
Lord Hunt of Kings Heath: My Lords, I can speak only for England rather than for the United Kingdom. Certainly the noble Lord will know that we announced

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1,000 extra medical school places and doctors in training in the NHS plan, in addition to the 1,126 new medical school places already being implemented. We have made great advances in ensuring that our workforce planning is effective and that this will give us the doctors we require to meet the demands being placed on the service. However, one can never be complacent. We shall keep this matter under regular review.
Lord Quirk: My Lords, further to the question from the noble Lord, Lord Winston, would the Minister agree on the importance of intercalated BSc degrees for medical students, whereby they opt out of medical training for a couple of years, finish a science degree and then go back into medicine? Does he further agree that any change to the curriculum that inhibits that very important injection into medical science would be deplored?
Lord Hunt of Kings Heath: My Lords, I have heard what the noble Lord has said. In examining the curriculum, we need constantly to ensure that we produce high calibre doctors who are ready and able to work within the National Health Service with a sufficient degree of training across the whole range of sciences. We also need to look at whether we can introduce greater flexibility. For instance, the issue of shortening the curriculum is applicable to mature students, whom it is important to attract to the National Health Service.
Earl Howe: My Lords, does the Minister agree that, while the issue raised by the noble Lord, Lord Clement-Jones, is extremely important, there is a need to ensure that a sufficient number of clinical academics are available to teach the increased numbers of students? Is it not also imperative that teaching facilities are improved to accommodate the increased numbers? There is concern among members of the BMA that there is a great deal to be done in that area as well.
Lord Hunt of Kings Heath: My Lords, it is certainly our wish that medical students, and indeed other students, are taught in the most effective way. I agree that teaching facilities are important. That applies as much to universities as it does to the National Health Service. But in addition to facilities, the quality of the clinical placement and the supervision and teaching given within NHS hospitals is as important as the teaching and facilities that are available in the universities.

Cannabis Use: State of the Law
2.44 p.m.
Lord Selsdon Lord Selsdon asked Her Majesty's Government:
Whether they intend to decriminalise the possession and use of cannabis.
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, cannabis is a controlled drug for good scientific reasons and research on its impact on health is still coming forward. Noble Lords may have seen reports this week of a study sponsored by the US Government's National Institute on Drug Abuse which has shown that the addictive effect on laboratory animals of cannabis's psychoactive ingredient, THC, is similar to cocaine. Decriminalising the possession and use of cannabis would be irresponsible. The Government have a firm and consistent view about the harm that drugs do and are opposed to any lessening of the controls on currently illicit drugs.
Lord Selsdon: My Lords, I am grateful to the Minister for that reply. However, I should be even more grateful if he could give some indication of the extent to which this invasive weed has entered our society. For example, how many regular users are there of this substance—sometimes known as the "weed of wisdom"? What is the annual value of sales on the street? It is not so much a question of damage that may be done to the individual, but of the damage that the individual may do to society in terms of road accidents, industrial accidents or theft. I should be grateful if the Minister could remove some of the smoky haze that clouds this issue.
Lord Bassam of Brighton: My Lords, I am able to help the noble Lord in one or two respects. It is reckoned that about 1½ million will have used cannabis in the past month, compared to 42 million alcohol users and 12 million tobacco smokers. A House of Commons research paper on the impact on the health services indicated an estimated annual cost of somewhere in the region of £137 million in terms of addiction treatment and rehabilitation costs. Those indications begin to explain the root cause of our policy thinking—which is to take a firm view against the legalisation and decriminalisation of cannabis.
Lord Mackenzie of Framwellgate: My Lords, the Minister mentioned the report issue by the United States National Institute on Drug Abuse. Did he read also the letter in Monday's Times from a consultant psychiatrist, Stephanie Sadler, who said that the difficulty faced by psychiatrists throughout the country is managing the results of psychosis and the irrational behaviour caused by cannabis use? Does he agree that, in the face of such evidence, any relaxation in the law relating to cannabis would be utter folly?
Lord Bassam of Brighton: My Lords, I did not read that piece of correspondence, although I am familiar with the information contained in it. This morning, on opening my local daily newspaper, I read the headline:
"Cannabis addiction has wrecked my son".
The story relates to Mr Matthew Lancaster, from Portslade in Hove. His mother claims, understandably, that cannabis addiction reduced her son to being barely recognisable by the age of 25 and

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turned him into a schizophrenic who suffered psychotic tendencies and hallucinations. That firmly underlines the problems that could arise if we were to set out on a course of decriminalisation and legalisation, as some are now urging us to do.
Baroness Warnock: My Lords, does the Minister agree that there is a distinction to be drawn between decriminalising cannabis across the board and permitting its use on medical grounds, particularly for MS sufferers? Would the Government be prepared to consider the latter, even if they are not yet ready to consider the former?
Lord Bassam of Brighton: My Lords, there is an important distinction to be made. For that reason, the Government have authorised clinical trials. My understanding is that one of the companies involved in the trials, GW Pharmaceuticals, envisages that if its trials are successful a licence application for the medical use of a cannabis derivative could be made as early as late 2002. So we do draw that distinction. We understand that there may well be some medical benefits. But our approach must be science led. That is the way forward in this matter, so that the greatest benefit can be achieved from any potential medical use of cannabis.
Lord Mancroft: My Lords, I declare an interest as chairman of the Drug and Alcohol Foundation; chairman of the Addiction Recovery Foundation; and a board member of the Mentor Foundation, which I believe is the largest international drug prevention organisation in the world, an organisation which is non-governmental; and vice-chairman of the All-Party Parliamentary Group on Drugs Misuse. Is the Minister aware that, although cannabis is an addictive and dangerous drug, it is not all that addictive and not all that dangerous? It ranks rather low in the list of dangerous things in this world.
Does the Minister realise that most people in this country are now aware of one thing—which I hope this Government and, indeed, my noble friends on this Front Bench are aware of—namely, that whether or not we legalise cannabis, the reality is that policies of this Government and of the previous government and those pursued in the past, concentrating, as they have, on dealing with what is, as the noble Lord said, a health and social problem through the criminal justice system, have produced no results at all and have led to a massive increase in drug use? That does not appear in any way at all to be to the advantage of the voters who put this and previous governments in place.
Lord Bassam of Brighton: My Lords, I thank the noble Lord for his important contribution. However, it would be a foolish government—would it not?—who ignored the health impact of a drug like cannabis. That is why we have a science-based approach and why we believe it is absolutely right to advise, warn and inform people of the potential health risks. Yes, the noble Lord is right to say that it may well be a drug that is less addictive than other drugs; nonetheless, it is addictive. We need to warn people of that risk.
Lord McNally: My Lords—
Lord Cope of Berkeley: My Lords—
Lord McNally: We have had three Tory questions—
The Attorney-General (Lord Williams of Mostyn): My Lords, perhaps we may hear the noble Lord, Lord McNally, first, followed by the noble Lord, Lord Cope.
Lord McNally: My Lords, before the Minister cites Harold Wilson's belief that Royal Commissions take minutes and sit for years, does he not consider that if successive governments had followed the Liberal Democrats in calling for a Royal Commission almost a decade ago we might have had the basis for a considered discussion? It really is sad when we are apparently still making policy on the basis of the Brighton Evening Argus rather than on considered studies of the question. Even at this late stage, I think the Government should consider setting up a Royal Commission instead of listening to confessional politics from the Conservative Front Bench or reading articles in the Brighton Evening Argus.
Lord Bassam of Brighton: My Lords, I have to defend the Brighton Evening Argus. It is my evening newspaper; and a jolly fine one too! The noble Lord is right to say that we should perhaps keep clear of the confessional approach and making policy on the hoof; that is not at all wise. However, the Government do not have any plans to set up a Royal Commission on the matter. As I said, we believe that this debate should be science led. That is how we intend to proceed, and that is certainly how we shall deal with some of the medical issues involved. We also have important institutions like the Advisory Council on the Misuse of Drugs, which has done a splendid job in this regard. We believe that we should listen to its advice and keep such matters carefully under review, as, indeed, we do with all our policies.
Lord Cope of Berkeley: My Lords, does the Minister recall, as the Liberal Democrat Front Bench evidently does not, that this matter was looked into by the Science and Technology Committee of your Lordships' House? The committee concluded that the harmful effects were as stated by the Minister and that the recreational use of cannabis should continue to be controlled. The fact that cannabinoids might prove to have value in the therapeutic field does not mean that that should affect decisions on the so-called "recreational use" of drugs. After all, there are many medicines that are extremely dangerous when taken by the wrong people or in the wrong circumstances.
Lord Bassam of Brighton: My Lords, all I can do is agree with the noble Lord.

House of Lords Management and Services Review
2.54 p.m.
Lord Barnett Lord Barnett asked the Chairman of Committees:
Further to his Written Answer on 28th September (WA 196), on what basis the steering group to review the structure for decisions on services within the House was established.
The Chairman of Committees (Lord Boston of Faversham): My Lords, the steering group was established on the basis of the decision of the House on 27th July, following the debate on the sixth report of the Offices Committee. The steering group will supervise a review of the management structure, the structure for taking decisions about the services of the House and other domestic matters, including the impact on the domestic committee structure.
Lord Barnett: My Lords, I am obliged to the noble Lord for his Answer, but that is not what he said in his Written Answer. Leaving aside the fact that we are talking about a Written Answer given on the first day back from the Recess to a planted Question, which gives the House no opportunity to consider the decision, will the noble Lord accept that what was said and what was carried by a resolution of your Lordships' House mentioned nothing about the appointment of a consultant? Why did the noble Lord get it wrong in his Written Answer, in which he said that the committee would,
"oversee the appointment of a consultant"?
The Chairman of Committees: My Lords, I am very happy to bring some reassurance to the noble Lord, Lord Barnett. However, as he has mentioned the matter of the Written Answer that I gave on Thursday 28th September (which gave to the House the names of the members of the steering group), there is something that I must point out to him. As a result of the consultations that took place during the Summer Recess, that announcement was made to your Lordships at the earliest possible opportunity following the reassembly of this House after the Summer Recess. I am grateful to those who engaged in the consultations. I thought that it was most helpful—and I hope that I was right—to provide your Lordships with that information the day after the House resumed.
The other piece of comfort that I hope I can bring to the noble Lord is that I did not get it wrong. The decision of the 27th July, as a result of the Motion before the House on that day, was as follows: that there should be review of the management structure and the structure for taking decisions about the services of the House and other domestic matters, including the impact on the domestic committee structure; and that the review should take place under the supervision of a small steering group composed of Members of the House.
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That was a decision taken by your Lordships. Noble Lords will have noted that, in accepting a modified version of the Motion before the House on that day, the decision included the words "under the supervision". Those words are an indication that the steering group would act, if it chose to do so, with assistance. Therefore, I can say quite clearly that the assumption was that a management consultant would be considered for appointment.
Lord Barnett: My Lords, the noble Lord has not answered my specific Question. In his Written Answer on the 28th September he refers to the steering group being established,
"to oversee the appointment of a consultant".
Can the noble Lord make it crystal clear that that is not what your Lordships decided? Indeed, we were specifically opposed to the idea of a consultant, the cost of over £100,000 and a process that would take about a year to complete when Members of this House could do it. Will the noble Lord make it clear that this steering group does not necessarily have to appoint a consultant?
The Chairman of Committees: My Lords, I am glad that the noble Lord, Lord Barnett, used those concluding words because they are correct. The decision that your Lordships took was to appoint a steering group that would supervise this review on the assumption that a management consultant would be appointed.
Noble Lords: No!
The Chairman of Committees: My Lords, I have read your Lordships' debate twice since we resumed on 27th September and I am quite confident that that was the decision that noble Lords reached. I referred to the concluding remarks of the noble Lord, Lord Barnett, because it will be perfectly open to the steering group, if it chooses to do so, not to appoint a consultant at all.
Lord Rodgers of Quarry Bank: My Lords, perhaps I may add my support to the remarks made by the noble Lord, Lord Barnett. This has been a long and painful saga; indeed, most of us hope that it will come to an end now that a steering group has been appointed. I found the same discrepancy between what I understood the House to have agreed on 27th July and the Written Answer to which the noble Lord referred. It seems that there was a discrepancy, as others have detected. But, notwithstanding that—and in order to be absolutely clear on the matter—it would be right for the noble Lord to repeat to the House what I understand he is now seeking to say; namely, that whatever that Written Answer may have said, the steering group will be free to proceed without a consultant, if it prefers that course of action.
The Chairman of Committees: My Lords, as regards the noble Lord's final point, that is precisely what I just said, and if it is your Lordships' wish, I shall confirm

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it again. But it is the case—and I am sorry to have to disagree with the noble Lord, Lord Rodgers of Quarry Bank—that in reaching their decision noble Lords envisaged the possibility of the appointment of a management consultant. During the course of our lengthy debate on 27th July a number of noble Lords objected in principle to the appointment of a management consultant. The principal objection was to specifying a named management consultant.
Noble Lords: Oh!
The Chairman of Committees: That was indeed the case. The cardinal point is that noble Lords accepted an amendment to the Motion to delete the name of the proposed, highly qualified management consultant, Mr Michael Braithwaite.

Flood Relief, Southern England
3.1 p.m.
Baroness Byford Baroness Byford asked Her Majesty's Government:
What arrangements they have made to assist with flood relief in the South of England.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, in accordance with established practice the Environment Agency, local authorities and emergency services joined together in responding to the recent severe flooding in southern England. I am sure that the whole House will wish to join me both in paying tribute to their excellent work and in expressing our sympathy to all those personally affected by the recent events.
As regards the financial arrangements, local authorities have statutory powers to deal with emergencies of this kind and are expected to budget accordingly. Where exceptional expenditure is incurred, they may, however, apply for additional financial assistance under the so-called "Bellwin rules".
Baroness Byford: My Lords, I am grateful for that response. I, too, express sympathy to all the families who have been affected. I know that everyone in the Chamber shares that view. I also thank the emergency services which the Minister mentioned as they have had a long, hard struggle. We accept that six inches of rainfall in so short a period is exceptional, but flooding also occurred earlier this year. Will the Government review their guidelines on future building in floodplain areas as that is a matter of great concern?
Baroness Hayman: My Lords, the noble Baroness is right to point out the exceptional nature of the rainfall. Between 10th and 16th October this year about twice the average rainfall for October occurred in Kent and Sussex. That gives noble Lords an idea of the extent of the problem. The noble Baroness rightly drew attention to the need for appropriate planning guidance in terms of building in areas that are at risk
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of flooding. We are in the process of updating that general advice which has been put out to consultation. We hope to issue new guidance by the end of the year.
Lord Dixon-Smith: My Lords, I, too, congratulate the local authorities which have the immediate responsibility for relief in such situations on the work that they did. However, there is a strategic issue which relates to flood prevention in regard to existing development. Is the Minister satisfied with the existing lines of authority and responsibility in this area? Will she consider that matter in relation to those areas which have been affected? Some remedial action could perhaps be taken to alleviate such problems in the future. However, in order to achieve that it may be necessary to cut across the established boundaries which exist between local authorities, water authorities, water companies and others in order to make sense of the whole issue.
Baroness Hayman: My Lords, we shall ask the Environment Agency to undertake a "lessons learned" exercise when this episode is over to see whether there are lessons that we need to learn from it. Obviously, we need to consider prevention, or at least risk reduction because we cannot guarantee absolute 100 per cent protection from flooding. Work has recently been undertaken with that aim in mind, including the construction of the Leigh barrier on the River Medway which featured significantly in the protection of Tonbridge during the recent flooding. The Environment Agency, local authorities and emergency services in the area responded well and coherently as a result of practising their emergency plans during the summer. However, the institutional arrangements are complex. We must consider whether we can improve them.
A seminar took place recently for those involved in flood defence. If we can simplify some of the complexity in this area, we shall do so. On the other hand, such provision crosses boundaries: the emergency services are involved; local authorities have responsibilities for emergencies beyond flooding, and the Environment Agency takes the lead. It is not simple to bring all those services under one heading, but we must ensure that co-ordination takes place.

Hatfield Rail Accident
3.6 p.m.
Lord Strathclyde: My Lords, for the second time in a week, much against my natural inclination, I have dragged myself to the Dispatch Box. I do so again on the matter of this Government's contempt for Parliament and, in particular, this House. I see that the noble and learned Lord the Attorney-General is present. I understand why the noble Baroness the Leader of the House is not present; she is in Scotland. I make no comment on that.
Early yesterday afternoon a rail crash occurred at Hatfield which resulted in deaths and injuries. Some of the injuries were very serious. It is 12 months since the

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tragic rail accident at Paddington, into which an inquiry is continuing. The precedents of this House and of the other place suggest that when such a tragedy occurs a Statement is made at the earliest possible opportunity. When the Clapham crash occurred in 1988 a Statement was made to Parliament the very same day.
This morning the Government approached the Opposition to say that the noble Lord, Lord Macdonald of Tradeston, was disinclined to make a Statement to Parliament on the basis that there was not much to add to what was already known and that there would be more and better information tomorrow when he intends to make a Statement. We accepted that. However, within minutes of our accepting that, we heard that Gerald Corbett, the chief executive of Railtrack, had tendered his resignation, possibly at the urging of the Minister. It has been drawn to my attention that a few minutes ago on BBC Radio the Minister encouraged the chief executive to retain his position. He said:
"I certainly would not want to see anything that put at risk the authority and executive lines of command inside Railtrack and I am sure that will be the corporate imperative for the board of Railtrack meeting tonight".
Railtrack has suggested that a faulty rail was to blame. For that reason the Government should have made a Statement this afternoon to report to Parliament; to tell us what their plans are; to share with us their strategy and their insights and, most of all, to reassure the travelling public that they are in control of the situation.
This morning the noble Lord, Lord Macdonald of Tradeston, was interviewed on Radio 4. He is quite prepared, and bothers, to get out of bed to speak to the BBC but he cannot be bothered to be accountable to this House. It would not be so bad if the noble Lord did not have personal ministerial responsibility for this matter. He is the Minister for Transport in this House. Why can he not be bothered to come here?
When we had a somewhat similar debate on Monday, the noble Lord, Lord Rodgers of Quarry Bank, said that it would have been inconceivable for a Statement not to have been given if the House of Commons had been sitting. I agreed with him then; I agree with him again today. This is a slap in the face for this House.
I very much hope that this matter is not seen by Members of the Government Front Benches as party political.
Noble Lords: Oh!
Lord Strathclyde: My Lords, it is a matter for us all. In fact that comment demonstrates the contempt with which the Labour Party treats Parliament. This is a matter for this House. Back Bench and Front Bench should unite to force the Government to come here to
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explain themselves. They have had 24 hours to prepare. Waiting until tomorrow is not good enough. It is a disgrace.
Lord Rodgers of Quarry Bank: My Lords, the noble Lord, Lord Strathclyde, has been generous in expressing agreement with my remarks on Monday. I hope that he will not be too upset if I say that he is quite over the top today. It seems to me that no contempt for Parliament is involved here. The reasons he gives for his remarks do not stand scrutiny. There is a tradition of making a Statement on the first possible day. Instead of having this minor wrangle, I wish that we were expressing our deepest sympathy with the families and friends of those who have lost their lives, and our best wishes to those who have been injured and who must make a recovery. That would have been a good course to have followed today. If the Minister had made a Statement, he could have said very little except that an investigation was under way.
To suggest that the offer of resignation by the chairman of a company in the private sector itself constituted a justification for a change of course does not stand up to scrutiny in any way.
I believe that we should have a Statement tomorrow. The Government should take the matter carefully and calmly. I am disturbed by the suggestion that the Deputy Prime Minister is returning from an official visit to China because of this crash. He cannot undo the event; it has occurred. He cannot conduct the investigation; that is for experts. He should not be making instant policy decisions. So I see no need for that. We want calm consideration of the matter in the hope that the public will in due course be reassured about safety and that the railways will have the future which we all wish them to have.
The Attorney-General (Lord Williams of Mostyn): My Lords, I am replying because my noble friend the Leader of the House is at Donald Dewar's funeral. Perhaps it is worth remembering why we are here on this occasion. Four people were killed yesterday and a large number of people injured. I have a good deal of personal regard, as he knows, for the noble Lord, Lord Strathclyde. He normally has a sure and felicitous touch. However, I do not think that what he said today coincided with what we know of him from the past. It is not right or appropriate to say about my noble friend Lord Macdonald of Tradeston that he could not be bothered to get out of bed to come to the House. He has always been honourable and open in this House and taken his duties with enormous seriousness, as we all know.
Perhaps I may put the context. It always strikes me as being a particular cruelty of fate that people who are going to work or about their own engagements on a train come to their death. It would have been possible to make a Statement, as the noble Lord said, which contained virtually nothing; I wonder where contempt for the House would there have lain. This is a matter

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of serious, grave and national importance. My noble friend Lord Macdonald of Tradeston intends to make a Statement to the House tomorrow. By that time he hopes that he will have had a first preliminary report from the inspectorate. That is showing a decent regard for Parliament—indeed, for the only House which is presently sitting. I repeat: in my mind it is better to show a decent regard for those who have lost life or have been injured, to commend those who have discharged their public duty nobly and honourably and to wait until tomorrow so that my noble friend Lord Macdonald will be able to help the House in a way that he has a duty to do.
I do not propose to say anything further because I do not think that it is decent or appropriate to do so.
Lord Marsh: My Lords, as one who has been offered and refused the resignation of a chief executive of a large nationalised industry, in very similar circumstances, perhaps I may say how much I agree with the remarks which have been made.
None of us has any idea at this stage what caused the incident and no one can do anything to assist. The sole effect of discussion of an incident of this type at this stage is increased distress and a blurring of the issues at stake. It is a problem which understandably occurs with the press and which is only exacerbated by early knee-jerk Statements.
Lord Trefgarne: My Lords, I have had the privilege of sitting on the Government Front Bench in circumstances very similar to those which now pertain as regards the noble Lord, Lord Macdonald of Tradeston.
I recall a similar incident, an air accident—an area for which I then had responsibility—involving a helicopter crash in the North Sea. The House of Commons was not sitting. The late Lord Soames was on the telephone to me at eleven o'clock in the morning saying, "You must make a Statement this afternoon". I prepared the Statement and made it.
I believe that the views of the Opposition and Back-Bench Members of the House should have been taken into account. Whatever the noble Lord, Lord Macdonald, thought he was or was not able to say, I, too, think that he should have been at the Dispatch Box to make a Statement.
Lord Clinton-Davis: My Lords, as one who had responsibility in this area in opposition, perhaps I may say that I agree 100 per cent with the statement made by my noble and learned friend Lord Williams of Mostyn. I think it much better that we pause and consider what has happened at the earliest opportunity—tomorrow. I am sad that the noble Lord the Leader of the Opposition has taken the view that he has. I hope that the noble Lord will agree that this is not a party matter. It is a matter where all of us are entitled to exercise our point of view but, frankly, it is no use doing so one day after the tragedy has occurred. Does the noble Lord agree?
Noble Lords: Next business!

Police (Northern Ireland) Bill
3.18 p.m.
Baroness Farrington of Ribbleton: My Lords, I beg to move the Motion standing in the name of my noble and learned friend Lord Falconer of Thoroton.
Moved, That it be an instruction to the Committee of the Whole House to whom the Police (Northern Ireland) Bill has been committed that they consider the Bill in the following order:

Clauses 1 and 2,

Schedules 1 and 2,

Clauses 3 to 14,

Schedule 3,

Clauses 15 to 64,

Schedule 4,

Clauses 65 to 70,

Schedule 5,

Clauses 71 to 74,

Schedules 6 to 8,

Clauses 75 to 77.—(Baroness Farrington of Ribbleton.)

On Question, Motion agreed to.

Political Parties, Elections and Referendums Bill
3.19 p.m.
Lord Bassam of Brighton: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Bassam of Brighton.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE PRINCIPAL DEPUTY CHAIR MAN OF COMMITTEES in the Chair.]
Clause 65 [Special Provision for Northern Ireland parties]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 177:
Page 41, line 36, leave out ("each") and insert ("a").
The noble Lord said: This clause has already been debated. I understand that other noble Lords wish to dissent. I beg to move.
Viscount Astor: On an earlier occasion, we debated a group of amendments of which this amendment formed part. However, subsequent to the government answers and other government amendments added to the Bill, I have two points to make. I gave the Minister notice that I wanted to speak on the amendment.
My noble friend Lord Mackay of Ardbrecknish made clear his opposition to the large group of amendments that the Committee considered last week relating to various Northern Ireland issues. It is regrettable that such a large grouping did not lead to a detailed debate on the application of Part IV to Northern Ireland, with which these amendments are

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concerned. It is an issue of the utmost importance and I hope that your Lordships will allow me to make some limited points on the amendments.
I apologise for the absence of my noble friend Lord Mackay of Ardbrecknish. He is today attending the funeral of the late First Minister of Scotland, Mr Donald Dewar. I hope that my noble friend will be joining us later today or the next time that we consider the Bill.
Amendments Nos. 177A and 178 allow for a blanket exemption of Northern Ireland from Part IV. Perhaps the Minister will consider the words of the Minister in another place, Mr Tipping, who said earlier this year:
"I hope that one day soon the situation will be normalised and the provisions in the Bill will apply to the whole of the United Kingdom, including Northern Ireland. However, that has not yet been achieved".—[Official Report, Commons, Standing Committee G; 1/2/00; col. 190.]
Last week, the Minister here said:
"Political developments in Northern Ireland have undoubtedly taken an important step forward since the Neill committee report was published, but there remain special factors which cannot be lightly dismissed".—[Official Report, 10/10/00; col. 246.]
It is important for Ministers to spell out what they mean by the situation in Northern Ireland being "normalised" so that the exemptions allowed by the amendments can be ended. Who will define normalisation? Will it be the Assembly, the Secretary of State or the Prime Minister? How will normalisation be achieved? What will be regarded as normal? What are the special factors that the Minister referred to last week? We do not know the criteria that will be used to make the judgment. I am not asking the Minister to pre-judge the issue. I simply want him to explain the criteria on which it will be judged. We need to know how the terms are defined before we deal with the issues again on Report.
There is one other issue that I should like the Minister to address. In so far as the amendments allow for a complete exemption from Part IV, will they allow the foreign funding not only of political parties in Northern Ireland, but of referendum campaigns? In that case, will foreign funding be allowed in the rest of the United Kingdom as well?
It seems possible for a political party to be set up in Northern Ireland, to receive foreign funding from America, Europe or even Australia and to use that funding not to contest elections in Great Britain, because that is ring-fenced under the Bill, but to campaign in a referendum in Great Britain. What is to stop that? I cannot find any means of preventing it. I am sure that the Government do not intend that to be permissible. Perhaps the Minister will consider whether there is a loophole. There might be a provision elsewhere in the Bill to prevent it, but if not he should consider the issue.
Those two short points are important. I should be grateful for a response from the Minister.
Lord Molyneaux of Killead: I support what has just been said. There is a great deal of unease about the
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position, even with the government amendments. There is also a great deal of confusion about the separation of Northern Ireland, as part of the United Kingdom, from the regulations that will apply in the bigger island. There are some other issues that I hope to touch on in a clause stand part debate, if that is possible, but at the moment I confine myself to supporting what the noble Viscount, Lord Astor, has said.
Lord Glentoran: I should like to add my voice to the debate. I am not speaking from the Front Bench, but I am the Opposition spokesman on Northern Ireland. We do not see a need to differentiate once again between Northern Ireland and the United Kingdom. Northern Ireland is part of the United Kingdom. We do not feel it necessary for the Government to complicate the issue of the funding of political parties with the amendments.
The provisions will cause confusion. They are already sending the wrong messages and giving one party in particular, Sinn Fein, which is probably the richest party in Ireland, an even greater advantage over other parties in the democratic processes, such as they are.
Devolution is working in Northern Ireland and I can see no reason why the amendments should be necessary now, let alone for an open-ended period. I should like a clear explanation from the Minister of why the Government feel that Sinn Fein needs special help to keep its coffers full.
Lord Goodhart: I do not wish to repeat the substance of what I said during the earlier debate, but I should like to emphasise one point. If the Government intend to proceed with Clause 65 in an amended form, they will get stronger support if they insert a statutory provision that no order made under that section could last for more than four years. Any order would therefore have to be renewed within the normal electoral cycle.
Lord Bassam of Brighton: We have already had the debate and, like the noble Lord, Lord Goodhart, I am reluctant to rehearse old territory, although I do not want to belittle the concerns that have just been expressed.
I reiterate that the exemption is not about favouring a particular party in Northern Ireland or in Ireland as a whole in any way, shape or form. It is not about helping Sinn Fein—far from it. As I said when we debated the amendments, the Government have made it patently clear over the past two years that we seek the development of more normalised politics in Northern Ireland.
We would be foolish to ignore the special factors that exist in Northern Ireland. Although the peace process has made tremendous progress over the past few years, we have to recognise that normal political rules do not yet apply. We hope that there will come a time when they do. That is why we have said that we want the situation to be reviewed.

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Perhaps I should try to respond positively to the suggestion that the noble Lord, Lord Goodhart, made. We are ready to consider it between now and Report and shall do so. I can give the noble Lord no commitment, but it is certainly a matter we need to review. I believe that the noble Lord, Lord Mackay, mentioned the possibility of a sunset clause. That is something to which we need to pay close attention.
The noble Viscount, Lord Astor, mentioned the criteria by which we might decide whether a state of normality in politics had been reached in Northern Ireland. Standing here today at the Dispatch Box, it is difficult for me to describe what that might be. But obviously there must be continued improvement in the strength of the political institutions, increased levels of participation and a further retreat from violence as a means of resolving political differences. I do not believe that violence can ever resolve political differences. Strong political institutions and effective political parties are required in Northern Ireland, and that is what we seek in the Bill. Clearly, a decision on whether normalisation had been reached would be for the government of the day working with all the political interests and, not least, the elected Assembly of Northern Ireland.
A particular question was asked about referendum campaigns. The Bill deals with donations to parties; it does not deal with the purposes for which those donations are required or are to be used. We shall have a debate on donations for referendums. I suggest that we tackle those issues when we come to them and when we consider Amendment No. 234YHA later this evening.
I understand the strength of the views expressed about these matters and I recognise their importance. They are difficult issues but we seek to resolve them. We hope that over time they can be resolved and also that we can move to a happy situation where the normal rules of political engagement in the United Kingdom apply to Northern Ireland.
3.30 p.m.
Lord Glentoran: Before the noble Lord sits down, if he is unable to answer me now, I wonder whether he will write to me to explain exactly what is so different about the electoral processes in Northern Ireland compared to those in the rest of the United Kingdom. Is it not a straight negotiating point between the Secretary of State for Northern Ireland and people involved in the paramilitaries in maintaining the peace process? If it is, perhaps the Minister would also be good enough to include that, if not now, then in the letter to me.
Lord Bassam of Brighton: I am always ready to correspond with noble Lords, as many Members of the Committee will be aware. However, we have set out our position, and this amendment is not concerned with negotiations. I believe that it recognises, as did the Neill committee, the political realities that exist in Northern Ireland, and we are trying to deal with those. That is the heart and source of the argument. Of
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course, I am happy to set out those views in writing for the noble Lord, but they are also contained in Hansard.
Viscount Astor: The Minister answered helpfully the questions about the political situation in Northern Ireland. Indeed, we welcome his commitment to consider either a sunset clause or a limit on the exemption. I asked the noble Lord a specific question about whether Northern Ireland political parties can use the foreign money which they obtain. Members of the Committee will remember that English parties will not be able to receive such money in the way that, for example, Sinn Fein can. Can the money be used for English referendums? It seems to me that, under the Bill, a Northern Ireland party, for example, although prevented from using the money in an English election, could use it for a referendum.
The Minister said that we shall be discussing referendums later in the course of the Bill. I accept that. Perhaps I may ask the Minister whether he will consider the position before we reach the amendment concerning referendums. Perhaps he will either come back to me with a reply later this evening or write to me. We should like an assurance from the Minister that what we see as a possible loophole does not exist. Alternatively, we should like an assurance from the Government that, if there is a loophole, they will consider whether they can tighten up the situation. If it suits the Minister, I shall be happy to leave this matter until later in today's proceedings.
Lord Bassam of Brighton: I like to be straight with your Lordships' House. The information I have from officials is that Northern Ireland parties can use the fruits of money raised abroad in a UK referendum. That may well present difficulties. Obviously we need to keep the matter closely under review and I shall give it further consideration. I believe that the noble Viscount has raised a useful point on which we shall reflect further.
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendments Nos. 177A to 181:
Page 41, line 39, leave out from ("for") to second ("to") in line 42 and insert ("disapplying any specified provisions of this Part, for such period as is specified, in relation").
Page 41, line 43, at end insert—
("( ) An order under subsection (1) may provide for any specified provisions of this Part to apply, in connection with any provision made by the order in pursuance of paragraph (a) or (b) of that subsection, with such modifications as may be specified.").
Page 41, line 43, at end insert—
("( ) Each order under subsection (1) shall be so made as to—

(a) apply to every Northern Ireland party, and

(b) make the same provision with respect to every such party.").

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Page 41, line 43, at end insert—
("( ) Where—

(a)at a time when any order is in force under subsection (1) a donation is received by a registered party which is registered in the Great Britain register, and

(b) the order provides for this subsection to apply to any such donation,

section 49(2)(c) shall have effect in relation to the donation as if it referred only to a registered party which is registered in that register.").
Page 42, line 1, leave out subsections (2) and (3) and insert—
("(2) In this section—
"Northern Ireland party" means a party registered in the Northern Ireland register;
"specified" means specified in an order under subsection (1).").
On Question, amendments agreed to.
On Question, Whether Clause 65, as amended, shall stand part of the Bill?
Lord Molyneaux of Killead: If the Committee will bear with me, I want to make a comment about the troubles in general. In the interval since the Committee last approached this matter on 12th October, intelligence sources have confirmed recent reports that a notorious terrorist supporter and American fundraiser by the name of Martin Galvin, who is well known internationally, having originally represented Sinn Fein/IRA, has now announced rather dramatically that he is diverting his support and the large sums of money he has raised in America to an amalgam of Real IRA and Continuity IRA, both of which have pledged themselves to destroy the Belfast agreement.
That ungodly coalition is already preparing to contest the elections next year, thereby placing a very large question mark over Clause 65. In the light of those worrying developments, might it not be prudent to reconsider whether Clause 65 should be set aside, given that, in view of the information that I have disclosed, it is now at worst obsolete and at best a threat to democracy? Surely it would be far better to heed the pleas made from various parts of your Lordships' House to treat the United Kingdom as the one constitutional unit that we all know it to be.
Throughout the United Kingdom there is deep concern over this clause, which exempts Northern Ireland political parties from provisions which will apply in Great Britain to restrict overseas donations. The effect of the Bill's exemptions for Northern Ireland parties will be to enable Sinn Fein and the new amalgam to which I have drawn the Committee's attention to gain access to funds raised in America.
Lord Bassam of Brighton: As ever, I am grateful to the noble Lord for his contribution to these sensitive debates. I certainly understand the view that he has expressed. However, it is not a view which I feel able to accept. I believe that it is important that we proceed as we have determined to do. I believe that to be the right course for all the reasons that we have rehearsed
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briefly today and during our earlier discussions and deliberations on the exemption that Northern Ireland parties will enjoy, if "enjoy" is the right word.
We need to make progress towards normalisation. We need to have secure political institutions in Northern Ireland. We must all undertake to stand strong against the sort of intimidation which regrettably takes place within part of that political process. We need to monitor carefully the situation which Mr Galvin seeks to exploit and try to use, or perhaps more correctly abuse, politically.
I am content with what we have in our amendments to Clause 65 and I urge the Committee to support the Government in relation to that.
Lord Rogan: In the light of that information, I still have grave reservations about Clause 65.
Clause 65, as amended, agreed to.
Clause 66 agreed to.
3.45 p.m.
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 182:
After Clause 66, insert the following new clause—

Political Parties, Elections and Referendums Bill
  PART IV A TAX RELIEF ON POLITICAL DONATIONS TAX RELIEF ON POLITICAL DONATIONS
  . After section 379 of the Income and Corporation Taxes Act 1988 (interpretation of sections 369 to 378) there shall be inserted—
  PART IV A TAX RELIEF ON POLITICAL DONATIONS TAX RELIEF ON POLITICAL DONATIONS

    Tax relief on political donations.
    379A.—(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 an eligible political party and—

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

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

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

    (d) the donor is resident in the United Kingdom at the time the donation is made.

    (3) For the purposes of this section a political party is an eligible political party if, at the last general election preceding the donation in question—

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

    (b) 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.

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

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

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

    (c) section 86 (interest), and

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

    shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.

    (8) In the application of section 86 of the Management Act 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—

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

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

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

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

    (9) The Board may by regulations make provision—

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

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

    (c) generally for giving effect to this section.

    (10) In this section—

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

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

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

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

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

    The noble Lord said: This amendment seeks to insert a new clause which attempts to implement recommendations 38 and 39 of the Neill committee that small donations to political parties represented in the House of Commons should be eligible for tax relief. That is not a wholly novel principle as donations to political parties are already exempt from inheritance tax. Indeed, the wording of the new clause is based on the existing wording of the tax relief provisions and also on the recommendations of the Neill committee.
    The noble Lord, Lord Beaumont of Whitley, who energetically represents the Green Party in this House does not appear to be in his place just at the moment. The wording provides that that benefit would be available only to political parties represented in the House of Commons. The reason for choosing this wording is, as I say, that it follows the explicit recommendation of the Neill committee and we wish to stick to that recommendation.
    That recommendation was not an isolated one-off in the Neill committee, a stand-alone recommendation. It was an integral part of what it was trying to achieve. The committee recognised that the base of political funding in this country needed to be broadened. But it also rejected, as do the Opposition, state funding of political campaigning.
    At this juncture I should point out that the Neill committee did not regard tax relief along the lines set out in this proposed new clause as state funding any more than I do. No one argues that charities, which benefit from tax relief on the donations that they receive, are funded by the state. The right honourable gentleman the Chancellor of the Exchequer has extended considerably that charitable relief. But for a long time the principle has been that in tax law certain charitable donations, as defined and with the conditions expressed, were regarded as the income of the charity rather than the income of the donor; in effect, that the donor was diverting part of his income to the charity concerned.
    In paragraph 8.7 of the Neill committee's report it is argued that tax relief is not only not state funding but that it would be necessary, given the reduction in large donations which the committee envisaged, to allow tax relief on small donations in order to prevent parties coming cap-in-hand to ask for direct state funding.
    This amendment was tabled by my colleagues in another place to the Finance Bill in 1999 and also to this Bill when it was before another place.
    It may be thought inappropriate to have a tax-relieving provision in a Bill of this character. Indeed, Her Majesty's Treasury would have judged it as such when I was a Treasury Minister because, generally speaking, tax relief has been restricted to Finance Bills. But that is not the view of the Treasury now. Indeed, in Committee on the Finance Bill in another place in June 1999, the Economic Secretary to the Treasury, in the course of rejecting the tax relief proposals along these lines put forward by my honourable friend, s said that this Bill—which was then a gleam in the eye, although the Bill was known to be on its way—would be the Bill in which such a measure should be included. That has the additional advantage of giving your Lordships the opportunity to consider that particular recommendation of the Neill committee.
    In another place, this proposal was supported by my right honourable friend John MacGregor, who was a Member of the Neill committee. I hesitate to express the views of that committee in the presence of the noble Lords, Lord Shore and Lord Goodhart, who were both members of that committee and who will obviously speak on this issue if they wish and give more detail. But

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    my right honourable friend made the point that, because of the new restrictions on donations which are involved in other recommendations of the committee and in other clauses of the Bill, and the reporting and disclosure requirements, large donations to political parties would be less forthcoming.
    As I understand it, the committee wished to deal with that. It saw tax relief on smaller donations as,
    "a means of ensuring that sufficient funds to serve our democratic purposes were attracted to political parties".
    That is why I say that it is an integral party of the other recommendations of the Neill committee and not a stand-alone provision.
    The committee recognised that the new restrictions would reduce the political parties' income, perhaps significantly. It was intended that this measure would, in part, address the imbalance which would otherwise be created.
    I should say that in another place this proposal was supported also by the Liberal Democrat spokesman and by the independent Member of another place, Mr Martin Bell, who said that it would encourage the little people to get involved in politics which would help our democracy and make it much healthier. The particular circumstances of his membership of another place makes that view of interest.
    Of course, that would be of benefit to all the main parties, including the Labour Party. This measure would benefit that party as well as other parties because it would enable it to broaden the base of its finances and to move away from significant large donations to many smaller ones. That is what the Neill committee intended and is the spirit of other parts of the Bill.
    There was also the question of cost, and no doubt the Treasury had a view on that aspect too. The estimate was that it could be expected to cost the Exchequer in terms of lost revenue £4 million or £5 million per year. I am sure that everyone would agree that that is not a particularly huge sum of money in the scale of things in the operation of Her Majesty's Treasury. Hundreds of millions have been spent on the Dome and tens of millions have been spent on the national changeover plan for the euro. That £4 million or £5 million, small as it is, would be well spent on the preservation of our democracy—and many of us believe that our political parties are an important matter in relation to that.
    I should add that the noble Lord, Lord Neill of Bladen, wrote to the Home Secretary in October of last year to respond to the Government's White Paper. He said:
    "During the Committee's investigation of the funding of political parties we found widespread support for the view that political parties should be funded by a large number of small donations rather than by a small number of large donations. My colleagues and I remain of this view … We are disappointed that you have decided against our proposals in relation to a tax relief system".
    It is no good the Labour Party or its spin doctors claiming that the Bill implements the Neill committee's recommendations because in this important respect it does not. As I have made clear, this is one of the key recommendations in the report. It is right in principle and in practice and it should be supported. I beg to move.
    Lord Shore of Stepney: I support the amendment without any inhibition whatever. The nominees of the three political parties together with the rest of the Neill committee agreed with this point. It is important that the financing of political parties is put on a correct basis. Political parties are at the heart of British democracy and they are not to be run on the cheap. To conduct the research and organisational presence that is required throughout the length and breadth of the land costs money so that our democracy can be operated effectively.
    From where does such money come? Some money comes from the state in various forms. What used to be called "Short money" is now I believe in this "other place", as we used to refer to it, called after the then Leader of the Opposition in this House. A certain amount of money is made available from the state to help in purely parliamentary activities. However, we do not want the state to finance political parties too much because that could lead to worries about independence and the independence of political parties is crucially important.
    So we must look to external sources. Traditionally, for the Conservative Party external sources have included corporations. Businesses have traditionally looked upon the Conservative Party as their party. The trade unions and the Co-operative movement have heavily financed the Labour Party. Things are changing. In the Labour Party we now draw much more money from corporations than in the past. I shall not go into the reasons for that; I shall put it on one side as it is not germane to this debate. I believe that most people would agree that, on the whole, although it is not desirable to receive funds from large corporations and from trade unions, we do not want to be in a position where they dominate our political parties financially.
    What is left? If we do not want our political parties to be run by large corporations and we do not want them run by trade unions and other collective bodies, we are left with one further possibility: donations from individuals. Increasingly, the tendency has been for very rich men and women to make donations. Now that all the parties are agreed that in future there has to be a declaration of any amount donated over £5,000, many people will be sensitive about making such donations. We now live in a world where people are cynical about other people's motives and inevitably a large donation, publicly acknowledged, will attract rigorous and detailed press and media scrutiny, if not hostility. Therefore, in future, the tendency will be for large donations to be less forthcoming.
    So we are left with the donations of ordinary members. I believe that there are 300,000 individual members in the Labour Party, but I do not know the

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    present score for the Conservative Party. If both parties rely more heavily on donations from individuals, that would be to the advantage of all. More people would become directly involved in politics and that will be important in relation to the internal democracy of political parties. It will not be good for party headquarters to be dependent upon a dozen or so rich donors. It would be much better if the funds were supplied by tens of thousands of people making an annual contribution. I am sure that the same argument applies to the Conservative Party.
    On the Neill committee's recommendation, the arguments in relation to democracy are overwhelming. The proposal has been carefully thought out. We have the agreement of the Inland Revenue that such a scheme would attract tax relief and the major administrative work of collecting tax rebates from the Treasury would be carried out by the political parties. Not only has the practical scheme been worked out, but I believe that all possible criticism has been met by saying that the ceiling would be £500 a year. It is not a matter of rich people financing political parties through tax relief. Hopefully, ordinary citizens will be able to afford £100 or £200 a year, and some even £500 a year, without corrupting the system in any way. It is a workable, modest scheme. The noble Lord, Lord Cope, mentioned £4 million to £5 million—that depends on the assumptions made about the number who will contribute—and I have never heard anyone mention a sum beyond £8 million.
    That being so, why on earth are the Treasury and a Labour Government, which on the whole give a special emphasis to contributions and democracy, saying no? I followed the debate when it first took place in the House of Commons and the reason given is difficult to take seriously. Perhaps it was possible to take it seriously a year ago, when it was forthcoming from the Treasury Front Bench Minister, but it clearly is not possible now. The reason given was that the country, in a period of great public expenditure stringency, would not like the thought of political parties benefiting even to the extent of £4 million to £5 million—or at the outside £8 million—a year. People would feel that that money should go towards a couple of schools here and there. Maybe, in those clays of great public expenditure stringency, that was so. I simply remind my Front Bench that we are committed to spending an additional £50 billion in the next three years. The sheer flimsiness of that argument has to be judged against that background.
    Once again my noble friend has the unhappy task of trying to justify the unjustifiable. My advice to him is do not try; take up the matter with your colleagues. We know that there is now a different political and expenditure environment and that they will not seriously object.
    4 p.m.
    Lord Goodhart: I too speak in support of the amendment. I do so principally wearing my Neill committee hat along with the noble Lord, Lord Shore. My party gives more qualified support to this amendment than I do. My party takes the view that tax
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    relief is second best to state funding. My purpose is not to speak against the state funding of political parties, but to speak in favour of tax relief on small and medium-sized donations.
    The Government have accepted virtually all of the 100 proposals made by the Neill committee. In a few cases they have modified them somewhat, but 1 believe that this is the only one—certainly the only important one—that the Government have rejected outright. The main purpose of tax relief is to give an incentive to parties to seek to obtain a larger proportion of their income from smaller donations.
    Tax relief on donations to political parties is given in many other countries. The Neill committee visited several countries and we were particularly struck by a highly successful scheme for the funding of political parties in Canada. That funding included what might be called "direct" public funding, in particular matching contributions for campaign expenses, and also tax relief. The system for tax relief appeared to be both popular and effective.
    In Canada there is tax relief on gifts at the federal level up to 1,150 dollars, which is somewhat more than the limit of £500 proposed by the Neill committee. On a gift of 1,150 dollars, tax relief is available in an amount of 500 dollars—again, considerably more generous than we are proposing for this country, though the system is different in some technical respects from that proposed.
    I should like to quote briefly from paragraph 8.6 of our report, which is in very much the same terms as the letter read by the noble Lord, Lord Cope. It reads,
    "We have found very widespread support for the view that it is more democratic, and therefore in the public interest, that political parties should be funded by a large number of small donations rather than by a small number of large donations. A system of tax relief which increases the value to political parties of smaller donations is likely to encourage the parties to make greater efforts to obtain them".
    We proposed to do that by allowing tax relief on the first £500 of a donation by individual taxpayers on a basis similar to that provided for charities by Gift Aid. It would mean that on each donation of £100 by a member, the party to which the donation was given would receive something in the order of £28 as the refund of tax from the Revenue. There are certain differences from the Gift Aid scheme. Unlike donations to charity, there would be a ceiling—as I said, £500—on the amount of donation qualifying for tax relief and, further, the donation could not be taken into account when calculating the donor's liability to higher rate tax, something which can be done in the case of donations to charity.
    So the whole benefit of the tax relief, as we proposed it, would have gone to the party and none of it to the donor. There would be no great administrative burden on the Inland Revenue. If it can deal with Gift Aid claims from thousands of charities, it can plainly deal with claims for refunds from a small number of political parties.
    Of course, there are arguments against tax relief. One is that, even with a ceiling, it would favour parties whose members have higher incomes, notably of

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    course the Conservatives. There is some truth in that; £500 is a substantial sum and not many donors would be able to pay so much. Even so, there would be a considerable benefit both for my party and, to a greater extent, the Labour Party. There may have been some misunderstanding as to how substantial that would be. For instance, in evidence before us the finance director of the Labour Party, Mr David Pitt-Watson, said at paragraph 8.12 of our report,
    "Tax relief is of value only to people who pay tax and where the donations given are of significant size. It would be of little value to the Labour Party, which has 400,000 members who are paying an average £20 each to the Labour Party's coffers. It would be of enormous value to our opponents".
    The fact is that what Mr Pitt-Watson was speaking of was a total of £8 million and the value of tax relief, under our proposals, to the Labour Party on that would be of the order of £2 million—a substantial sum.
    The second argument against the scheme was that it would discriminate against donors who pay no income tax because they would not be able to confer any additional benefit on the party to whom they gave the donation. But, again, the fact is that, given the low level at which the basic rate of tax becomes payable in this country, few donors, except perhaps students, would be people who are not themselves taxpayers, at least at the basic rate.
    The third and main argument on which the Government relied in rejecting our proposal was what I might call the schools and hospitals argument, which was mentioned by the noble Lord, Lord Shore. It was said that there would be less money available for public expenditure. When one asks how much less, as we have already been told, the Government estimated the cost of the proposal at £4 million to £5 million a year.
    The Government's spending is rapidly approaching £400 billion a year. So £4 million amounts to around 0.001 per cent of government spending. That is not £1 in every £1,000; it is not even £1 in every £10,000; it is £1 in every £100,000 of government spending. It is the equivalent of someone earning £100,000 spending £1. That is far too small an amount for the schools and hospitals argument to be remotely credible.
    I should emphasise the fact that tax relief is already given in the United Kingdom on bequests to political parties which are exempt from inheritance tax. That stems from a provision in the Finance Act 1975 which introduced what was then called capital transfer tax and is now called inheritance tax, and of course it was introduced by a Labour government. Given that inheritance tax is not payable on estates of less than £250,000, it is clear that that relief is directed at wealthy donors.
    Let me conclude by saying this. I started by talking of the need to give incentives to parties to obtain more funding from small donations. But there is more to it than that. We give tax relief on charitable gifts in this country because we believe that support of charity is part of the role of a good citizen. Tax relief sends a message to people that giving to charity is a good thing. We need to send the same message about giving
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    to political parties. We live in a time of cynicism about politics and politicians. Party membership is falling across the board in all parties. But parties are an essential element of the democratic process. They need members and they need money. Of course it is not a citizen's duty to belong to a political party or to contribute to it. But we should recognise that citizens who do that are supporting the democratic process and one effective way of recognising that is to allow tax relief on relatively small donations to political parties.
    Baroness Gould of Potternewton: I should like to make just one or two points which concern me in respect of the amendments before us and in respect of the Neill committee report.
    I understand the sentiment that we want to try and widen the base of donations. That is absolutely right and I am sure nobody would disagree. My problem is that I understood the aim of the Neill committee report—we have been discussing the report for many days and will no doubt continue to discuss it—was to try and arrive at some sort of equity and remove discrimination wherever it lies. We have two forms of discrimination in the amendment before us.
    First, we have the point at paragraph 8.10, which the noble Lord, Lord Goodhart, did not quote and is one of the arguments against the scheme, where it says,
    "From the viewpoint of the donor, the unfairness of the system is that it would cost a non-taxpayer more to provide the same benefit to the party than it would cost a taxpayer".
    That was picked up by Professor Vernon Bogdanor, who said,
    "it would be thought in this country to be inequitable, that people who do not pay tax … should not get the benefits that taxpayers would".
    So there we have an inequity which would be built into this legislation and that cannot be right.
    The noble Lord, Lord Goodhart, quoted David Pitt-Watson from the Labour Party. We believe that the amendment would have little value to the Labour Party. However the figures are interpreted, the clear view of the party is that the amendment would be of greater benefit to our opponents. That is a political point which perhaps is not as valid as the other points, but nevertheless it is true.
    The noble Lord, Lord Cope, pointed out that the noble Lord, Lord Beaumont, who represents the Green Party, is not in the Committee today. I believe that the amendment is discriminatory against the small parties. The idea that the criteria should be two members of the party elected to the House of Commons or one MP and not less than 150,000 votes discriminates against small parties. We all know that the real force of our democracy is that we do not try to preclude small parties from having equal status to the big ones.
    As regards state aid by the back door, when the House of Commons Select Committee reported in 1994 it identified tax incentives as a form of public subsidy; in other words, state funding. At that time, the Conservative Party put in very strong evidence to support that view. It is interesting to note that that view has changed.

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    The Neill committee did not believe that the arguments against tax relief by deduction at source are very strong. I believe that the way they have been included in the Neill report and in the amendment is strong because it creates a discriminatory practice.
    The Earl of Sandwich: I warmly support the amendment moved by the noble Lord, Lord Cope. I speak as the son of a Member of Parliament who sat on the Conservative Benches and who for a long time was an Independent Conservative. I warmly support what was said by the noble Lord, Lord Shore, about the loss of individual commitment. The noble Baroness, Lady Gould, has poured a great deal of cold water on what has been said and I am sorry that she has made party-political points. The noble Lord has opened up a much bigger debate than we ought to be having on this small part of a large Bill. However, I hope that what the noble Lord, Lord Cope, said will cause the Government to reflect—and although perhaps they will not accept this amendment, I hope that they will come back with one tabled in another form at a later stage. It is time that the Government gave some ground on what is of universal interest.
    4.15 p.m.
    Lord Shutt of Greetland: I am in the same position as the noble Lord, Lord Hodgson, who spoke last week; neither of us were Members of your Lordships' House when debate on the Bill began earlier in the year. I must first declare an interest as a member and director of the Joseph Rowntree Reform Trust. I have held that position for the past 25 years. Its principal activity is the making of grants, often for political purposes, as it is one of the few organisations able to do so. We deliberately do not have charitable status, thanks to the good thoughts of Joseph Rowntree back in 1904.
    Like all other Members of the Committee, except perhaps a handful of Cross-Benchers, I have a vested interest in the party to which I belong, but I want to speak in favour of the amendment in context of the Bill as a whole.
    Throughout my adult life I have been involved in a political party at either national, regional, constituency or ward level. Last week, a great deal was said about the national parties and the constituencies but nothing was said about ward organisations or village associations. In the context of the Bill as a whole, I am concerned about who on earth will take on the responsibilities of treasurer and all that that will mean in terms of the regulation of political parties. The more I examine the Bill, the more I wonder who will take on the job of director general of a political party these days, bearing in mind the onerous burdens that the Bill imposes. It seems to me that the Bill introduces more regulation into this voluntary activity in life in Britain than perhaps is the case for any other voluntary activity.
    I believe that as regards political parties, the Bill is all downside. Although I am persuaded that that must be so when it comes to cleaning up politics, there is a
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    tremendous amount of downside to the Bill. It seems to me that the amendment we are considering is the only piece of upside for the political parties.
    Other parts of the Bill relate to political parties straightening up their record keeping. Records must be kept not only so that parties can claim back tax on individual donations but also for other purposes. The other interesting feature of the amendment is that it relates to individuals and not to corporate donations to political parties. Political parties are hardly vibrant at the present time. They may well be keeping up appearances. Perhaps they are doing so because of large donations.
    I believe that political parties need something to attract volunteers. I do not know who will wake up tomorrow morning and say, "I think I will join a political party today" and then go and do so. The likelihood is that some people will join political parties at some stage tomorrow but that may be because someone appears on the doorstep with a receipt book and suggests that it is appropriate.
    A provision which would encourage a growing involvement in political life in this country would redeem the Bill. People should be given the opportunity to join and those who sign them up should be able to say, "Yes, if you join, from your donation we can get a small sum from the Exchequer to assist the party".
    During the past five months as a Member of this House it has been my experience that it is unusual for a Minister to reply, "I accept this amendment with acclaim". However, I trust that on this occasion consideration will be give to the proposal. As was indicated by my noble friend Lord Goodhart, we are talking not only about £500 or £200 donations, but as likely as not about £20 or £10 donations. Provided that the donor is a taxpayer and that proper records are kept, there is no reason why tax relief should not be available on very small sums.
    In giving an upside, £500 might be thought of as on the high side—I believe that it is about right—but if the sum were £200 it would, in my view, still provide an incentive and reinvigorate our political parties and, indeed, our democracy. I support the amendment.
    Lord Norton of Louth: I, too, support the amendment and rise to reinforce the points made by the noble Lord. I am in complete agreement, although I would go slightly in the opposite direction as regards the amounts involved. For reasons which I shall indicate, I would go further than the recommendations of the Neill committee.
    The amendment is extremely attractive for the reasons which have been given. The proposal is not for the benefit of the donors but for the benefit of the parties. Indeed, the noble Baroness, Lady Gould, may find that if the amendment were agreed to, the number of donors to the Labour Party would increase.
    The Bill imposes a substantial burden on political parties. That argument has been made in various ways during the passage of the Bill. That burden occurs at a time when the parties are already under tremendous

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    pressure. I have also made that point in various debates on the Bill. We must address how to sustain and revitalise political parties. To allow certain donations to be tax deductible may act as an incentive to people to give, or at least to give to a greater extent than before, and the parties will benefit. I do not pursue the matter further given the points powerfully made by other Members of the Committee.
    I go further than the amendment and the direction suggested by the noble Lord who has just spoken. Perhaps one should increase the amount that may be allowable against tax. To raise the limit somewhat has the attraction that in all likelihood the amount given to parties will increase. It may also be an attractive means of discouraging non-compliance with the provisions of Clause 63. Under that clause someone who gives a total of £5,000 in small donations is required to report it to the electoral commission. However, there is a problem about ensuring compliance because, apart from the donor, no one may be aware that the aggregate donation is £5,000. Let us say that £5,000, or a proportion of it—but perhaps more than the amount proposed in the amendment—is allowable against tax, subject to the donor providing a certificate from the electoral commission that a report has been submitted. That would ensure more effective reporting.
    I appreciate that there may be powerful and compelling arguments against that proposal. With considerable regret, I do not speak as an expert on tax allowances. It would create problems and involve a greater loss to the Treasury than the figure mentioned by my noble friend Lord Cope. However, there is a case for giving thought not only to allowing donations to be tax deductible but perhaps to a proposal along the lines that I have just indicated. I reinforce the points already made. If we accept that political parties are under threat and need to be revitalised—I believe that they do—perhaps this is an amendment worthy of serious consideration.
    Lord Hayhoe: I also support the amendment. I first became involved in politics in campaigning in the North Croydon and Hammersmith by-elections before the 1950 general election, and I have been involved ever since. That rather dates me. One of the worries about the present situation is that the growth in cynicism about politics and politicians and lack of interest in the political process have led to a steady decline in the average turn-out in general elections during the period to which I have referred. This amendment may help in a small way to redress the balance.
    A person may become a little more interested in politics if he knows that in making a donation the political party will benefit from some tax relief. The benefit goes to the party, not the individual. One would have thought that interest in politics generally would benefit from that. If we continue as we have, our precious system of democracy which we have built up over the years will gradually erode. We saw an indication of that perhaps recently when some of our
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    fellow citizens believed that it was more appropriate to demonstrate and blockade the streets than to seek their political ends through the normal political processes.
    Having listened to powerful speeches by members of the Neill committee in support of the recommendation of that body—only the noble Baroness, Lady Gould, was critical of it—the balance of argument in favour of the amendment is overwhelming. One can never have a proposal that is not susceptible to nit-picking at the edges. Having been in a somewhat similar position to that of the noble Lord, Lord Bassam—I have had to defend government decisions which are fairly indefensible—I hope that when the Minister comes to reply he will hold out the hope that he and his colleagues will give further consideration to this sensible, useful and important amendment.
    Lord Clinton-Davis: I support the noble Lord, Lord Hayhoe, in one respect. I believe that the Minister should give more careful thought to this matter. I do not know whether this is the right kind of amendment, but I have come to this debate with an open mind and have listened carefully to my noble friend Lord Shore. He was my first Secretary of State, but that is no reason for supporting him today. As one who has looked carefully at the propositions advanced over the years, first as an opposition spokesman and then as a government Minister in this House, I know that the most that we can expect of the Minister today is an emphatic statement that he will think about it. I do not believe that we can ask him to do anything more.
    I hope that the Minister has listened carefully to the representations made today on behalf of the Conservative, Liberal Democrat and Labour Parties. This is not a matter of party advantage or disadvantage, but it should be thought about carefully. I beg the Minister to think about this amendment most carefully rather than to reject the idea, which I suspect is indicated in his brief. The proposition has been well advanced from all quarters of the Committee today.
    Lord Rennard: In this debate I should like to strike a rather different tone from that of a number of Members of the Committee who have argued enthusiastically in favour of the amendment. The argument that I make indicates that I support the amendment with slight reluctance rather than that I am totally convinced by it. When I looked at the proposition in the report of the Neill committee I was reminded of the words of Winston Churchill, who described democracy as the worst possible system of government apart from all others.
    Lord Renton: Sir Winston Churchill added that one could not have any other system.
    Lord Rennard: Indeed he did, and perhaps that is the conclusion to which I shall come in a few moments. I do not believe that the amendment puts forward a good scheme. However, it is not the worst possible system for the financing of political parties and it is better than the status quo. I understand some of the

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    Government's reservations about the scheme, in particular those voiced a few moments ago by the noble Baroness, Lady Gould. I find it somewhat strange to hear the Government hiding behind the Neill committee in defence of other proposals but ignoring its conclusions on this issue.
    I do not believe that the Government's objections can be based on expense. The estimated cost of £4 million, which is less than one-hundredth of 1 per cent of the additional £43 billion that the Government propose to spend on public services—the "schools and hospitals" argument—will not break the bank. I do not believe that the Government's objections can be the size of the sum involved or other priorities. The Government's objection must simply be that the £4 million would go disproportionately to parties with supporters able and willing to donate up to £500. I understand their legitimate concern that there is already an uneven playing field in our democracy and that this scheme may make the slope steeper in the Labour half of the pitch.
    There is an easy answer to this problem. The election commission could distribute the estimated £4 million fairly on the basis of levels of support for the parties. That would address the objections made from the government side. It will not be a great additional burden on the commission as it will also be distributing the £2 million fund to the political parties for policy development. But in the absence of such a scheme based on fairness, I shall have to support a tax concession scheme in spite of its drawbacks.
    4.30 p.m.
    Lord Bassam of Brighton: I feel like I am encircled by the debate and put into a very interesting position. Before I get to the heart of the issue I must say that this has been a very wide-ranging debate. I have been very impressed by the breadth of the debate and many of the contributions made. I enjoyed the last contribution. I thought it was very helpful. I also took very careful note of the contribution of the noble Lord, Lord Norton of Louth. I thought he made a very useful and telling point. As ever, I pay great respect to the noble Lord, Lord Clinton-Davis, for his very careful political advice and guidance.
    Of course, the Government will have to listen and reflect on all that has been said in this important debate. Members of the Committee have made some very telling points. I want to advance the case against giving this tax concession because I think it is important that that case be heard. The purpose of the new clause is to introduce, as the Neill committee recommended, tax relief on donations to political parties of up to £500. The Government have sought to implement the Neill committee's recommendations, as the committee intended, as a package. However, the Government remain unpersuaded of the case for tax relief on political donations.
    In chapter 7 of its report, the Neill committee came down squarely against any general system of financial support for political parties. The Government agree with that conclusion. A tax relief scheme for political
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    donations would, in our view, amount to general state aid by another route, one which the noble Lord, Lord Rennard, fully grasped and acknowledged in his contribution. If the case has not been made for direct grants to political parties paid for out of public funds, nor has it been made for a tax relief scheme. When it comes down to it, a scheme of this kind is simply another method of securing the same undesirable end.
    In its report the Neill committee reviewed the arguments against state aid. It is perhaps worth spending a little time examining those various arguments. A number of the arguments were put succinctly by the Conservative Party in its written evidence to the Neill committee. In its memorandum of evidence it indicated that its view on public funding had not changed since the party gave evidence to the Home Affairs Select Committee inquiry in 1993. In its evidence to that inquiry the Conservative Party's memorandum stated:
    "The Conservative Party is opposed to the direct funding of political parties. State funding would either unduly favour established parties or encourage the formation and growth of extremist parties".
    As well as those commendable objections to the public funding of racist or anti-democratic parties, the Conservative Party's memorandum to the Neill committee went on to advance other arguments against state funding. It said that such funding,
    "would reduce the dependence of the parties on their own activists for fund-raising and would increase the distance between parties and the electorate".
    Lord Goodhart: As regards that argument, if the tax relief is given linked to the donations, surely it would increase rather than decrease the urge to go out and recruit new members and get subscriptions from them.
    Lord Bassam of Brighton: That may be a consequence. I accept the point. But these are powerful arguments which cannot be sidestepped by portraying tax relief as something other than state funding; because that is what it is, state funding by another means.
    To those arguments I would add two more. The first is that I am not aware of any great public clamour for general state funding of political parties. One of the core objectives of the Bill is to clean up British politics by ensuring that there is full transparency in the way the political system is financed. I do not believe that this objective would be well served if, at the same time as banning foreign funding and requiring the disclosure of donations, we awarded political parties a public subsidy—that is what we would be doing—to help them with their campaigning activities. With the Conservative and Labour parties having spent £28 million and £26 million respectively at the last election, there is little evidence that the political process is being run on a shoestring!
    My final argument is that, even if there was a case for public funding to be made, few would identify the needs of political parties as a priority in terms of public expenditure. Another point bears consideration. The administrative costs of such a scheme have not been

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    the subject of any precise estimate, but it seems clear that they would be significant and they would offset the benefit, particularly, as the Neill committee recognised, in relation to smaller donations.
    I recognise that the proposed new clause would give effect to one of the Neill committee's recommendations. The Government have sought, wherever possible, to adhere to the committee's recommendations. But for the reasons I have set out, this is one issue on which the Government have concluded that they must depart from the committee's recommendations.
    It has been an important and valuable debate. I shall take stock of what has been said. No doubt we in government will want to reflect carefully upon it. But the points I have made in response to the wide-ranging contributions from many Members of the Committee will, I trust, begin to set the balance of the argument back in the other direction too.
    Lord Norton of Louth: Before the noble Lord sits down, a large thrust of his argument is that there should not be a public subsidy of political parties. But surely there already is. I refer to what is provided for parties at election time in terms of mail distribution and election broadcasts. In effect, it is already there; so the principle surely is already conceded.
    Lord Bassam of Brighton: I accept that there is state support, but it is very limited and it is for specific purposes. This takes us a stage further. It would, by another route, be indirect state funding. Most people would accept that whether it is tax relief or direct grant aid, it is state funding. This is a big leap to take in that direction.
    Lord Cope of Berkeley: It has been an extremely interesting debate. As the Minister rightly acknowledged at the start of the debate, the majority of the argument has been against him. Nevertheless, there are some points to which I should like briefly to respond.
    The noble Baroness, Lady Gould, picked up the view expressed by the Labour Party representative which is quoted in the Neill committee report. The idea that all Conservative Party members are rich is absolute nonsense, as those of us who have been involved in the party for many years know, and certainly as every Conservative MP, or, for that matter, candidate finds out every weekend in his or her constituency. It is also true—we on these Benches have come to recognise it—that some wealthy and generous individuals support the Labour Party and occasionally turn up to contribute to our debates.
    However, there is also what I might call "the Green Party point". That was specifically considered by the Neill committee in paragraph 8.23 of its report. We have chosen very precisely in the amendment the definition recommended by the Neill committee. Of course it was open to any Member of the Committee to modify the definition in whichever way he thought appropriate. We stuck to the definition of the Neill
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    committee, not just for the sake of sticking to the recommendation but also because we agreed with the argument. If registered political parties were chosen to be the beneficiaries, that would include all kinds of campaigning groups and so on, where it would be less appropriate.
    The same point applies to the choice of £500 as the cut-off limit. We accepted the Neill committee's figure. I agree that it can be argued about in both directions—up or down. But no amendments were tabled in either direction. We support the Neill committee's recommendation but are keen also to establish the principle that lies behind it rather than confuse the debate by arguing about the detail of it. Similarly, on the administrative costs, we are entirely open to suggestions which might help the work of the Inland Revenue in ensuring that the scheme proceeded smoothly and was able to be managed in the most appropriate way to avoid misuse. I am not undertaking to accept any Inland Revenue amendment. I have seen enough Inland Revenue amendments to know that some of them go too far in stamping on these matters. But there it is.
    The Minister discussed the question of direct state funding and rightly said that we do not think that that is desirable. The Conservative Party does not think that it is desirable, although I am not arguing against the ways in which it already happens—either through the Short and Cranborne moneys, which were referred to, or through the assistance in kind at the time of elections, with free broadcasts and so on. Sometimes we look across the Atlantic with horror at the enormous amounts of money being spent by American candidates in the elections. I refer not only to the presidential candidates but, particularly at this time in the American election cycle, all candidates. They seem to spend absolutely huge quantities of money. But most of that—or a large proportion of it—goes on buying television time. In order to get a comparable figure in this country, one has to take into account the free broadcasts that political parties are allowed, particularly at election times, although not only at election times. So there is already state funding in that sense. There is also tax relief at least as far as concerns inheritance tax.
    The difference of this proposal from straight state funding for the ordinary activities of political parties centrally is, as the noble Lord, Lord Goodhart, pointed out, that it would directly link the relief received by the parties to the donations. However, I thought that theMinister might slightly have given the game away when, as another of his arguments against the proposal, he said that there is no public clamour for it. That means that it has not so far turned up in a focus group, or not very definitely, or for that matter in a poll of some kind. That is not necessarily a very good way to decide on policy, particularly when an extremely senior, wise and expert committee, appointed for the purpose to review the matter and to go into all the details—I refer to the Neill committee—made this recommendation.

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    The noble Lord, Lord Clinton-Davis, suggested that the Government should consider the matter. I recommend to the Committee that we should give them time to do that, particularly as the Minister said that the Government would reflect on the debate, although he argued in the opposite direction. I certainly think that he should reflect on the debate. While he is doing that, please will he ensure that the Labour Party stops putting out press releases saying that the Bill implements the Neill recommendations? It is quite clear from the Minister's response to what has been said in the past hour that it does not do that in this very important respect. However, as I said, we should give the Government time to reflect. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Schedule 6 [control of donations to individuals and members associations]:
    4.45 p.m.
    Lord Bach Lord Bach moved Amendment No. 182A:
    Page 114, line 28, leave out ("and") and insert ("or").
    The noble Lord said: In moving this amendment, I wish to speak also to Amendments Nos. 182B, 182C, 186A, 187A and 189A. There are three opposition amendments in this group, Amendments Nos. 182D, 182E and 182G. If I may, I shall speak to them before they are moved.
    The government amendments in this group fulfil a commitment given by the Parliamentary Secretary, Privy Council Office, Mr Paddy Tipping, during the Committee stage of the Bill in another place. It was suggested by the honourable Member for North Dorset, Mr Walter, that the disclosure threshold for donations to members' associations should be £5,000, rather than £1,000. His argument ran that members' associations, such as the Tribune Group or the Tory Reform Group, were national bodies not local bodies, and that in the interests of consistency the disclosure threshold should match that for donations to the central organisation of a political party.
    We agree that there is some force in his argument, although members' associations will not exclusively be national bodies. The group of Labour councillors on Brighton and Hove Council could, for example, constitute a members' association for the purposes of Schedule 6 to the Bill. That said, we accept the point made by the Opposition Front Bench in another place and are content to raise the limit accordingly.
    Government Amendments Nos. 182A, 182B and 182C address a matter of drafting only. The definition of a "controlled donation" for the purposes of Schedule 6 presently refers to a donation received by a person or members' association for their "use and benefit". However, the test should be whether a donation is made for either the use or benefit of the recipient. For example, a donation which took the form of services in kind could not be said to have been made available for the recipient's use but the recipient would nevertheless reap a benefit.
    I turn to opposition Amendment No. 182D. It is not precisely clear to me why the noble Lord, Lord Mackay, whose name is attached to the amendment, wishes to exclude from the ambit of Schedule 6 donations made to elective office holders in connections with their official functions. He may have in mind routine gifts given, say, by a visiting leader of a European centre-Right party to the Leader of the Conservative Party. I should be surprised if many gifts of that kind came above the £1,000 disclosure limit or even perhaps the £200 de minimis. In any event, the amendment does not make a distinction between such gifts and, say, a donation of £10,000 to the Leader of the Opposition to help him to run his office. Such a donation—£10,000—would be in connection with the discharge by the Leader of the Opposition of his official functions and ought to be subject to disclosure in the usual way.
    Amendment No. 186E would require the electoral commission to issue guidance to regulated donees about what constitutes political activities. I remind the Committee that Clause 9 already enables the commission to issue advice to regulated organisations and individuals, so we do not see the need for a provision along these lines in Schedule 6. We are sure that the commission will be ready to assist regulated donees to meet their obligations under the Bill, including by offering guidance. But we should recognise that it would be difficult to compile comprehensive hard and fast rules on what is or what is not a political activity. The message to regulated donees is: if in doubt, ask.
    In responding to Amendment No. 182G. perhaps I may say that we are grateful to the Opposition for drafting it. We accept the amendment. It is an improvement. I beg to move.
    Viscount Astor: Perhaps I may respond to the Minister and speak to Amendments Nos. 182D, 182E and 182G. I had wondered what the difference is between "use and benefit" and "use or benefit". I sometimes wonder whether guidance should be issued to the draftsman about the words "and" and "or". We are always having arguments about whether it should be "and" or "or" and sometimes we are told that it should both. It would be helpful if the right form of words could be devised. A clever parliamentary draftsman should be able to think of a form that would cover all these eventualities.
    I shall turn now to the amendments. I welcome government Amendments Nos. 186A, 187A and 189A. They place the disclosure limit for members' associations on the same level as those for parties' central organisations. That reflects a point raised on 1st February by my honourable friend Robert Walter in the Standing Committee of another place. However, I shall not detain the Committee by going further into the detail.
    More significant amendments have been moved by the Minister in this grouping on matters that have not previously been debated in another place. I refer specifically to matters addressed by Amendments Nos. 182D and 182E. Amendment No. 182D seeks to

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    clarify the definition of a donation in relation to an individual who holds an "elective office"; that is, a Member of Parliament. I am confused by the Bill. I had assumed that that would include those Members of your Lordships' House who have been elected. However, if one reads Schedule 6, paragraph (8), at line 20 of page 115, "relevant elective office" means a Member of Parliament. Precisely how would that fit with your Lordships' House?
    I have the advantage over the noble Lord in that I have been elected, not to this House, but to remain in this House, whereas the noble Lord has not. Perhaps the Minister could define the term.
    Lord Bach: I have conceded Amendment No. 182G which is the amendment to which I believe the noble Viscount is presently referring. It should read, "Member of the House of Commons". The noble Viscount and his colleagues are right and we have accepted that.
    Viscount Astor: I am grateful to the noble Lord. I was about to acknowledge that he has conceded the point. We shall see an improvement on the definition.
    Paragraph (8) of the schedule includes Members of the European Parliament, the Scottish Parliament, the Northern Ireland Assembly and so forth. It also includes members of any local authority, the Greater London Assembly and the Mayor of London; a long list is included here which embraces a huge number of people. Can the Minister tell the Committee how relevant information as regards donations is to be disseminated? What consultation is to take place? Has Mr Ken Livingstone, the Mayor of London, been told about paragraph 8(g)?
    I shall turn to Amendment No. 182D, tabled in the name of my noble friend, concerning control over donations. This relates to political activities. Can the Minister provide a definition of what is a "political activity"? Does a donation to fund a meeting or drinks reception between a Member of the House of Commons and his constituents count as such, even though that could not be defined as a party political meeting? How will this affect Members of the European Parliament as regards any funding they receive from that body? Would that be prohibited because such funding would be seen to be funding from abroad, even though it would relate to their official duties?
    These matters deserve some consideration and I should be grateful for the noble Lord's thinking here. As the Minister will realise, this amendment is of a probing nature to establish the Government's reasoning and to provide an opportunity for the Minister to cite relevant examples.
    As regards Amendment No. 182E, the Minister rightly pointed out that the electoral commission will have wide powers to offer advice. However, we would feel much more comfortable if the commission had conferred on it a duty to provide guidance, which is perhaps a stronger term than advice. A great many
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    people will be affected by the rules and regulations being introduced by the Bill. Given that, the commission should have a clear duty, set out in the Bill, to disseminate appropriate advice to all those different groups of people who are going to need it. Significant implications lie behind the provisions of Schedule 6. It will affect, for example, the register of interests not only in the other place but also in your Lordships' House. The commission will need to consider what should and should not be declared.
    Furthermore, the way in which the provisions of Schedule 6 will affect the rules by which your Lordships' House presently governs itself means that noble Lords will be directly affected by it. Can the Minister confirm whether that will be the case, because that is how I read it? I feel that the Government should have consulted the Procedure Committee and the Committee for Privileges in this House—and possibly the relevant committees in another place—to gauge their reaction to these provisions. After all, noble Lords have taken the view that it is their right to regulate their own affairs.
    Schedule 6 is extremely wide ranging and covers a great deal of territory. Furthermore, it will affect a vast number of people, ranging from senior figures in political parties to Members of Parliament, moving on to mayors, councillors and so forth. The provisions will affect not merely hundreds of people, but possibly thousands or even hundreds of thousands. A positive duty should be put on the commission to offer guidance on how Schedule 6 will work.
    I have put a number of questions to the Minister in response to this grouping of amendments, in particular as regards the effects they will have on this House and on Parliament in general. I shall be most grateful for the Minister's response when he comes to sum up our debate.
    Lord Norton of Louth: Perhaps I may raise a point which has been highlighted by Amendment No. 182G. I should like to use that amendment as a peg on which to inquire into a matter that is related to the matters covered by it. I understand that the Minister has accepted the amendment and I hope that he, in turn, will understand why I am raising a point in the light of that acceptance.
    Amendment No. 182G refers to paragraph 8 of Schedule 6 where the term used is "relevant elective office". The Minister conceded that in his acceptance of the amendment to subparagraph (a), where reference is made to a "Member of Parliament", so that it will be refined to refer to a "Member of the House of Commons"—because it refers only to elected offices. Because of that, I should like to raise a point which has been triggered in my mind in relation to subparagraph (f), which relates to a member of any local authority. I believe that it is possible for a member of a local authority not to be an elected member, but to be co-opted. I am not sure what would be the status in that case.
    I chair the standards committee of Hull City Council. I am not an elected member; indeed, the whole point of the committee is to include people who

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    are not elected because they are then completely detached from the process. To that end, I understand that I and the other members are co-opted. Would that mean that we would be included in the definition of "members of a local authority" by reason of co-option? It may be that subparagraph (f) needs to be refined to clarify that point. Alternatively, perhaps the paragraph's opening term, "relevant elective office" should be changed to reflect the fact that it refers only to those elected to serve on one of the relevant bodies. I hope that this point will be helpful to the noble Lord.
    5 p.m.
    Lord Bach: I shall deal first with the point raised by the noble Lord, Lord Norton of Louth. He has made an extremely helpful point. There is a nice question here as regards whether he is in fact a member of the local authority in the important capacity he plays within it. Perhaps I may take the point away and look at it.
    So far as concerns the comments made and points raised by the noble Viscount, I am most grateful to him and I shall do my best to respond as fully as I can. I shall then return to the point made by the noble Lord, Lord Norton, because I now have some more information on that.
    Members of this House are not covered by paragraph 8 of Schedule 6. That is why we have accepted Amendment No. 182G. I know that the noble Viscount was elected—we were all delighted at how high he was on his party's list. But the voting was for a party list as opposed to an election. I am sure that he will understand the distinction. I wish some of his noble friends would see that as clearly as he does. So the answer to that question is, no, the House of Lords is not included.
    There has been consultation; we have brought forward a White Paper and a draft Bill. We will ensure that Members of Parliament, councillors and others are notified of the coming into force of Schedule 6—which, as the noble Viscount indicated, is an important schedule to the Bill—and the obligations that it places on them.
    The noble Viscount mentioned that under Clause 9 there is no compulsion on the electoral commission to offer guidance. He is right about that. But in reply I ask him, perhaps rhetorically, is it not hard to believe that an electoral commission with these powers would not see one of its primary tasks as being to advise relevant people and organisations of where they stand on issues raised by Schedule 6? Indeed, we expect that, in practice, advice on such matters will be given on a case-by-case basis. In other words, a party will go to the electoral commission and will expect—and get—a reply to a particular query. We do not think that any overall guidance could be expected to cover all possible circumstances.
    Turning again to the point raised by the noble Lord, Lord Norton, co-option is limited to parish councils, not principal area councils, in terms of becoming a member of the local authority. We all remember the days of aldermen, but, whether for good or for bad,
    1062
    those days are past. Those who are co-opted in a parish council or town council are members of that council for these purposes. I hope that I have answered most of the questions that have been raised.
    Viscount Astor: The Minister's reply in regard to the electoral commission was helpful. I shall study it and think about the matter again before Report stage. The Minister recognised that the electoral commission may have to give advice to a huge group of people; he said that some of it will be given on a case-by-case basis. But it is important that the electoral commission recognises that it will have to lay down some rules for people to follow. If it ends up having to respond to every individual request, it will be extremely busy. The commission will have to set out what it believes to be the ordinary way to behave, and then respond to requests that are outside that—otherwise it will he swamped by inquiries from people who do not know what to do. Perhaps the Minister will consider that issue.
    I was perhaps not as effusive as I should have been in thanking the Minister for accepting the one amendment which removes the complication of your Lordships' House coming under the schedule. I am grateful to the noble Lord for his acceptance of that amendment.
    On Question, amendment agreed to.
    Lord Bach Lord Bach moved Amendments Nos. 182B and 182C:
    Page 114, line 34, leave out ("and") and insert ("or").
    Page 114, line 39, leave out ("and") and insert ("or").
    On Question, amendments agreed to.
    [Amendments Nos. 182D and 182E not moved.]
    Lord Bach Lord Bach moved Amendment No. 182F:
    Page 115, line 5, after ("2") insert (", 2A").
    The noble Lord said: This amendment was spoken to on an earlier day in Committee. I beg to move.
    On Question, amendment agreed to.
    Viscount Astor Viscount Astor moved Amendment No. 182G:
    Page 115, leave out line 21 and insert ("member of the House of Commons;").
    On Question, amendment agreed to.
    Lord Bach Lord Bach moved Amendments Nos. 183 to 183P:
    Page 115, line 36, at end insert—
    ("( ) Where—

    (a) at a time when any order is in force under section 65(1) a donation is received by a regulated donee resident or carrying on activities in Great Britain, and

    (b) the order provides for this sub-paragraph to apply to any such donation,

    section 49(2)(c) shall have effect in relation to the donation as if it referred only to a registered party which is registered in the Great Britain register.").
    Page 115, line 40, at end insert—
    ("(aa) any sponsorship provided in relation to the donee (as defined by paragraph 2A);").
    Page 115, line 41, leave out ("the donee or a person acting on his or its behalf)") and insert ("or on behalf of the donee)").

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    Page 115, leave out line 48.
    Page 116, line 1, leave out sub-paragraph (2) and insert—
    ("(2) Where—

    (a) any money or other property is transferred to a regulated donee pursuant to any transaction or arrangement involving the provision by or on behalf of the donee of any property, services or facilities or other consideration of monetary value, and

    (b) the total value in monetary terms of the consideration so provided by or on behalf of the donee is less than the value of the money or (as the case may be) the market value of the property transferred,

    the transfer of the money or property shall (subject to sub-paragraph (2B)) constitute a gift to the donee for the purposes of sub-paragraph (1)(a).
    (2A) In determining—

    (a) for the purposes of sub-paragraph (2)(c), whether any money lent to a regulated donee is so lent otherwise than on commercial terms, or

    (b) for the purposes of sub-paragraph (2)(d), whether any property, services or facilities provided for the use or benefit of a regulated donee is or are so provided otherwise than on such terms,

    regard shall be had to the total value in monetary terms of the consideration provided by or on behalf of the donee in respect of the loan or the provision of the property, services or facilities.
    (2B) Where (apart from this sub-paragraph) anything would be a donation both by virtue of sub-paragraph (1)(aa) and by virtue of any other provision of this paragraph, sub-paragraph (1)(aa) (together with paragraph 2A) shall apply in relation to it to the exclusion of the other provision of this paragraph.").
    Page 116, line 4, after ("member") insert (", trustee").
    Page 116, line 13, at end insert—

    Sponsorship
    2A.—(1) For the purposes of this Schedule sponsorship is provided in relation to a regulated donee if—

    (a) any money or other property is transferred to the donee or to any person for the benefit of the donee, and

    (b) the purpose (or one of the purposes) of the transfer is (or must, having regard to all the circumstances, reasonably be assumed to be)—

    (i) to help the donee with meeting, or to meet, to any extent any defined expenses incurred or to be incurred by or on behalf of the donee, or

    (ii) to secure that to any extent any such expenses are not so incurred.

    (2) In sub-paragraph (1) "defined expenses" means expenses in connection with—

    (a) any conference, meeting or other event organised by or on behalf of the donee,

    (b) the preparation, production or dissemination of any publication by or on behalf of the donee, or

    (c) any study or research organised by or on behalf of the donee.

    (3) The following do not, however, constitute sponsorship by virtue of sub-paragraph (1)—

    (a) the making of any payment in respect of—

    (i) any charge for admission to any conference, meeting or other event, or

    (ii) the purchase price of, or any other charge for access to, any publication;

    (b) the making of any payment in respect of the inclusion of an advertisement in any publication where the payment is made at the commercial rate payable for the inclusion of such an advertisement in any such publication.

    (4) The Secretary of State may by order made on the recommendation of the Commission amend sub-paragraph (2) or (3).
    (5) In this paragraph "publication" means a publication made available in whatever form and by whatever means (whether or not to the public at large or any section of the public).").
    Page 116, line 17, leave out ("or a referendum").
    Page 116, line 17, at end insert—
    ("( ) the provision of assistance by a person appointed under section 9 of the Local Government and Housing Act 1989;").
    Page 116, line 29, leave out from ("which") to ("and") in line 31 and insert ("(in accordance with any enactment) falls to be included in a return as to election expenses in respect of a candidate or candidates at a particular election;").
    Page 116, line 40, at beginning insert ("the total value in monetary terms of").
    Page 116, line 40, at end insert—
    ("(2A) The value of any donation falling within paragraph 2(1)(aa) shall be taken to be the value of the money, or (as the case may be) the market value of the property, transferred as mentioned in paragraph 2A(1); and accordingly any value in monetary terms of any benefit conferred on the person providing the sponsorship in question shall be disregarded.").
    Page 116, leave out lines 43 to 46 and insert—

    ("(a) the total value in monetary terms of the consideration that would have had to be provided by or on behalf of the donee in respect of the loan or the provision of the property, services or facilities if—

    (i) the loan had been made, or

    (ii) the property, services or facilities had been provided,

    on commercial terms, and

    (b) the total value in monetary terms of the consideration (if any) actually so provided by or on behalf of the donee").

    Page 116, line 47, leave out sub-paragraph (4).
    Page 117, line 1, leave out ("or (4)").
    The noble Lord said: These amendments were spoken to in Committee on 12th October. I beg to move.
    On Question, amendments agreed to.
    [Amendments Nos. 184 to 186 not moved.]
    Lord Bach Lord Bach moved Amendment No. 186A:
    Page 119, line 11, leave out ("£1,000;") and insert ("£5,000 (where the donee is a members association) or £1,000 (in any other case);").
    The noble Lord said: This amendment was spoken to with Amendment No. 182A earlier today. I beg to move.
    On Question, amendment agreed to.
    [Amendment No. 187 not moved.]
    Lord Bach Lord Bach moved Amendments Nos. 187A and 187B:
    Page 119, line 18, leave out ("£1,000.") and insert ("£5,000 (where the donee is a members association) or £1,000 (in any other case).").
    Page 119, line 25, leave out ("58") and insert (" 57").
    The noble Lord said: Amendment No. 187A was spoken to earlier today. Amendment No. 187B was spoken to on 12th October. I beg to move.
    On Question, amendments agreed to.
    [Amendment Nos. 188 and 189 not moved.]
    Lord Bach Lord Bach moved Amendments Nos. 189A to 190:
    Page 121, line 34, leave out ("£1,000.") and insert ("£5,000 (where the donee is a members association) or £1,000 (in any other case).").
    Page 122, line 28, after ("9(3),") insert ("9(4),").
    Page 122, line 33, leave out from ("shall") to second ("to") in line 34 and insert ("include power to make provision for disapplying any specified provisions of this Part, for such period as is specified, in relation").
    Page 122, line 37, at end insert—
    ("( ) Each order under section 65(1)(b) (as applied by sub-paragraph (1)) shall he so made as to—

    (a) apply to every person or members association falling within sub-paragraph (1)(a) or (b), and

    (b) make the same provision with respect to every such person or members association.").

    The noble Lord said: These amendments have all been spoken to. I beg to move.
    On Question, amendments agreed to.
    Schedule 6, as amended, agreed to.
    Clause 67 [Campaign expenditure]:
    Viscount Astor Viscount Astor moved Amendment No. 191:
    Page 42, line 19, leave out subsection (2).
    The noble Viscount said: We have now moved on from the issue of political donations in Part IV to that of political expenditure in Part V. This is a probing amendment which, when it was originally tabled, sought to provoke a debate on the issue of campaign expenditure. The Government have subsequently tabled a large number of amendments which relate to it and to issues in Schedule 7 with which subsection (2) of Clause 67 deals. Indeed, although Amendment No. 191 seeks to delete subsection (2) for probing purposes only, I notice that the Government are seeking to delete large chunks of it with Amendments Nos. 191A and 191B.
    Perhaps the most significant amendments in this group are Amendments Nos. 191A and 191B, together with government Amendments Nos. 192A and 195A. These amendments will remove Part II of Schedule 7 from the Bill in its entirety and substantially alter the definitions in Part I of the schedule. This is highly significant.
    As the Committee will be aware, political parties will in future only be able to spend up to a maximum of just under £20 million on what is called "campaign expenditure" in the year before a general election. This builds on one of the key recommendations of the Neill committee, recommendation 47.
    Schedule 7 currently defines the term "campaign expenditure" in some detail. The Government are seeking to alter that definition. In another place, the vast majority of the provisions that the Government are seeking to delete were not queried by the
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    Opposition. Indeed, there was a very short discussion over the detail of the definition relating to the preparation of the manifesto.
    On Report, the Opposition tabled amendments similar to Amendments Nos. 194 and 195 in relation to legal and professional fees. The issue was whether legal fees related to industrial tribunals, for example, or the auditing of accounts under the Bill, should count as campaign expenditure when, in effect, they were in no way related to political campaigning. I am therefore to an extent grateful that one of the effects of government Amendment No. 192A is to take all legal and professional fees out of the definition. That reflects, although in a more pronounced way, the points that my right honourable friends made in another place. Therefore, I shall not go into more detail on Amendments Nos. 194 and 195.
    Returning to the general definition in Part I, government Amendment No. 192A seeks to delete much more than the area that have mentioned. We expect the Minister to explain why.
    In addition to the legal and professional fees that I have mentioned, the amendment seeks to remove from the definition of "campaign expenditure" three further categories. Two of them relate directly to elections. The first is mentioned on page 123 of the Bill in subparagraph (7); namely,
    "Office accommodation acquired specifically for the purpose of being used in connection with a relevant election".
    That seems strange. Surely it is logical that campaign expenditure should include the cost of offices rented specifically for use in election campaigns.
    The second category to be deleted is the employment of staff used in connection with a relevant election. Again, that seems strange and we look forward to the Minister's explanation.
    Amendment No. 193D would also remove a large amount of expenditure from the definition of "campaign expenditure"—staff expenses, postage and stationery costs. Why are these being excluded even if they are incurred in relation to an election campaign? How does Amendment No. 193D, which seeks to delete staff expenses from the main definition entirely, fit with Amendment No. 193G, which appears to limit the exemption in paragraph 2 in respect of expenses to those which are paid by the individual concerned and not reimbursed by the party? What kinds of expenses will now be covered and what do the amendments taken together mean?
    Amendment No. 192B seems to tighten up some of the Government's drafting in relation to transport costs, but I should be interested to hear from the Minister a clearer definition of exactly what kinds of transport would be covered. That is the thinking behind our Amendments Nos. 192C and 193, which seek to examine what the words "national or other basis" and "from place to place" mean in the current drafting. What if, for example, an MP is being transported by the party to a campaign event in his own constituency? Does that count under the national limit or under the MP's limit as a local candidate? What about candidates or prospective candidates

    1067
    visiting neighbouring constituencies? Would their transport expenditure count? What about that of party officials or local activists?
    The government amendments would also tighten up the definitions in relation to rallies and public meetings. In order to count towards the limit, they would no longer have to attract "national publicity", nor would they have to be attended by "prominent persons", and the costs of hiring premises for the meetings would now be covered. However, we were under the impression that the new national limit was supposed to relate to national campaigning only. Perhaps the Minister will outline the kinds of meetings that will be covered under the new definition that would not have been covered under the Bill as presently drafted.
    Government Amendments 195A to 195C relate to the second type of expenditure in Schedule 7; namely, overheads. They seek to delete the category entirely. These amendments would blow a pretty big hole in the definition of "campaign expenditure". Permanent staff and office costs, telephone and other office costs, to the extent that they are attributable to the election campaign, would be removed entirely. We are puzzled by this development. Why are the Government doing this? We do not understand their logic.
    While the amendments would to some extent reduce the administrative burden on political parties, they would have the effect of also allowing political parties to spend a great deal of the £20 million limit on, for example, national advertising, transport, meetings or rallies than would otherwise be the case. This would be of direct and substantial benefit to any parties that had the full amount of money to spend. We are mindful of the conclusion of the Neill committee, at paragraph 10.49 of its report, which states:
    "Which items of election-related expenditure should be included within the new national limit? The short answer is 'all'".
    I have raised some fairly detailed points on this group of amendments, many of which are government amendments and many of which are mine. I thought it might be helpful if I put these points to the Minister at this stage so that, in introducing the government amendments, he may be able to deal with them. I beg to move.
    The Deputy Chairman of Committees (Baroness Serota): I should point out to the Committee that if this amendment is agreed to, I cannot call Amendments Nos. 191A and 191B.
    5.15 p.m.
    Baroness Gould of Potternewton: I rise to give general support to the whole cluster of government amendments. I do so because all the political parties have registered concern about the complexity of Schedule 7 as it stands. There was obviously a need to simplify the schedule wherever possible.
    One of the problems brought about by the amount of detail in the schedule was that the electoral commission would have had laid down before it the
    1068
    precise implications of the provision; rather, it will be commissioned to come up with a list of matters that should be covered and will now have the ability to do. What is important is that the provision will now be simplified in such a way as to reduce an enormous amount of the administrative burden on political parties and make the whole process more manageable.
    The noble Viscount, Lord Astor, raised a number of specific points, and as we go through the Bill we may indeed see the need for modifications. However, the general principle—the idea that Schedule 7 should be simplified and made more workable—must be supported. Practitioners within political parties will support this approach. In no way should any amendment take away the need for tough restrictions. We must not undermine the Bill's intentions. Nevertheless, the definition of "election expenditure" is now more comprehensive and more workable than it was previously. In the all-party discussions that have taken place, all sides have expressed the view that Schedule 7 as it stood was impossible to operate. As we are constantly reminded by Members in this place, political parties are made up of volunteers and activists, not accountants. The simplification of the schedule may help the work of those volunteers. The new definition will ensure that the next general election is fought on a more level playing field than the old Schedule 7 would have provided.
    Lord Bassam of Brighton: I am grateful to the noble Viscount for his explanation that his amendments are probing amendments. I am not sure what he probed, but it was an interesting observation in itself.
    I confess to being slightly puzzled by Amendment No. 191, which would remove subsection (2) of Clause 67. The subsection defines "campaign expenditure" by reference to items of qualifying expenses set out in Schedule 7. The noble Viscount has not tabled an amendment to delete Schedule 7. If he is broadly content with Schedule 7, as he would appear to be, I hope he will accept that we must retain Clause 67(2) in order to give effect to that schedule.
    The large group of government amendments to Clause 67(2) are consequential on the proposed changes to Schedule 7 and it is to these that I now turn. Schedule 7 is the product of recommendation 53 of the Neill committee report. That recommendation stated:
    "Legislation governing national expenditure limits should include a schedule … setting out a comprehensive list of items of relevant expenditure which should be declared by political parties at parliamentary elections. The contents of the schedule should be kept under review by the Electoral Commission".
    That is very sound advice.
    As throughout the rest of this Bill, we have sought to be faithful to the Neill proposals. The committee recommended a comprehensive list of election expenses and we have produced one. In retrospect, however, the Neill committee's recommendation was rather on the ambitious side. It is worth reminding ourselves constantly that political parties are, by and large, voluntary organisations—a point made by several noble Lords during our debates and deliberations on this Bill. At best, they employ only a

    1069
    small number of directly employed core staff. To expect political parties to itemise and account for every telephone call, stamp or paper clip devoted to an election campaign is simply expecting too much.
    The main political parties would have to engage a small army of staff just to keep on top of the requirements of the Bill, thereby diverting their limited resources away from fighting an election campaign. We need to strike a proper balance between the public interest in exerting a downward pressure on campaign expenditure and the ability of the political parties to comply with the administrative consequences involved. As it stands, Schedule 7 imposes unreasonable demands on political parties. The aim of these government amendments is to scale back the list of qualifying expenses to something more manageable.
    The amendments would strike out the items relating to office accommodation, staffing, legal or other professional services and the use of telephones and other office equipment. Staff expenses, postage, stationery and printing costs would also be omitted to the extent that such costs did not fall within any of the remaining items; thus, for example, the printing costs of campaign leaflets would still be covered. We have also removed the whole of Part II of Schedule 7, which relates to overheads.
    The qualifying expenses that will remain in Schedule 7 would still constitute a formidable list. The list will include the cost of producing party political and election broadcasts, all advertising costs, direct mail, opinion polling, media facilities, campaign rallies and transport costs such as a party leader's "battle bus". The information supplied to the Neill committee by the three main parties suggests that these items together accounted for a very significant share of their overall expenditure at the last general election. Pruning the list of qualifying expenses will go a considerable way towards easing the bureaucracy on the parties but without compromising the tight rein to be imposed on campaign expenditure.
    I should remind the Committee that it will remain a responsibility of the electoral commission to keep the list of qualifying expenses under review. It will be open to the commission, in the light of changing patterns of election spending, to recommend change to the list in order to keep it up to date. Paragraph 7 of Schedule 7 enables such changes to be made by order so that the commission's recommendations can be acted upon speedily.
    By removing the item relating to legal services from Schedule 7, I hope that the noble Viscount, Lord Astor, can be persuaded that his Amendments Nos. 194 and 195 are no longer needed. These two amendments relate to legal or other professional expenses incurred either in respect of any requirements of the Bill or in connection with any legal proceedings. It seems to me to be most sensible to remove them. Expenses incurred in respect of such matters would not constitute expenses incurred for election purposes, as defined in Clause 67(4) and would not, therefore, count as qualifying expenses. I see no purpose in adding these items to the list of exclusions in paragraph 2 of Schedule 7.
    1070
    Amendments Nos. 192B, 193F and 193G aim to clarify the relationship between paragraph 1(11) and 2(e) of Schedule 7. These provisions are concerned with travel costs. Paragraph 1(11) is particularly aimed at transportation costs associated with the hire of a "battle bus" or of a helicopter to take leading party figures around the country during the course of a whistlestop campaign tour. The paragraph would also encompass the cost of bussing in party supporters to an election rally. In sharpening up the drafting of this provision we have removed the reference to,
    "travelling from place to place",
    which I believe will address the concerns raised in Amendment No. 193. The revised provision also leaves out the words "national or other" which, as presently drafted, qualify the reference to an "election campaign" in paragraph 1(11), perhaps confusingly. I hope that this addresses the noble Viscount's point as set out in Amendment No. 192C. Where party workers meet their own travel costs, these would not fall to be treated as a campaign expense. Amendments Nos. 193A to 193C bring the drafting of paragraph 1(12) into line with the revised paragraph 1(11). Government Amendments Nos. 234M to 234YC simply make parallel changes to the list of referendum qualifying expenses.
    I hope that the Committee will agree that these government amendments are an equitable and proportionate response to legitimate concerns by all political parties about the practicality of operating to Schedule 7 in its current, perhaps overly prescriptive, form. The revised schedule will continue to cover the main items of campaign expenditure and, as such, will ensure that the limits on such expenditure are effective in achieving the Neill committee's objective of ending the "arms race" in election spending.
    During the course of my commentary I hope that I have covered the main questions raised. However, I believe that the noble Viscount, Lord Astor, asked a few questions about expenses, especially in relation to a candidate's election campaign. Such expenses would be included in the candidate's return under the Representation of the People Act. The noble Viscount's further question about existing paragraph 1(11) is probably answered simply by the replacement of that paragraph under Amendment No. 192B.
    The noble Viscount also raised the question of office and staff costs. As I said earlier, we have deleted these so that we can reduce the administrative burdens on parties. In our view, these provisions are also unfair to small parties that will not have any significant infrastructure and only take on staff or officers at election times. I trust that those explanations will satisfy the noble Viscount.
    Viscount Astor: I am grateful to the Minister for his explanation, which I believe has answered most of the points that I raised, but I shall certainly have to study Hansard to consider it further. I believe the government amendments relating to office and staff costs are particularly helpful. I am somewhat confused on government Amendments Nos. 193A to 193C as regards how they change the definition of rallies and

    1071
    public meetings. I am still under the impression that a new national limit was supposed to relate to national campaigning only. But, as far as I can see, the changes that are to be made will not necessarily have that effect.
    However, I shall have to study Schedule 7 in its revised form and, if necessary, return to the matter at a later stage if I have any further queries. As I am sure the noble Lord knows, it is difficult to put all the amendments into Schedule 7 and imagine how the revised schedule will work. Nevertheless, I am grateful to the Minister for his reply. It has been most helpful in improving our understanding of how Schedule 7 works. I take note of the point made by the noble Baroness, Lady Gould, that this schedule must be made simpler, more understandable and must be workable. Indeed, if the provisions are too complicated, the schedule will not work. The purpose of all political parties here is to produce something that is workable. In the light of that and the Minister's comments, which were generally helpful, I beg leave to withdraw my amendment.
    Amendment, by leave, withdrawn.
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendments Nos. 191A and 191B:
    Page 42, line 21, leave out ("either").
    Page 42, line 23, leave out from ("purposes") to end of line 26.
    On Question, amendments agreed to.
    5.30 p.m.
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 191C:
    Page 42, line 29, leave out subsections (4) and (5) and insert—
    ("(4) "For election purposes", in relation to a registered party, means for the purpose of or in connection with—

    (a) promoting or procuring electoral success for the party at any relevant election, that is to say, the return at any such election of candidates—

    (i) standing in the name of the party, or

    (ii) included in a list of candidates submitted by the party in connection with the election: or

    (b) otherwise enhancing the standing—

    (i) of the party, or

    (ii) of any such candidates,

    with the electorate in connection with future relevant elections (whether imminent or otherwise).

    (5) For the purposes of subsection (4)—

    (a) the reference to doing any of the things mentioned in paragraph (a) or (as the case may be) paragraph (b) of that subsection includes doing so by prejudicing the electoral prospects at the election of other parties or candidates or (as the case may be) by prejudicing the standing with the electorate of other parties or candidates;

    (b) a course of conduct may constitute the doing of one of those things even though it does not involve any express mention being made of the name of any party or candidate; and

    (c) it is immaterial that any candidates standing in the name of the party also stand in the name of one or more other registered parties.").

    The noble Lord said: The amendments in this group primarily relate to the definitions of campaign expenditure incurred for election purposes in Clause 67 and of controlled expenditure in Clause 80.
    The whole object of Part V of the Bill is to plug the gap in the controls on election expenditure that was created by the fascinating Tronoh Mines case in 1952. Tronoh Mines Ltd had placed an advertisement in The Times shortly before the 1951 general election condemning the policies of the then Labour government. The readers of the advertisement were invited to save the country by electing
    "a new and strong government with ministers who may be relied upon to encourage business enterprise and initiative".
    Until that point it had been generally assumed that such advertising would be illegal, first, because the expenses were not authorised by an individual candidate or his agent and, secondly, because it breached the limit on third party spending set out in the then Section 63 of the Representation of the People Act 1949. The judge in the case concluded otherwise. He ruled that the purpose of Section 63 of the 1949 Act was to prohibit the incurring of expenditure which has the effect of supporting a particular candidate or candidates in a particular constituency. Section 63 did not prohibit expenditure,
    "the real purpose or effect of which is general political propaganda, even although that general political propaganda does incidentally assist a particular candidate among others".
    We do not want the controls on campaign expenditure set out in Part V to be similarly vulnerable to legal challenge in years to come. What we are seeking to control is any campaign expenditure which is directed at enhancing the standing of a party, and therefore its electoral prospects, in the 365 days before the date of a general election. The Conservative Party's current "Save the Pound" campaign is a good example of the type of activity which should be caught by the controls. The campaign clearly seeks to promote the Conservative Party by reference to its stance on a particular policy. But whether, in the words of Clause 67(4), the campaign can be said to be "promoting or procuring" the election of Conservative Party candidates at the next election or generally enhancing the electoral prospects of such candidates is arguably open to question. There is at least a possibility that Clause 67(4) in its current form might be relied upon as evidence that expenditure which was intended to boost a party's general support, at a time when no election was imminent, was not caught by the expenditure controls. Clearly, we need to avoid any such construction being placed on this subsection.
    The revised subsections (4) and (5) of Clause 67, as substituted by Amendment No. 191C, shifts the focus away from promoting or procuring the election of a party's candidates. The emphasis is now on promoting or procuring the electoral success of the party or otherwise enhancing the party's standing. Some reference to candidates is still apt because ultimately the measure of a party's electoral success is the return of one or more of its candidates. However, Amendment No. 191G makes it clear that a reference to a party's candidates in this context is not confined to

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    candidates who have already been selected or formally nominated, but includes candidates who have still to be identified.
    The tighter definition of the term "for election purposes", with its specific reference to the return of list based candidates makes subsection (8) of Clause 67 unnecessary; it is therefore omitted by Amendment No. 191E.
    Amendment No. 191F makes it clear that where a party is a party with accounting units, campaign expenses incurred by an accounting unit are to be regarded as expenses incurred by or on behalf of the party. Without such a provision it would be the easiest thing in the world for a party's central organisation to avoid the spending limits by channelling some of its expenditure through one or more of its constituency associations. Amendment No. 191D makes it clear that any election expenses incurred by a candidate or candidates and which are included in a return made under the 1983 Act or any other enactment do not constitute campaign expenditure under Part V. The reference to candidates in the plural is intended to catch candidates for election as London members of the Greater London Authority.
    Amendments Nos. 208X and 208YB to Clause 80 simply seek to bring the definition of controlled expenditure into line with the revised definition of campaign expenditure.
    Amendment No. 208YA, which inserts a new subsection (7A) in Clause 80, makes it clear that a registered party does not incur controlled expenditure when it publishes election material promoting itself or its candidates, including material denigrating other parties or their candidates. Expenditure on such material would fall to be accounted for as campaign expenditure under Part V. But there may be circumstances where a registered party contests only a limited number of seats at an election and in the seats it is not contesting supports the candidates of another party. In such circumstances the party will need to consider, on a case by case basis, whether any election material it issues falls to be accounted for under Part V or Part VI.
    Finally, Amendment No. 208YG relates to Clause 82(1)(b). This provision is designed to stop expenditure being counted twice under both Parts V and VI. If a third party uses its photocopier to run off, free of charge, some leaflets for use by a registered political party, it would be appropriate for the political party concerned to record the cost of the leaflets as notional expenditure under Part V. There is little merit in the third party also having to record, under Part VI, the notional cost to itself of using the photocopier. Removing the words in brackets will avoid such double counting. I beg to move.
    Viscount Astor: I thought that I heard the Minister refer to Amendment No. 208X. However, I thought that that amendment had been degrouped from the amendments we are discussing and that we shall discuss it later. I believe that it would be easier if we proceed on that basis. I hope that the Minister will
    1074
    consider that matter while I address Amendments Nos. 191C to 191G which I thought were grouped and would be spoken to as a group by the Minister. I think that it would be helpful to the Committee to deal with Amendments Nos. 208X, 208YA, 208YB and 208YG later, if that is satisfactory.
    I have a number of questions on Amendments Nos. 191C to 191G which I am sure the Minister will answer. First, why are the words,
    "promoting or procuring electoral success"
    used in the proposed new subsection (4)(al of the Amendment No. 191C when the Bill as drafted uses the term
    "promoting or procuring the election"?
    What is the difference both in theory and in effect between electoral success and the actual election of a candidate? The proposed new subsection (4)(a) of government Amendment No. 191C mentions "procuring electoral success". One is either elected or one is not elected. Does the noble Lord consider that one can be electorally successful without being elected? Perhaps one can, but I fail to see how that can happen unless, of course, one stands as some kind of blocking candidate where one might consider one has been successful in blocking someone else. Does that count as electoral success?
    The proposed new subsection (5)(b) in Amendment No. 191C states that,
    "a course of conduct may constitute the doing of one of those things"—
    that is, promoting or procuring electoral success—
    "even though it does not involve any express mention being made of the name of any party or candidate".
    Why use the term "a course of conduct" which is a broad term? What kind of political activity do the Government consider that that rather wide term will cover? Who will decide whether a political course of conduct will promote, procure or, indeed, prejudice a party or a particular candidate's election? Will it be the electoral commission or the courts?
    The proposed amendment allows for almost anything undertaken publicly by a political party to be construed as campaigning even it is not intended as campaigning and does not involve the mention of any name, party or candidate. Are political parties to be penalised because they have acted unwittingly in a way which falls within the wide definition in this amended subsection?
    I am puzzled by subsection (5)(c). In what circumstances will candidates stand for different political parties? Are there examples? The amendment refers to,
    "candidates standing in the name of … one or more other registered parties".
    Is the Minister signalling a Lib/Lab pact for the next general election; or does he have in mind other parties which might be registered in future? I do not understand. A candidate normally stands for one party. How does one stand for more than one party? I am confused. I look forward to the Minister's explanation.

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    I welcome Amendments Nos. 191D and 191E which state in two lines what the Bill currently states in 12. We want greater clarity. However, having cut some words out, Amendment No. 191F doubles the length of Clause 67(9) with no apparent change in meaning. Where the Minister has managed to cut some words, he has quickly added more.
    The Minister explained Amendment No. 191G. However, I do not understand. That may be my fault. How can a party promote the electoral success of future unidentifiable candidates? I understand that a party can promote the interests of identifiable candidates. The Minister did not explain the matter clearly. What do the Government mean by that?
    5.45 p.m.
    Lord Bassam of Brighton: That point relates to the situation where the party has not yet selected a candidate but is actively campaigning to promote the party in advance of the candidate being selected, and expenses might be incurred as a product of that.
    The noble Viscount asked whether it would be a matter for the party to determine whether expenditure is election expenditure. That will be open to challenge and refinement by the electoral commission. Ultimately the courts would determine that point.
    The noble Viscount seems to make points rather than ask questions. I shall study his remarks carefully before I answer specific issues he raises. Clearly they have a bearing on the content of the amendments. In these amendments we seek to clarify the language and make it easier to understand. At this stage, we should not get into too much detail on these points. I am happy to listen further the points the noble Viscount raises. I shall reflect on what he said. If specific questions arise, I shall reflect further and write to him.
    Viscount Astor: I welcome the Minister's intention to write. This is a government amendment. The noble Lord has considered the amendment carefully before tabling it. Amendment No. 191C states that a candidate can stand for different parties at the same time. It is not a detail but an important point of principle. How can someone stand for more than one party at the same time?
    How will expenditure be defined? Will the provision lead us down strange roads, mixing up campaign expenditure?
    Lord Bassam of Brighton: The explanation is simple. The provision reflects the fact that, certainly with regard to this side of the Chamber, candidates stand often as Labour and Co-operative Party candidates.
    Viscount Astor: It is an interesting answer.
    Lord Bassam of Brighton: As a further example, in the general election of 1992 Plaid Cymru candidates stood as Plaid Cymru and Green Party candidates.
    Lord Goodhart: I was going to refer to the fact that there used to be Conservative and National Liberal candidates.
    Viscount Astor: I am grateful to the noble Lord. I am not aware of any intention for such candidates at the next election; but who knows?
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    I have no great knowledge of the internal workings of the Labour Party. I had always assumed that a Labour Party and Co-operative Party candidate was a candidate within the Labour Party, which was, in effect, sponsored by the Co-operative Party. Perhaps I am wrong.
    Lord Bassam of Brighton: The noble Viscount will understand that the Co-operative Party is a separate party in its own right.
    Viscount Astor: I am grateful to the Minister for that explanation. I shall have to mug up on my knowledge of the details of the Labour Party.
    Strange alliances could arise. I am not sure how such alliances could affect campaign contributions. For example, if there were a Lib/Lab pact and a candidate stands jointly or separately, there may be some pooling or separation of resources.
    Lord Bassam of Brighton: The noble Viscount is somewhat obsessed by the concept of this Lib/Lab pact. He reads too much into the amendment.
    Viscount Astor: The only reason that I am obsessed by it is because every time we on these Benches believe that we have a good point the Liberal Members march firmly through the Government Lobbies. Sometimes that is because of the strength of the argument the noble Lord puts forward. Occasionally they follow the Official Opposition into the Lobby. However, sometimes one feels that they act almost for reasons of duty.
    It has been an interesting debate. I shall re-read the provision to ascertain whether it has any effects on campaign expenditure. I accept the Minister's points about the Co-operative Society.
    Lord Bassam of Brighton: It is not the Co-operative Society but the Co-operative Party. There is a great difference.
    Viscount Astor: I am grateful to the noble Lord for correcting me. As he rightly says, the Co-operative Party is a quite different body.
    I am grateful for the noble Lord's explanation. I shall consider what he says.
    On Question, amendment agreed to.
    Lord Bach Lord Bach moved Amendments Nos. 191D to 192:
    Page 43, leave out lines 7 to 12 and insert ("included in a return as to election expenses in respect of a candidate or candidates at a particular election.").
    Page 43, line 13, leave out subsection (8).
    Page 43, line 19, leave out subsection (9) and insert—
    ("(9) Where a registered party is a party with accounting units—

    (a) expenses incurred or to be incurred by or on behalf of any accounting unit of the party shall be regarded as expenses incurred or to be incurred by or on behalf of the party, and

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    (b) references to campaign expenditure incurred or to be incurred by or on behalf of a registered party accordingly extend, in relation to the party, to expenses which constitute such expenditure by virtue of paragraph (a).").

    Page 43, line 21, at end insert—
    ("( ) In this section "candidates" includes future candidates, whether identifiable or not.").
    Page 43, line 21, at end insert—
    ("( ) Nothing in this Part applies in relation to expenses incurred or to be incurred by or on behalf of a minor party.").
    On Question, amendments agreed to.
    Clause 67, as amended, agreed to.
    Schedule 7 [Campaign expenditure: qualifying expenses]:
    The Deputy Chairman of Committees (Baroness Turner of Camden): Before I call Amendment No. 192A, I remind the Committee that if Amendment No. 192B is agreed to, I cannot call Amendments Nos. 192C and 193.
    [Amendments Nos. 192C to 193 not moved.]
    Lord Bach Lord Bach moved Amendments Nos. 192A and 192B:
    Page 123, leave out lines 32 to 42.
    Page 123, line 43, leave out from beginning to end of line 3 on page 124 and insert—
    ("(11) Transport (by any means) of persons to any place or places with a view to obtaining publicity in connection with an election campaign.
    Expenses in respect of the transport of such persons include the costs of hiring a particular means of transport for the whole or part of the period during which the election campaign is being conducted.").
    On Question, amendments agreed to.
    Lord Bach Lord Bach moved Amendments Nos. 193A to 193G:
    Page 124, line 5, leave out ("attract national publicity") and insert ("obtain publicity in connection with an election campaign").
    Page 124, line 8, leave out ("prominent").
    Page 124, line 8, after ("events") insert (", the hire of premises for the purposes of such events").
    Page 124, line 10, leave out sub-paragraphs (13) and (14).
    Page 124, line 27, leave out ("permanent staff") and insert ("staff (whether permanent or otherwise)").
    Page 124, line 28, leave out ("reasonable").
    Page 124, line 30, at end insert ("to the extent that the expenses are paid by the individual from his own resources and are not reimbursed to him").
    On Question, amendments agreed to.
    [Amendments Nos. 194 and 195 not moved.]
    Lord Bach Lord Bach moved Amendments Nos. 195A to 195C:
    Page 124, line 31, leave out from beginning to end of line 28 on page 125.
    Page 125, leave out lines 34 to 39 and insert ("as to the kinds of expenses which do, or do not, fall within Part I of this Schedule").
    Page 126, line 27, leave out ("or II").
    On Question, amendments agreed to.
    Schedule 7, as amended, agreed to.
    Clause 68 [Notional campaign expenditure]:
    Lord Bach Lord Bach moved Amendment No. 195D:
    Page 43, line 22, leave out subsections (1) and (2) and insert—
    ("(1) This section applies where, in the case of a registered party—

    (a) either—

    (i) property is transferred to the party free of charge or at a discount of more than 10 per cent. of its market value, or

    (ii) property, services or facilities is or arc provided for the use or benefit of the party free of charge or at a discount of more than 10 per cent. of the commercial rate for the use of the property or for the provision of the services or facilities, and

    (b) the property, services or facilities is or are made use of by or on behalf of the party in circumstances such that, if any expenses were to be (or are) actually incurred by or on behalf of the party in respect of that use, they would be (or are) campaign expenditure incurred by or on behalf of the party.

    (1A) Where this section applies, an amount of campaign expenditure determined in accordance with this section ("the appropriate amount") shall be treated, for the purposes of this Part, as incurred by the party during the period for which the property, services or facilities is or are made use of as mentioned in subsection (1)(b).
    This subsection has effect subject to subsection (6).
    (1B) Where subsection (1)(a)(i) applies, the appropriate amount is such proportion of either—

    (a) the market value of the property (where the property is transferred free of charge), or

    (b) the difference between the market value of the property and the amount of expenses actually incurred by or on behalf of the party in respect of the property (where the property is transferred at a discount).

    as is reasonably attributable to the use made of the property as mentioned in subsection (1)(b).
    (1C) Where subsection (1)(a)(ii) applies, the appropriate amount is such proportion of either—

    (a) the commercial rate for the use of the property or the provision of the services or facilities (where the property, services or facilities is or arc provided free of charge), or

    (b) the difference between that commercial rate and the amount of expenses actually incurred by or on behalf of the party in respect of the use of the property or the provision of the services or facilities (where the property, services or facilities is or arc provided at a discount),

    as is reasonably attributable to the use made of the property', services or facilities as mentioned in subsection (1)(b).").
    The noble Lord said: I shall speak also to Amendments Nos. 197A to 197C, 202A, 208S, 208U, 208YC to 208YF, 209A, 210V, 210W, 214D, 217A, 218C, 218F, 218G, 221C, 234YD to 234YG, 235A, 235J, 238D, 239C, 239F, 242D, 242E, 252E, 253A to 253F and 259Q. I apologise for the number of government amendments in the group, which also contains four opposition amendments. It seemed sensible to group together a number of minor technical and drafting changes—not necessarily easy ones—to the expenditure controls in relation to political parties, third parties, referendum campaigners and candidates. The Committee may be pleased to hear that on the government amendments I shall confine my remarks to the main changes.
    Amendments Nos. 202A, 208S, 210V, 214D, 235A and 235J relate to expenses incurred before the beginning of a relevant election or referendum period but used during that time. Noble Lords will recall that Parts V, VI and VII place limits on election or referendum expenditure by reference to what are referred to "relevant periods", ending with the date of a particular poll. One means of circumventing the limits is to incur expenditure in advance of the period during which restrictions apply. To combat that, Schedule 8(12) and Schedule 9(12) provide that any expenditure on property, services or facilities, such as billboard advertisements, purchased before the relevant period but for use during that period will count towards the limit on campaign expenditure for that period.
    The current provisions in the Bill will not work satisfactorily and no equivalent provision is included in Part VII, which relates to referendums. Schedule 8(12) and Schedule 9(12) do not focus sufficiently on the use made of the property, service or facilities procured. In Parts V to VII, we want to control expenditure incurred for election or referendum purposes. If property, goods or services are procured before a campaign period with electoral purposes in mind but end up being used for separate purposes, it would be unreasonable to expect the party to bring that expenditure to account. The first set of amendments clarifies the position.
    The amendments to Clauses 68, 81, 107 and 127 address the issue of notional expenditure—that is, benefits in kind provided by a third party. Again, the key issue is the purpose for which property, services or facilities provided by a third party are to be used. For example, if a printing company printed 200,000 election leaflets for a party and another 200,000 newsletters to be sent to party members only, it would be appropriate to account for only the cost of the 200,000 election leaflets as notional expenditure. The amendments provide for such apportionment.
    Finally, Amendments Nos. 253F and 259Q modify the application of new Sections 90A to 90C of the Representation of the People Act 1983, as inserted by Clause 127, to fit the circumstances of the election of the London members of the Greater London Assembly. Expenses in such elections are incurred to promote the election not of an individual candidate, but of a slate of candidates on a party list. The language in new Sections 90A to 90C needs to be adapted to reflect that new state of affairs.
    The four opposition amendments in the group are also concerned with notional campaign expenditure. Clause 68 provides that if a party is provided with the use or benefit of property, services and facilities free of charge or at a discount of more than 10 per cent, it is to be regarded as having incurred an amount of election expenses equivalent to the value of those free services or the value of the discount. Amendment No. 196 would specify that those requirements applied in respect of benefits in kind provided by a permissible donor. The amendment is misconceived. The purpose of Clause 68 is to ensure that benefits in kind are
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    counted against a party's expenditure limit. If a wealthy supporter pays for an advertisement in a national newspaper, taken out in the name of a party, the cost should be accounted for by the party.
    The question of whether a particular benefit in kind constitutes a donation and consequently may be accepted only from a permissible donor is a separate matter regulated by Part IV, which we have already debated. In the example that I have given, the party would need to establish that the wealthy supporter was a registered voter and would then need to report the donation in the normal way. Although it is not a key point, the amendment would exclude benefits in kind provided by an impermissible donor from the ambit of the clause, so they would not count against the party's expenditure limit.
    Amendment No. 197 would specify that the requirements of Clause 68 applied to benefits in kind in relation only to a relevant election, not to the party's ongoing use. That is already provided for in Clause 68(1)(b), as substituted by Amendment No. 195D, which we are debating. Under this provision, donated property, services or facilities are to be accounted for as notional expenditure only if, in the event that the party itself had incurred the expenditure, it constituted "campaign expenditure". I take the example of a printing company which offers its services to a party at no charge. If those services took the form of producing a newsletter to go to party members only, the cost of that newsletter would not constitute campaign expenditure and, therefore, would not fall to be accounted for under Clause 68.
    The third opposition amendment, Amendment No. 209, would delete Clause 82(1)(b)(i). Again, it may be helpful to explain the purpose of this provision by way of an example. Let us imagine that company X decides to provide assistance to party Y during an election campaign by loaning it printing equipment free of charge. The market value of the use of that equipment over the period in question is £30,000. Under the provisions of Part V of the Bill, and Clause 6 in particular, the loan of the equipment must be treated as campaign expenditure incurred by the party and must be included in its election expenditure return.
    However, without Clause 82(1)(b)(i) the same loan of equipment might at the same time also, under Clause 80, fall to be regarded as controlled expenditure on the part of company X—in other words, the donor. Indeed, given the value of the loan, company X would need to be a recognised third party and comply with all the relevant requirements of Part VI. The loan would count against the company's own expenditure limit and the company would also be required to submit a return as to the controlled expenditure which it had incurred in making the loan. In other words, the effect of Amendment No. 209 would be that the provision of a benefit in kind might count against the expenditure limit of both the beneficiary and the provider and require both to include it in a return to the electoral commission. We believe that that would be unjust and over-bureaucratic. In the example that I have given,

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    the company is not campaigning in its own name. Accordingly, no useful purpose would be served by treating the company as a third party.
    Finally, and perhaps rather more simply, Amendment No. 253 would increase the de minimis threshold at which a candidate would have to account for notional expenditure. The noble Lord's amendment would raise the threshold from £50 to £100. We believed that this matter had been disposed of to the satisfaction of the Official Opposition in another place. The Bill as introduced in another place contained a de minimis threshold of £20. In response to concerns that that was too low, on Report we increased it to £50. That step was welcomed by the honourable Member for Beaconsfield, Mr Dominic Grieve. We are not inclined to increase the limit a second time. A candidate would have to declare a donation of £50 or more and, therefore, it makes sense that the notional expenditure threshold is set at the same level.
    Moreover, I put it to the Committee that, set against an expenditure limit of the order of £8,000, a donation in kind of £50 to £100 is not an insignificant sum and, on balance, should be recorded. I beg to move.
    6 p.m.
    The Deputy Chairman of Committees: For the convenience of the Committee I should say that if Amendment No. 195D is agreed to, I cannot call Amendments Nos. 196 and 197.
    Lord Cope of Berkeley: I am grateful to the Minister for setting out in some detail what these complicated amendments seek to achieve. I did not have the necessary wet towel around my head and therefore I am not sure that 1 appreciated all the subtleties of what he said. However, no doubt at a later stage we shall be able to ensure that we have grasped the issues.
    I turn, first, to the matter of notional campaign expenditure. At first it seemed to me that the de minimis provision of £200 was being written out of this part of the Bill. However, I believe that I am right in saying that the sum of £200 is covered by Amendment No. 197B. I believe that it should be covered and that probably it is.
    With regard to opposition Amendment No. 196, which inserts the words "by a permissible donor", perhaps I may ask the Minister whether the provisional transfer of property or services must be from a permissible donor or whether it can be from anyone. The noble Lord referred to it but I was not sure what he meant.
    I accept what the Minister said with regard to Amendment No. 197.
    I turn to Amendment No. 209, which again is in the name of my noble friend. I am not clear in what circumstances it is envisaged that a third party can incur expenditure on behalf of a registered party, except in the case of expenditure which in any event is attributed to it; for example, when it obtains property at a discount of more than 10 per cent.
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    I turn to government Amendment No. 202A which concerns the subject of expenditure incurred before a campaign begins. I am concerned that the provision should not be drawn too widely in relation to services which are provided before the relevant campaign period starts. I do not argue with the principle behind the provision; it is clearly right because sometimes supplies which are necessary for an election campaign will be bought in advance. However, the time period seems to go back indefinitely. The time limit may be covered by some of the other provisions which, for example, require accounts to be kept for only six years.
    However, the period in question could go back a long way. I know of one or two cases, for example, where the headquarters of a local Conservative Party are located in the rooms of a Conservative club which the club has owned for many years and where the association is allowed to use one or two rooms as its office. I believe that the same arrangement sometimes occurs in other parties. The building may have been bought many years earlier. Therefore, I should like to know how far back the records need to be kept in such a case. I do not believe that they should be kept for ever but rather for a reasonable period.
    Amendment No. 210V concerns third parties. Those of us who have been involved with political parties know that campaign material and items of property will be used for campaigning purposes. However, some organisations will not be regular political parties. I am not sure how they will know that at some stage they may be regarded as using those items for political ends, even though the items will have been paid for some time ago.
    It is slightly invidious to give an example but it may help to explain what I am talking about. The RSPCA campaigns on a number of matters such as fur farming, which we discussed the other day. In some circumstances where the matter is controversial among political parties or political candidates, the campaign could be regarded as having a political end. Yet it could be difficult for the RSPCA to distinguish the items of expenditure which it had used in that particular campaign.
    Organisations other than regular political parties will be drawn into this matter—in some respects quite properly. I recall visiting the United States on previous occasions and seeing something of their politics. There, because of the restrictions on the financing of political campaigns, action groups—political action committees—were set up which, in effect, supported a candidate but managed actually to be part of his campaign. In my view, that was not helpful for democracy in the United States. It seemed to me that that had some negative effects, not least that a large part of the campaign was not at all in the control of the candidate because it was in the control of the separate political action committee. Some fairly ghastly negative campaigning went on, and still does, I believe, under that heading. That is a danger which we must bear in mind.
    Will the Minister confirm that Amendment No. 221C also meets the earlier point I made in respect of detailed record-keeping? In particular,

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    Amendments Nos. 235A and 235J cover individuals who take part in referendum campaigns. Again, it could be difficult if there is an indefinite period for which they must produce expenditure records which they cannot be expected to have.
    Amendment No. 242E will disapply some, but not all, of the requirement for detail in respect of the returns. My general question is in relation to the length of time for which records must be kept and how far back it will be necessary to account for expenditure. I do not wish to pursue Amendment No. 253E.
    Lord Bach: I am grateful to the noble Lord. It may well be that I shall not be able to answer all the questions which he has asked. But I shall do my best.
    I start with Amendment No. 196 which would specify that the requirement applied to property provided by a permissible donor. We believe that the amendment confuses the purpose of the provisions and is unnecessary. The provisions of Part IV regulate whether or not a political party may accept a particular benefit in kind. The provisions of Clause 68 are not based on any assumption as to whether the benefits in kind in question also constitute a donation, although they no doubt would do so; nor is it necessary that they should do so.
    Indeed, the effect of the amendment would simply be that benefits in kind provided by an impermissible donor would not count against a party's expenditure limit. A party could not accept a donation in kind from an impermissible donor under the provisions of Part IV, which we have already debated. But if a party did accept an illegal donation to offset its election expenditure, it should be accounted for under this part of the Bill, Part V. I hope that that is helpful.
    As regards Amendment No. 202A, we agree that the principle should not be too widely drawn. The noble Lord wants to know for how long records should be kept. We say that the key point is the value of the donation at the time that it was actually made to a political party. The value of the goods or property, for example, at the time that it was obtained by a third party is irrelevant. The important point is the value of the donation when it is actually made to the political party.
    I turn now to Amendment No. 210V and the noble Lord's example of the RSPCA. The RSPCA's expenses need to be accounted for only if they fall within Part VI and are used for election purposes.
    Amendment No. 221C seeks to remove the words "during the regulated period" from Clause 91(5). That subsection expressly recognises that controlled expenditure incurred by a third party before it becomes a recognised third party can count towards the relevant limits. The detailed controls in Clauses 85 to 88 will not apply to that expenditure. The reason for removing the relevant words is that the subsection needs to apply also to expenditure before the regulated period begins but treated as incurred during it when the third party was not, at the relevant time, a recognised third party and should be looked at with
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    Amendment No. 242E which inserts a comparable subsection into Clause 115, which relates to referendum expenses.
    As must be abundantly clear, this is not an easy part of the Bill. I am extremely grateful to the noble Lord for his questions and comments. If there is anything important that I have left out in my response, I shall make sure that he is written to.
    Lord Cope of Berkeley: I return to the question of third parties. I used the example of the RSPCA and I do not wish to focus too much on that organisation. However, Clause 80 provides that the expenditure concerned can be expenditure addressed to the public at large and designed to promote the election of candidates who hold particular opinions or advocate particular policies or are against them. So if an organisation is campaigning on an issue in which two or more candidates in a particular election disagree, it may be held to be covered by that clause and, hence, its expenditure could be brought into it.
    It may be right that it should be brought in, but I am just trying to clarify in my own mind whether it could affect an organisation campaigning for an individual point of view on what might be a very narrow issue in the election as a whole but nevertheless, one on which the two candidates disagreed and on which some votes might turn.
    6.15 p.m.
    Lord Bach: I shall have to write to the noble Lord on that point rather than attempt an answer which may not be accurate.
    On Question, amendment agreed to.
    [Amendments Nos. 196 and 197 not moved.]
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendments Nos. 197A to 197C:
    Page 44, line 2, leave out ("and") and insert ("or").
    Page 44, line 9, leave out subsection (4) and insert—
    ("(4) Where an amount of campaign expenditure is treated, by virtue of subsection (1A), as incurred by or on behalf of a party during any period the whole or part of which falls within any period which is, in relation to the party, a relevant campaign period for the purposes of section 75, then—

    (a) the amount mentioned in subsection (4A) shall be treated as incurred by or on behalf of the party during the relevant campaign period, and

    (b) the treasurer or a deputy treasurer appointed under section 69 shall make a declaration of that amount,

    unless that amount is less than £200.
    (4A) The amount mentioned in subsection (4) is such proportion of the appropriate amount (determined in accordance with subsection (1B) or (1C)) as reasonably represents the use made of the property, services or facilities as mentioned in subsection (1)(b) during the relevant campaign period.").
    Page 44, line 25, leave out subsection (7) and insert—
    ("(7) In subsections (1), (1B), (1C) and (3) any reference to anything done by or in relation to a registered party includes a reference to anything done by or in relation to any accounting unit of the party; and section 46(4) and (6)(a) shall apply with any necessary modifications for the purpose of determining, for the purposes of subsection (1), whether property is transferred to a registered party or to any such unit.").
    On Question, amendments agreed to.
    Clause 68, as amended, agreed to.
    Clause 69 [Officers of registered party with responsibility for campaign expenditure]:
    [Amendments Nos. 197D to 197G not moved.]
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 198:
    Page 44, line 46, at end insert—
    ("( ) Where a deputy treasurer of a registered party is convicted of an offence falling within subsection (3), his appointment as deputy treasurer shall terminate on the date of the conviction.").
    On Question, amendment agreed to.
    The Deputy Chairman of Committees: I should inform the Committee that if Amendment No. 199 is agreed to, I cannot call Amendments Nos. 199A to 199D.
    Lord Bach Lord Bach moved Amendment No. 199.
    Page 45, line 1, leave out subsection (5) and insert—
    ("(5) If, where the appointment of any deputy treasurer of a registered party has been notified to the Commission under subsection (1)—

    (a) the deputy treasurer dies or his appointment terminates for any other reason, or

    (b) any change occurs in the address of his office,

    the treasurer of the party must notify the Commission of that fact within the appropriate period.
    (5A) In subsection (5) "the appropriate period" means—

    (a) the period of 14 days beginning with the date of the deputy treasurer's death or the termination of his appointment, or

    (b) the period of 28 days beginning with the date when the change of address occurs,

    as the case may be.").
    On Question, amendment agreed to.
    [Amendments Nos. 199A to 199D not moved.]
    Lord Bach Lord Bach moved Amendments Nos. 200 and 201:
    Page 45, line 10, leave out ("register of political parties") and insert ("Great Britain or Northern Ireland register").
    Page 45, line 10, at end insert—
    ("( ) Where the Commission receive a notification under subsection (5), they shall cause any change required as a consequence of the notification to be made in any such entry as soon as is reasonably practicable.").
    On Question, amendments agreed to.
    [Amendment No. 201A not moved.]
    Clause 69, as amended, agreed to.
    Clause 70 [Restriction on incurring campaign expenditure]:
    Lord Bach Lord Bach moved Amendment No. 201B:
    Page 45, line 24, at end insert—
    ("( ) Where any expenses are incurred in contravention of subsection (1), the expenses shall not count for the purposes of sections 74 to 78 or Schedule 8 as campaign expenditure incurred by or on behalf of the party.").
    The noble Lord said: In speaking to the amendment I shall also speak to Amendments Nos. 210F and 234YH. These amendments respond to concerns that the system of authorising expenditure in Parts V to VII of the Bill is based on an unrealistic assumption about the ability of the central organisation of ally of the major political parties to control the actions of every officer and member of the party.
    Those legitimate concerns stem from the effect of Clause 67. Under subsections (2) and (9) of that clause the definition of "campaign expenditure" includes expenditure incurred by or on behalf of an accounting unit of a party. Clause 70(1) requires that all campaign expenditure incurred by or on behalf of a party must be authorised by either the treasurer, or a deputy treasurer, or a person authorised in writing by either the treasurer or a deputy treasurer. A person who incurs campaign expenditure without the required authorisation commits an offence under subsection (2) of Clause 70.
    The fact that campaign expenditure was incurred without authorisation, say by an officer of a constituency association, does not absolve the party from bringing that expenditure to account in the return prepared under Clause 75. Moreover, any unauthorised expenditure would count towards the expenditure limits in Schedule 8. For a party spending close to its expenditure limit, any unauthorised expenditure could have the effect of pushing the party over the limit, thereby exposing the party to criminal sanctions. The party is therefore vulnerable to the maverick or irresponsible actions of any of its members or officers right down to branch level.
    We believe that it is unreasonable to expose any party to such a situation. We would expect all the major parties to instruct all their constituency associations, branches and other sub-units as to the requirements of the legislation. But ensuring that party officers and members are attuned to the requirements of the Bill is one thing, guarding against the actions of mavericks is quite another. A party may be able to take disciplinary action after the event, but by then it could be too late in terms of the party's own liability to prosecution.
    To address these concerns, raised by all the major political parties, Amendment No. 201B provides that any campaign expenditure incurred in breach of Clause 70(1) would not count towards a party's expenditure for the purpose of the limits in Schedule 8. Furthermore, a party's treasurer would not be required to include unauthorised expenditure in a return under Clause 75. In short, no liability would fall on the party or the registered treasurer in respect of unauthorised expenditure. Liability would instead fall solely on the person who incurred the expenditure.
    Amendments Nos. 210F and 234YH make parallel amendments to Clauses 85 and 108, where a registered party is acting as a recognised third party or permitted participant. In other words, the incurring of unauthorised controlled expenditure or referendum expenses would constitute offences, but unauthorised

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    expenditure would not count towards the limits in Schedules 9 and 13 respectively as respects a registered party.
    We understand that the Official Opposition, while being broadly supportive of this change, had some concerns about possible abuse. It has been suggested that an unscrupulous political party could seek to evade the expenditure controls by giving a nod and a wink to supposedly "unauthorised" expenditure. We do not dismiss such concerns, but nor do we believe that such a scenario is likely to arise. As I have said, it would continue to be an offence—punishable by a fine of up to £5,000—to incur unauthorised expenditure. This is not a step that any person seeking to secure political office either for himself or herself or his or her party will take lightly. Similarly, it is difficult to imagine that the treasurer of a registered party would conspire with others to commit such an offence.
    Furthermore, we are sure that party workers will be on the look out for any sign of transgression of the rules by other parties and will quickly draw them to the attention of the electoral commission and the police. Indeed, if they did not, there would be a remarkable change in how one party views another during an election. In the circumstances, we believe that we can rely on the criminal offence in Clause 70(2) to ensure that this sensible easement in the controls is not open to abuse. I beg to move.
    Lord Cope of Berkeley: We welcome these amendments. As the Minister said, we are concerned about possible unscrupulous use, but his words have reassured us. We hope that provisions provided elsewhere in the Bill for punishments will prove effective in that respect.
    Baroness Gould of Potternewton: I welcome Amendment No. 201B. Having been a party official for many years, I can envisage concerns being expressed by all political parties in relation to the problems that could be caused by a maverick or irresponsible person creating expenditure that would take the party over the maximum, thus setting in train the legal consequences of such an action. The amendment is welcomed, as the noble Lord, Lord Cope, said, by all political parties and it will help to overcome that particular problem. I have had discussions about possible abuse in relation to this matter but, as my noble friend said, it is covered by Clause 72.
    On Question, amendment agreed to.
    Clause 70, as amended, agreed to.
    Clause 71 [Restriction on payments in respect of campaign expenditure]:
    Lord Rennard Lord Rennard moved Amendment No. 201C:
    Page 45, line 33, leave out ("£100") and insert ("£500").
    The noble Lord said: Amendment No. 201C concerns reducing the bureaucracy imposed on political parties through this legislation. On Tuesday last week I argued that as my party's nominating officer, I would be willing to take on some additional
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    duties by sharing some of the responsibilities which it is proposed that the party treasurer should undertake. Today I am seeking to reduce that administrative burden and the associated paperwork.
    The Bill will require that receipts must be provided for expenditure over £100. That will mean copying a huge number of bills. My view is that although all payments should be listed, a receipt should be required only for payments in excess of £500. That would considerably reduce the administrative burden, and I do not believe that it would open up greater prospects for fraud.
    As an election agent in the past, I remember the cumbersome process after polling day of collecting receipts, initially for anything over the value of £2 and then for anything over the value of £20. For a few weeks after an election a great deal of time was spent chasing receipts from people to whom one had paid money for goods or services. In the old days, the Post Office used to be particularly bad at supplying receipts for phone bills on time. Acquiring invoices and receipts can sometimes be difficult, even though the bills have been paid. Collecting such things as bills for gas, electricity, rent, rates, printing and so on, was a difficult process. Last year I relived the nightmare in connection with the European election. Collecting receipts for small sums of money from all over the UK involved a myriad of paperwork and a great deal of time.
    Unless we can reach agreement in relation to ongoing financial support for the parties to assist with that operation, I believe that that will cost the parties a great deal of time and money to administer. In any event, let us try to reduce the bureaucracy involved by saying that sums of money under £500 must be accounted for but that they do not require an invoice and a receipt. I beg to move.
    Lord Lucas: This is an arcane bit of accounting that is required of political parties. I cannot think of a commercial firm that requires invoices to be receipted. An invoice is quite sufficient for all auditing purposes. If one requires to check something, a letter is sent to the person who provided the invoice asking, "Is this true?" I find it astonishing that receipts are required at all, let alone for amounts as small as £100. It is something that has come out of the Dark Ages.
    6.30 p.m.
    Viscount Astor: Perhaps I might at this stage add my support for this amendment to that of my noble friend. It is sensible to look at this point. My honourable friend Dominic Grieve moved an amendment in Committee in another place to raise the limit to £250. The noble Lord, Lord Rennard, wants to raise it to £500. But whatever the arguments on the amount, an issue of principle clearly arises.
    What happens if the invoice is lost? We heard from the noble Lord, Lord Rennard, that trying to obtain the right invoice from the right place, such as the Post Office, is sometimes an impossible task. Also it is important to remember—I do not believe the noble

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    Lord, Lord Rennard, mentioned this—that criminal sanctions are attached to this clause. We do not want to put local volunteers in the position of being liable to prosecution simply because they forgot about or lost a receipt for a small amount of money. That does not make sense. So this amendment is extremely valid.
    Perhaps I can come back to Amendments Nos. 201E and 201F after the Minister has responded.
    Lord Bach: The noble Lord, Lord Rennard, with his great experience, put the case for increasing the threshold in Clause 71(2) from £100 to £500. As he explained, the significance of the threshold is that it determines the point at which any campaign expenditure must be supported by an invoice and a receipt. The provision is modelled on Section 73 of the Representation of the People Act 1983, although in that case the threshold is set at £20. So we have already shown some appreciation for the administrative burdens on political parties by setting the threshold at £100.
    There is no right or wrong level at which to set the threshold. But simply as a matter of good accounting practice it would be desirable for a party to insist on an invoice and receipt where the cost of any goods or services exceeds £100. As well as providing an audit trail for the electoral commission, such good practice would help protect a party against fraud. In those circumstances, it is our judgment that £100 is about right. I invite the noble Lord to let the figure in the Bill stand so that it can be put to the test at the next election. If it proves to be too onerous a requirement, it would be open to the electoral commission to recommend an increase, perhaps to a level closer to the one the noble Lord proposed and for him to remind us of our refusal to go along with him on this occasion.
    Perhaps I may say a word on receipts because the noble Lord, Lord Lucas, made a small but important contribution to this debate. Receipts for gas, electricity, rates and even paper clips will not be required as they do not constitute campaign expenditure. Invoices and receipts will be required only for the items of qualifying expenses in the revised, and I am happy to be able to tell the Committee, much reduced Schedule 7.
    I turn from Amendment No. 201C to the government amendments in this group, which are principally concerned with the controls in Clauses 72 and 73, on making claims in respect of campaign expenditure and the settlement of such claims. Equivalent controls are to be found in Parts VI (the third party aspect) and VII (the referendum aspect) and the group therefore includes parallel amendments to the relevant clauses in those parts.
    The restrictions on making claims in respect of campaign expenditure are part of the machinery for ensuring the proper observance of the limits on such expenditure. Subsection (1) of Clause 72 currently requires that any claim for payment in respect of campaign expenditure must be sent to the treasurer or a deputy treasurer or other authorised person within 21 days of the date on which the expenditure was
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    incurred. Where a claim is received, in accordance with subsection (1) it must be paid within 42 days of the date on which the expenditure was incurred.
    On reflection, those requirements could place an unduly onerous requirement on registered parties. Campaign expenditure may be said to have been incurred when the contractual terms for the supply of the relevant goods or services are agreed. On such a construction the goods or services would have to be paid for within 42 days from the date of the contract, irrespective of the date the goods or services are supplied, which may be some weeks or months later. To insist on such payment terms could lead to cash flow problems for registered parties.
    Where possible we should leave the arrangements for making and settling claims in respect of campaign expenditure to political parties and their contractors. But we need a fail-safe mechanism to ensure that all such claims are properly settled in time for the relevant information to be included in the return made by a registered party after an election.
    The amendments to Clause 72 and the equivalent clauses in Parts VI and VII achieve that proper balance. Amendment No. 201D provides that the restrictions in Clause 72 apply only in the case of claims for payment in respect of campaign expenditure incurred during a relevant election period, as defined in Schedule 8. Amendments Nos. 201E and 201F provide that the 21 and 42-day deadlines for making and paying claims run, not from the date on which the campaign expenditure was incurred, but from the end of the relevant campaign period. Lastly, Amendment No. 201G protects the rights of creditors to require payment from a registered party before the end of the 42-day period allowed in the revised Clause 72(2).
    Amendments Nos. 201H and 201J to Clause 73, which is concerned with disputed claims, are consequential to those to Clause 72. Again, parallel amendments are made in Parts VI and VII. Amendment No. 201K, also to Clause 73, would omit subsection (3). That subsection relates to proceedings in Scotland in cases where a registered party admits liability but is challenging the amount of a claim. The procedure for settling such disputes is already laid down in rules of court; consequently subsection (3) is simply unnecessary.
    Amendment No. 208W also removes an unnecessary provision, in this case that in Clause 78(2)(c). Clause 78 sets out the form of the declaration which must be made by a registered treasurer when submitting his party's return as to campaign expenditure. It is clear from Clauses 72 and 73 that any late or disputed claims which have not been included in the return may only be paid in pursuance of a court order. As such, it is unnecessary for a treasurer to make a declaration to that effect. Other amendments in this group are of a minor technical character. Among other things, they ensure that in applying

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    certain provisions in Part V to recognise third parties and to permitted participants the appropriate adaptations are made.
    Lord Lucas: Perhaps I might briefly come back on the question of receipts. I trained as an accountant over 30 years ago and we had already abandoned receipts as a necessary document for an audit trail then. They had no value. If an invoice has been forged, forging a receipt is no problem. To check an invoice one must go back to the person who issued the invoice and ask, "Is this really yours? Were you paid for it?".
    The problem being pointed out by the noble Lord, Lord Rennard, is that there is no difficulty obtaining an invoice from British Telecom; it gives out invoices and we are made to pay them. But obtaining a receipt is God's own business. And it is something which is of no value to an audit trail. It adds nothing to its quality. It merely adds a great deal to the time taken to obtain it. It was abandoned a long time ago for public company auditing and should be abandoned now for the control of political expenditure.
    Lord Bach: Before the noble Lord, Lord Cope, who I believe is a distinguished accountant, speaks to the amendment—no, I am wrong. I thought that he was.
    Lord Cope of Berkeley: I am an accountant by training but not very distinguished!
    Lord Bach: I do not accept that distinction. Before the noble Lord becomes involved in the argument, perhaps I may say that we are grateful to the noble Lord, Lord Lucas. There appears to be much in what he says and we want to consider that aspect of the matter. We are trying to bring many electoral practices out of the Dark Ages but the noble Lord is encouraging us to move faster than we had intended. Perhaps we may go away and think about what he has said.
    Lord Rennard: I thank the Minister for that helpful reply and the noble Lord, Lord Lucas, for his comments. The utility companies were a bad example but there is a problem with many suppliers obtaining a receipt. The amount is not the only issue at stake but as regards election expenses the term used in current legislation is "voucher"; one has to produce a voucher to the value of £20 or more. An invoice may be sufficient on these occasions, but a signed receipt is too burdensome. One cannot expect parties to collect signed receipts for small amounts of money from every supplier across the UK in order to conform with the legislation. On that note, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 71 agreed to.
    Clause 72 [Restriction on making claims in respect of campaign expenditure]:
    Lord Bach Lord Bach moved Amendments Nos. 201D to 201G:
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    Page 46, line 3, after ("party") insert ("during any period which is, in relation to the party, a relevant campaign period (within the meaning of section 75)").
    Page 46, leave out lines 8 and 9 and insert ("not later than 21 days after the end of the relevant campaign period.").
    Page 46, line 10, leave out from ("paid") to end of line 11 and insert ("not later than 42 days after the end of the relevant campaign period").
    Page 46, line 26, at end insert—
    ("( ) Subsection (2) is without prejudice to any rights of a creditor of a registered party to obtain payment before the end of the period allowed under that subsection.").
    On Question, amendments agreed to.
    Clause 72, as amended, agreed to.
    Clause 73 [Disputed claims]:
    Lord Bach Lord Bach moved Amendments Nos. 201H to 201L:
    Page 47, line 12, after ("party") insert ("as mentioned in section 72(1)").
    Page 47, line 16, leave out ("section 72(1)") and insert ("that provision").
    Page 47, line 25, leave out subsection (3).
    Page 47, line 32, after ("claim") insert ("(whether it is disputed or otherwise) which is").
    On Question, amendments agreed to.
    Clause 73, as amended, agreed to.
    6.45 p.m.
    Clause 74 [Limits on campaign expenditure]:
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 201M
    Page 47, line 34, leave out subsection (1).
    The noble Lord said: These amendments are largely designed to make Schedule 8 a little easier to follow. I know that that objective will be warmly welcomed by noble Lords across the Committee. It is certainly welcomed by me. No doubt noble Lords opposite will say that they do not go far enough. We can certainly debate that point, but I would put it to them that the appropriate point to have such a debate may come later when we examine Amendments Nos. 205 to 208, the last of which seeks to remove paragraphs 8 to 11 of the schedule. For the moment, therefore, I will concentrate on setting out the purpose of these essentially drafting amendments.
    The bulk of the amendments in this group, by which I mean Amendments Nos. 202H to 202K, 203B, 205A, 205B, 206A, 207A, 208A, 208C, 208F, 208G and 208J to 208R, clarify the circumstances in which the limits in each of paragraphs 3 to 11 of Schedule 8 apply to a registered party. Perhaps I may illustrate the point by reference to paragraph 3 of Schedule 8, which relates to parliamentary general elections. As presently drafted, paragraph 3(1) states:
    "For the purposes of sections 74 and 75 this paragraph imposes limits in relation to a parliamentary general election".
    As amended by Amendment No. 202K, it would read:
    "This paragraph imposes limits in relation to campaign expenditure incurred by or on behalf of a registered party which contests one or more constituencies at a parliamentary general election".
    I hope that the Committee will recognise the improvement. The purpose of each paragraph will be far more transparent to the reader and, in particular, to parties' registered treasurers.
    The amendments to Clauses 74 and 75 largely flow from these changes. For example, as a result of the redrafting of paragraphs 3 to 11 of Schedule 8, subsection (3) of Clause 74 is no longer required. Subsection (1) of Clause 74, and the words
    "in connection with such elections"
    in subsection (2) are not required because they incorrectly imply that Schedule 8 imposes limits on campaign expenditure in relation to particular elections. In fact, Schedule 8 imposes limits on campaign expenditure in relation to relevant periods connected with particular elections. This approach reflects the fact that, in our view, campaign expenditure cannot be neatly apportioned between two or more different elections taking place in close proximity to each other.
    Amendments Nos. 202B to 202G and 203A are consequential to the introduction of a separate register for Northern Ireland parties. As a result, any campaign expenditure by a Northern Ireland party must be attributed solely to Northern Ireland, while campaign expenditure incurred by a party registered in the Great Britain register must be apportioned between England, Scotland and Wales. The task of apportionment is made easier by the removal of paragraph 2(2) of Schedule 8. That is the effect of Amendment No. 202F
    Both sub-paragraphs (2) and (3) of paragraph 2 are concerned with the apportionment of campaign expenditure between the different parts of Great Britain. There is some overlap between the two provisions and, in practice, whichever formula is applied the outcome is likely to be much the same. In the interest of simplification, paragraph 2(2) can therefore be omitted. I beg to move.
    On Question, amendment agreed to.
    Lord Bach Lord Bach moved Amendments Nos. 201N to 201R:
    Page 47, line 40, leave out (", in connection with such elections,").
    Page 48, line 1, leave out subsection (3).
    Page 48, line 8, leave out ("any limit imposed by Schedule 8") and insert ("that limit").
    Page 48, line 11, leave out ("any campaign") and insert ("the").
    On Question, amendments agreed to.
    Lord Cope of Berkeley Lord Cope of Berkeley moved Amendments Nos. 202:
    Page 48, line 15, leave out paragraph (b).
    The noble Lord said: Amendment No. 202 leaves out subsection 4(b) of Clause 74. It provides that the party is guilty of an offence if it spends more than it should in a general election or other elections covered by it. There is a difficulty about that because political parties do not exist as a legal entity. How can "the party" pay a fine? Who will pay the fine if the funds of
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    a political party are not sufficient to meet it? If the limit were exceeded to a great extent the fine could be very large.
    There appears to be nothing to stop a party vastly overspending and then going bust and I do not know what would then happen. Would the treasurer, the leader or the members of the party be personally liable? There could be a large number of members who would be very surprised suddenly to be presented with such a bill.
    The issue was discussed at length in another place but that was back in February. The then Minister, Mr Tipping, said that he would give Further consideration to it. I wonder what thought has been given not only to that matter during the eight months since that discussion but also to the type of fines which might be imposed and who will be responsible.
    Amendment No. 235, which arises later in the Bill, has a similar purpose. There is a difficulty about the Government's amendment which applies also to this one. Effectively, some of the campaigns will be continuous. After all, one has elections to Parliament at Westminster, to the European Parliament, to the Scottish Parliament and to the Northern Ireland and Welsh Assemblies. The national parties are involved in all of those elections. If the one-year period applies to each election, there will be an overlap. Remembering that the period applies one year before the election, if the next general election is in May 2001 the period in question goes back to May of this year. If the general election is to be in October next year, the limits already begin to apply. Even if the next general election is delayed to the last possible moment—May 2002—the limits will apply almost as soon as this Bill becomes an Act. Therefore, there could be difficulties, particularly bearing in mind that the £20 million limit, which the Committee will debate later, is lower than the sum spent by the major parties in the previous general election. Therefore, the restriction is not inconsiderable. I beg to move.
    Lord Renton: My noble friend raises an unusual and interesting matter. Vicarious liability, which is the liability of one person for the actions of another, arises generally where an employer of any kind—an organisation like a political party is one such—employs an individual, in particular anyone who holds a responsible office. Here the position is inverted, in that the employee in question, the treasurer or deputy treasurer, may be guilty of an offence but the liability appears to be that of the party overall. I am not sure what the Government have in mind. My noble friend is wise to raise this matter in order to see what lies behind the provision. This is the strangest example one can remember of vicarious liability.
    Lord Bassam of Brighton: Listening to the noble Lord, Lord Renton, it seems that we have probably invented a new term. The concept of "inverted vicarious liability" may add to the legal lexicon.

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    This is an important issue which comes down to the importance of having sanctions. If the limits on election and referendum expenditure are to be effective, it is axiomatic that they must be backed up by appropriate sanctions. Clause 74(4) provides that a party's treasurer or deputy treasurer is guilty of a criminal offence where he or she has authorised expenditure in excess of the prescribed limits. This offence is equivalent to the one in Section 76(1) of the Representation of the People Act 1983 which makes it an illegal practice for a candidate, or his election agent, to incur expenditure in excess of the constituency spending limit. Therefore, this territory is not entirely unfamiliar to political parties.
    However, we believe that it is right that some broader liability should attach to the party as a whole. Most political parties are unincorporated associations. Clause 143 provides for proceedings against such associations. Subsection (2) of that clause provides for the payment of fines out of their funds. Where overspending occurs, it may not always be appropriate to bring the weight of the law to bear on a single individual. The treasurer is acting on behalf of the party and it is the party which should attract its share of responsibility in the event that it exceeds the expenditure limit.
    In the case of overspending by individual candidates, they face the prospect of losing their seat if found guilty of an illegal practice. However, in the case of national party expenditure, it is not possible to envisage equivalent consequences. As the Neill committee conceded, it is inconceivable that the results of a general election could be set aside or all the seats gained by the errant party declared void. The Neill committee concluded at paragraph 10.124 that the only realistic sanction would be a heavy financial penalty.
    Clause 74(4)(b), which Amendment No. 202 would remove, makes provision for a party to be prosecuted for overspending. Clause 112(4), which Amendment No. 235 would delete, makes similar provision in relation to referendums. Clause 143 makes provision for proceedings to be brought against an unincorporated association for an offence under this Bill and for a fine to be paid out of the funds of that association.
    We believe that these provisions are proportionate to the need to deter overspending. Limits on campaign expenditure are a core element of this Bill, and it must be right that where the limits are exceeded not only the treasurer but the party itself faces criminal penalties. As the party opposite professes to support the recommendations of the Neill committee, I invite the noble Lord to withdraw the amendments.
    Lord Cope of Berkeley: I suppose that a little thought may have gone into this matter since February, but in any case I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 202A:
    Page 48, line 23, at end insert—
    ("(6) Where—

    (a) at any time before the beginning of any relevant campaign period (within the meaning of section 75), any expenses within section 67(2)(a) are incurred by or on behalf of a registered party in respect of any property, services or facilities, but

    (b) the property, services or facilities is or are made use of by or on behalf of the party during the relevant campaign period in circumstances such that, had any expenses been incurred in respect of that use during that period, they would by virtue of section 67(2)(a) have constituted campaign expenditure incurred by or on behalf of the party during that period,

    the appropriate proportion of the expenses mentioned in paragraph (a) shall be treated for the purposes of this section, sections 75 to 78 and Schedule 8 as campaign expenditure incurred by or on behalf of the party during that period.
    (7) For the purposes of subsection (6) the appropriate proportion of the expenses mentioned in paragraph (a) of that subsection is such proportion of those expenses as is reasonably attributable to the use made of the property, services or facilities as mentioned in paragraph (b).").
    On Question, amendment agreed to.
    Clause 74, as amended, agreed to.
    Schedule 8 [Limits on campaign expenditure]:
    Lord Bach Lord Bach moved Amendments Nos. 202B to 202K:
    Page 127, line 14, leave out ("registered party") and insert ("party registered in the Great Britain register").
    Page 127, line 15, leave out (", Wales and Northern Ireland") and insert ("and Wales").
    Page 127, line 17, leave out ("the United Kingdom") and insert ("Great Britain").
    Page 127, line 17, at end insert ("; and
    (b) campaign expenditure incurred by or on behalf of a party registered in the Northern Ireland register shall be attributed solely to Northern Ireland.").
    Page 127, line 18, leave out sub-paragraph (2).
    Page 127, line 30, leave out ("the United Kingdom") and insert ("Great Britain").
    Page 127, line 36, leave out ("the United Kingdom") and insert ("Great Britain").
    Page 127, line 40, leave out ("the United Kingdom)") and insert ("Great Britain)").
    Page 128, leave out lines 4 to 8 and insert—

    ("(1) This paragraph imposes limits in relation to campaign expenditure incurred by or on behalf of a registered party which contests one or more constituencies at a parliamentary general election.

    (2) Where a registered party contests one or more constituencies in England, Scotland or Wales, the limit applying to campaign expenditure which is incurred by or on behalf of the party in the relevant period in that part of Great Britain is—").

    The noble Lord said: I beg to move Amendments Nos. 202B to 202K which have already been spoken to.
    On Question, amendments agreed to.
    Lord Rennard Lord Rennard moved Amendment No. 203:
    Page 128, line 9, leave out ("£30,000") and insert ("£22,500").
    The noble Lord said: This amendment goes to the very heart of the Bill. The proposed national expenditure limit is probably the most significant proposal in the legislation and is at the heart of the

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    proposals of the Neill committee. This amendment provides that the national limit for a Westminster general election should be about £15 million, not £20 million.
    The Government will say that they propose the figure of £20 million because that is the total recommended by the committee chaired by the noble Lord, Lord Neill. However, that is not an argument as to why it is the right limit. The Government have chosen to vary the committee's recommendations in relation to Northern Ireland, tax concessions for political donations, overseas voters and in many other ways. The recommendation of the Neill committee is merely a compromise figure within that committee, not one to which anyone outside it should feel bound.
    I suggest that the prime purpose of the Bill is to curb the "arms race" on party spending in elections. At Second Reading, I illustrated the problem by looking at the growth in spending of the Conservative Party at successive general elections. In each of the 1974 general elections, it is calculated that the Conservative Party spent less than £100,000 on its national campaigns. By 1979, with the services for the first time of the noble Lord, Lord Saatchi, in charge of advertising, it was estimated that the party spent £2 million on its national campaign. That figure grew to £4 million in 1983, to £9 million in 1987, to £11 million in 1992 and to a staggering £28 million in 1997.
    I have heard some politicians argue that this money simply does not buy votes, but why else would the party seek to raise and spend such huge sums of money? It is not simply for fun. If we are to lessen the influence of money in buying an election and increase the power of the voter, there must be a national limit. A limit of £15 million seems more appropriate to me. It is almost 50 per cent higher than the sum of money spent by the Conservative Party in the last-but-one general election.
    If £11 million was enough for John Major to win re-election in 1992, then £15 million should be a sufficient limit now. Of course I do not believe that any amount of money would result in the election of his successor; I simply do not think that more than £15 million should be wasted attempting it. I cannot believe that the Government need more than £15 million at the next general election to make their case adequately. If they do, then their case must be very weak indeed.
    I am also concerned with the issue of the balance of constituency and national campaigning. If all the candidates for one party, standing in every seat, spent up to the last penny legally allowed in their constituencies, then they would be allowed to spend a total of only £5 million. The tight limit of around £8,000 within each constituency means that a candidate may not be, for example, able to afford advertisements in his or her local newspaper. But a candidate standing for a much richer rival party may benefit from the equivalent of up to £30,000 worth of advertising in his constituency in national newspapers or through poster billboards.
    That cannot mean a fair fight. Therefore, constituency expense limits should be increased so that the aggregate of constituency spending limits is far higher than about one quarter of the national spending limit.
    As evidence of the appropriateness of this £15 million limit, I can do no better than draw the attention of Members of the Committee to the evidence of the Labour Party as submitted to the noble Lord, Lord Neill. In a document entitled Transparency, Participation, Equality the Labour Party argued for exactly this limit of £15 million. It stated 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".
    That is exactly so. The £15 million limit is a figure for which Mr Martin Linton argued strongly in another place. He pointed out that most Members in the other place belonged to parties which argued for that limit. Indeed, more than 70 per cent of them belong to parties which supported a national limit of £15 million. Therefore, the £15 million limit proposed in the amendment would be more appropriate than the one proposed, more consistent with the aims of the Bill and in the best interests of our democracy. I beg to move.
    7 p.m.
    Lord Cope of Berkeley: It will come as no surprise to the noble Lord, Lord Rennard, that we do not support these amendments. The issues were debated at length in Committee in another place on 3rd February. It will not be useful to go over those arguments again. I simply point out that this seems to be the limit which was recommended by the Neill committee. The Government are sensible to stick to the Neill committee's recommendations in this respect, as in most, but not quite all, others.
    Lord Bassam of Brighton: I am in the peculiar position of barking against my own party on this occasion. I liked the point made by the noble Lord, Lord Rennard, about how much it might cost to elect William Hague. I actually think it might cost a good deal more.
    The limit of £30,000 per constituency, set out in Schedule 8, is designed to produce an aggregate figure of £19.77 million for a party contesting every seat at a general election. Amendments Nos. 203 and 204 would reduce the limit per constituency to £22,500 and, as the noble Lord has explained, maximum total expenditure of a party to a little under £15 million.
    The figure in the Bill is based on, and closely approximates to, the specific recommendation—as has been acknowledged—of the Neill committee. To be frank, the Labour Party, which has traditionally been outspent by the Conservative Party, suggested the lower figure. We would have been happier if the committee had recommended one. But a question of this kind is especially suitable for determination on a consensus basis by an independent committee. The Government are convinced that the best course—

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    perhaps the only proper course—is to adopt the Neill figure. 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.
    The Neill committee's figure is a substantial reduction on the £26 million to £28 million that the two largest parties spent at the last general election and offers a safeguard against any wild escalation of the political spending "arms race".
    I am glad that the noble Lord has reminded the Committee of the case for lower limits, but I am quite sure that we should stick, at this stage, to the Neill committee's recommendation. It will be for the electoral commission to keep the level of the limit under review and it will be open to the commission to propose a reduction. But that is for the future. In these circumstances I trust that the noble Lord will withdraw his amendment.
    Lord Rennard: I thank the Minister for his reply and in particular for his comment that the Government may have been happier if the Neill committee had been in favour of the Labour Party's proposal of £15 million. Is that perhaps because fresh consensus was required in order to have the lower limit? There is no consensus for the £20 million limit. Indeed, since the Labour Party want it so strongly, and people like Mr Martin Linton in another place argued it so eloquently, the only way in which one could establish perhaps a fresh consensus might be if members of the Government had the courage to stand by their own party's submission on this issue and support a £15 million limit.
    Earlier today noble Lords opposite argued that various items of electoral expenditure are being removed from the total; items such as utility bills, legal services, headquarters' costs and so. Since these factors have been taken out of the equation of total expenditure, it still seems to me appropriate that we should be reducing the £20 million limit more towards the expenditure on previous elections and not the perhaps wholly exceptional 1997 election expenditure. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Bach Lord Bach moved Amendments Nos. 203A and 203B:
    Page 128, line 10, leave out ("the United Kingdom") and insert ("Great Britain").
    Page 128, line 16, leave out from beginning to ("party") in line 17 and insert ("Where a registered party contests one or more constituencies in Northern Ireland, the limit applying to campaign expenditure which is incurred by or on behalf of the").
    The noble Lord said: These amendments have already been spoken to. I beg to move.
    On Question, amendments agreed to.
    [Amendment No. 204 not moved.]
    Lord Bassam of Brighton moved Amendment No. 204A:
    Page 128, line 18, at end insert—
    ("(4A) Sub-paragraph (4B) applies to a registered party in a case where at the election a candidate stands for election in any constituency in the name of that party and one or more other registered parties.
    (4B) In such a case, the amount applying to the party in respect of the constituency under sub-paragraph (2)(a) or (4) (as the case may be) shall, instead of being the amount specified in that provision, be that amount divided by the number of registered parties in whose name the candidate stands for election as mentioned in sub-paragraph (4A).").
    The noble Lord said: I beg to move.
    Viscount Astor: Perhaps I may ask the Minister a simple question. In an earlier debate on this issue the noble Lord assured me that the idea of having someone standing for one or more other registered parties was not a sinister precursor of a Lib-Lab pact, or indeed a pact with anyone else. He explained that it included the Co-operative Party. I thought that party was part of the Labour Party but the noble Lord pointed out that it was a separate party which is allied to the Labour Party. We are all grateful for that. Perhaps the Minister will confirm that when it comes to national and local campaigning limits the Co-operative Party and the Labour Party are taken as one entity. I presume that is the case, but I should be grateful for his confirmation.
    Baroness Gould of Potternewton: Perhaps from my own history I may reply to the noble Viscount. There is an agreement between the Labour Party and the Co-operative Party that candidates stand as Labour and Co-operative candidates. The Co-operative Party in itself does not put up candidates.
    Viscount Astor: I am grateful for that explanation. However, it still does not cover the point about campaign expenditure limits. I should be grateful if the Minister would reply to that point. What I do not know is whether the Co-operative Party spends any money separately. If it did, would that be covered?
    Lord Bassam of Brighton: The answer to the noble Viscount is, yes, it would. I have an imaginary example. If the Referendum Party could form an alliance with the Save the Pound Party, if such a party exists—I cannot recall—and field joint candidates, in such circumstances each party would enjoy an expenditure limit of, say, £19.230 million. That would undermine the whole system of controls. That is why Amendment No. 204A provides that where there are two or more parties fielding a joint slate of candidates the expenditure allowance for each seat is divided equally between them. I hope that clarifies the point and puts it beyond doubt.
    Lord Renton: Can the noble Lord tell us whether, historically, that has ever happened? Has any candidate ever been nominated for more than one party?
    Lord Bassam of Brighton: I gave the example earlier of Plaid Cymru and Green Party candidates in Wales. It apparently happened in the 1992 general election.
    Viscount Astor: We are all grateful for the Minister's explanation.
    On Question, amendment agreed to.
    Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 205:
    Page 128, line 19, leave out from ("period") to end of line 27 and insert ("means the general election period, as defined in section 58(6)").
    The noble Lord said: In moving this amendment, I wish to speak also to Amendments Nos. 206 to 208. Although these amendments should not be taken too literally, they give us the opportunity to raise the question of the period during which spending restrictions on political parties and others will apply. The Bill as drafted provides for spending limits to apply to political parties and third parties during theperiod of 365 days ending with the date of the poll. That is easy enough in the case of a European election or another election in which the date of the election is known a year in advance but it is much more difficult in the case of a general election where the date is not known in advance and where, therefore, parties cannot plan ahead.
    On an earlier amendment I remarked that we are probably already in the 365-day period for the next general election. I am not asking the Minister to reveal the Prime Minister's thinking on this matter. I just put it forward as a possibility that the election may turn out to be in either May or October next year. In those circumstances it could be quite difficult to apply the limits, the necessary accounting systems and so on.
    There is also the point that the limit as expressed in the Bill gives an advantage to the government of the day. The government of the day know, or at least the Prime Minister of the day knows, or has an idea—a better idea than anyone else—when the election is likely to be and can plan on that basis. The other parties do not have that advantage. If the election turned out to be delayed longer than they anticipated, they could be placed in a difficult situation.
    Amendment No. 208 seeks to highlight the complexity of the Bill in relation to overlapping elections. The paragraphs are extremely complex, in particular because they apply to elections of which we do not know the date as well as elections of which we do. It is difficult to understand exactly how the provisions are going to work. For quite a lot of the time we shall be in a pre-election situation for one election or another—potentially at any rate—and for quite a lot of the time for more than one election. Therefore, these are not theoretical provisions. They are provisions that will apply quite substantially. I beg to move.
    7.15 p.m.
    Lord Bassam of Brighton: In responding to these four amendments, I willingly confess and put up my hand to the fact that Schedule 8 to the Bill is hardly
    1102
    Enid Blyton standard bedtime reading. It is difficult and complex but it is a serious piece of lawmaking which is a vital part of the structure of campaign expenditure controls set out in Part V. These amendments would seriously weaken that structure. Indeed, I would go so far as to say that Amendment No. 205 would undermine its very foundations.
    Amendment No. 205 would reduce the period during which the controls on campaign expenditure would apply in relation to a parliamentary general election. As paragraph 3 of Schedule 8 stands, the relevant period for such an election is the period of 365 days prior to the date of the poll. The amendment cuts the relevant period to a period of just some 30 days beginning on the day an election is called. If adopted, the amendment would lead to a new "arms race" in election spending. Instead of being limited to a budget of some £20 million in the year before an election, the two main parties would be free to spend up to that amount in the final six weeks of the campaign and, on top of that, spend a further £10 million, £20 million or perhaps even £30 million or more in the weeks and months that proceeded a formal announcement of the date of the poll. Is this slide into American-style political campaigning really what the noble Lord wants?
    Amendments Nos. 206 and 207 appear to have much the same objectives, but it is not clear from these amendments when the noble Lord intends the relevant period for Scottish parliamentary and Welsh Assembly elections to commence. The noble Lord asked why paragraph 3 of Schedule 8 specifies 365 days. As with so much of the detail in the Bill, the answer can be found in the Neill committee report. The Labour and Conservative Parties each supplied figures to the Neill committee setting out their campaign expenditure in the run-up to the 1997 election. The Conservative Party indicated that in the 13-month period from April 1996 to May 1997 it spent some £28 million. The Labour Party's figure of some £26 million covered the 16 months from January 1996 to May 1997. It was on the basis of those figures that the Neill committee recommended a cap on election spending of £20 million. At paragraph 10.42 of its report the committee made it clear that in its judgment,
    "the new national spending limits should be set substantially below the total amounts spent by those [Labour and Conservative] parties in 1997".
    It is clear from the Neill committee's analysis that the objective of ending the "arms race" of election expenditure would not be achieved if the cap of £20 million was applied only in the immediate run-up to a general election.
    It is perfectly true that the committee came down against specifying a particular time period during which the expenditure controls should apply. The committee instead preferred to rely on the precedent established by the 1983 Act, which refers to election expenses incurred,
    "before, during or after the election".
    As we indicated in the White Paper, we are not persuaded that this approach will work. The Neill committee itself acknowledged that the absence of a

    1103
    clear time period in the 1983 Act had undoubtedly caused uncertainty. Without a clear set of rules, including a clear timetable, the two main parties might be tempted to engage in creative accounting, if only to ensure that the other side did not gain an advantage. Specifying the period of 365 days will ensure the necessary certainty and provide a clear level playing field between the two major parties.
    The fact that the precise date of a general election is not known well in advance is no hindrance to the operation of the scheme set out in the Bill. In practice, a political party can ensure that its campaign expenditure remains within the prescribed limits by adhering to those limits during any 365-day period. Parties will, in any event, wish to keep in reserve a significant proportion of their expenditure "allowance" for the formal campaign period following the announcement of the date of the poll.
    The noble Lord asked whether we are within the 365-day period for the next general election. Indeed, he suggested that that was the case. I fully admit to not knowing the answer to that question; indeed, it would be wrong if I did. However, at this stage of a Parliament, I would expect a prudent party treasurer to be operating on the basis that we are already inside the relevant period and to be planning the party's campaign expenditure accordingly. Of course, in the case of the next general election, the controls on campaign expenditure cannot apply until Part V comes into force. On the basis of our current plans, this will not be until February 2001. In the event that the next general election is held within 365 days of the commencement date—there must be a high probability of that unless Parliament goes the full term—Clause 151 enables lower limits to be applied to the reduced period. Consultation will of course take place with the main political parties as regards the appropriate level of the limits in those circumstances.
    Amendment No. 208 seeks to delete paragraphs 8 to 11 of Schedule 8. The noble Lord opposite clearly has a difficulty with these provisions, but we do not believe that simply striking them from the Bill would be the answer. I shall endeavour to guide the Committee through these paragraphs to explain how they fit in within the overall scheme. However, I also commend to noble Lords the Explanatory Notes to the Bill. These set out a number of worked examples to explain the circumstances in which these provisions would apply.
    Schedule 8 places limits on campaign expenditure not by reference to particular elections, but by reference to particular periods of time in which the elections will be held. The Government have opted for this approach because, in our view, it is unrealistic to expect expenditure in connection with one election to be perfectly and precisely delineated from expenditure in connection with another election which is going on at around the same time. If more than one election is imminent, advertising and other campaigning activities by a political party at the national level are likely to be devoted to achieving success at both elections. Any attribution of a share of the cost of this
    1104
    or that election would be likely to be artificial and unconvincing, as well as placing an additional administrative burden on party treasurers.
    Paragraphs 3 to 7 of Schedule 8 set the limits for parliamentary elections, European parliamentary elections and elections to the devolved legislatures, where there is no overlap in the relevant periods for those elections. Paragraphs 8 to 11 come into play where relevant periods do overlap. In essence, what these paragraphs set out to do is to define the combined relevant period where elections overlap and set a higher aggregate limit that is to operate during such combined periods.
    These paragraphs may appear complex, but that is because they need to cover all possible combinations of elections. In practice, the relevant periods for the various parliamentary and assembly elections are unlikely to overlap very often. As a consequence, for most of the time, paragraphs 8 to 11 can be disregarded.
    Paragraph 8 of Schedule 8 deals with a combination of elections to the European Parliament and to a devolved legislature. The date of these elections is generally fixed. Consequently, barring any extraordinary elections to the Scottish Parliament or to the Northern Ireland Assembly, we know that this paragraph will not apply until 2019. If the treasurer of the Conservative Party has any anxiety about what the relevant period and limits will be, say, in Scotland in 19 years' time, I can tell him. The relevant period will run from 3rd January 2019—that is, four months before the date of the Scottish parliamentary elections—until 9th June 2019; namely, the date of the European parliamentary elections. Assuming that the Conservatives will be fighting every available seat, the party will have an aggregate limit at today's prices of £1,876,000. What could be more straightforward than that? A noble Lord has asked whether that sum will be in euros. Even though I am tempted to make the conversion, that is a question to be reserved for a later debate!
    Paragraph 9 of Schedule 8 determines the campaign expenditure limits that apply during the period when a parliamentary general election is pending and overlaps with the relevant period for a European parliamentary election or for an election to a devolved legislature. For the purposes of this paragraph, a parliamentary general election is pending during the period between the date that the election is announced and the date of the poll. Political parties will certainly not need to worry about such a possibility in the case of the next general election, which must take place before May 2002; that is, nine months before the relevant period starts for the elections to the devolved legislatures in May 2003.
    Paragraph 9(4) of Schedule 8 will only ever apply if two parliamentary general elections are held within four months of each other. I think we can all agree that that is a most unlikely scenario.

    1105
    Paragraphs 10 and 11 deal with other possible permutations of combined election periods. As will be seen from the worked examples in the Explanatory Notes, the circumstances in which either of these two paragraphs would come into play are likely to be very exceptional indeed. Quite simply, no registered treasurer needs to lose too much sleep over these provisions. They have their place in the Bill and their underlying objective is straightforward. They should stand part of Schedule 8.
    Lord Cope of Berkeley: I said that the amendment was not to be taken too literally. The Minister has done that, albeit only briefly. However, I am not complaining too much. It has had the beneficial effect of drawing from him an explanation which has made the scheme appear rather more simple. Whether it does when we come to reflect on it is for the future. In the meantime, however, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendments Nos. 205A and 205B:
    Page 128, line 29, leave out sub-paragraph (1) and insert—
    ("(1) This paragraph imposes limits in relation to campaign expenditure incurred by or on behalf of a registered party which stands for election or (as the case may be) in whose name candidates stand for election at a general election to the European Parliament.").
    Page 129, line 2, leave out sub-paragraph (1) and insert—
    ("(1) This paragraph imposes limits in relation to campaign expenditure incurred by or on behalf of a registered party which contests one or more constituencies or regions at an ordinary or extraordinary general election to the Scottish Parliament.").
    On Question, amendments agreed to.
    [Amendment No, 206 not moved.]
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 206A:
    Page 129, line 30, leave out sub-paragraph (1) and insert—
    ("(1) This paragraph imposes limits in relation to campaign expenditure incurred by or on behalf of a registered party which contests one or more constituencies or regions at an ordinary election to the Welsh Assembly.").
    On Question, amendment agreed to.
    [Amendment No. 207 not moved.]
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 207A:
    Page 130, line 2, leave out sub-paragraph (1) and insert—
    ("(1) This paragraph imposes limits in relation to campaign expenditure incurred by or on behalf of a registered party which contests one or more constituencies at an ordinary or extraordinary general election to the Northern Ireland Assembly.").
    On Question, amendment agreed to.
    [Amendment No. 208 not moved.]
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendments Nos. 208A to 208S:
    Page 130, leave out lines 32 to 35 and insert—
    ("(1) This paragraph applies where (apart from this paragraph)—

    (a) separate limits would apply as follows to campaign expenditure incurred by or on behalf of a registered party in Scotland, Wales or Northern Ireland (as the case may be), namely—

    (i) under paragraph 4 in relation to a general election to the European Parliament; and

    (ii) under paragraph 5, 6 or 7 in relation to an election within that paragraph; and

    (b) any part of the period which would be the relevant period for the purposes of paragraph 4 falls within any part of the period which would be the relevant period for the purposes of paragraph 5, 6 or 7.

    (1A) In such a case—").
    Page 130, line 38, leave out from first ("of") to ("(as") in line 39 and insert ("the party in Scotland, Wales or Northern Ireland").
    Page 130, line 43, leave out ("a registered") and insert ("the").
    Page 130, line 43, after ("period") insert ("for the purposes of this paragraph").
    Page 131, line 1, leave out ("(except in the context of a period mentioned in sub-paragraph (1))").
    Page 131, leave out lines 6 to 11.
    Page 131, line 13, leave out sub-paragraph (1) and insert—
    ("(1) This paragraph applies where—

    (a) separate limits would (apart from this paragraph) apply as follows to campaign expenditure incurred by or on behalf of a registered party in England. Scotland, Wales or Northern Ireland (as the case may be), namely—

    (i) under paragraph 3 in relation to a parliamentary general election; and

    (ii) under paragraph 4, 5, 6, 7 or 8 in relation to an election or elections within that paragraph; and

    (b) the parliamentary general election is pending during any part of the period in relation to which the limit imposed by paragraph 4, 5, 6, 7 or 8 would (apart from this paragraph) apply.

    (1A) In such a case—

    (a) neither paragraph 3, nor paragraph 4, 5, 6, 7 or 8 (as the case may be) shall apply to the expenditure mentioned in sub-paragraph (1)(a); and

    (b) the limit or limits imposed by this paragraph shall apply to it instead.").

    Page 131, line 23, after ("period") insert ("for the purposes of this sub-paragraph").
    Page 131, line 46, leave out from ("Where") to ("the") in line 48 and insert ("sub-paragraph (1)(a)(i) is applicable in the case of each of two parliamentary general elections which are pending during different parts of any such period as is mentioned in subparagraph (1)(b),").
    Page 132, leave out lines 31 to 43.
    Page 132, line 45, leave out from beginning to end of line 5 on page 133 and insert—
    ("(1) This paragraph applies where—

    (a) a limit under paragraph 9 would (apart from this paragraph) apply to campaign expenditure incurred by or on behalf of a registered party in England, Scotland. Wales or Northern Ireland (as the case may be) in relation to a period that would either be—

    (i) a relevant period for the purposes of paragraph 9(2), or

    (ii) a first relevant period for the purposes of paragraph 9(4); and

    1107

    (b) another limit under paragraph 4, 5, 6, 7 or 8 applies to campaign expenditure incurred by or on behalf of the party in that part of the United Kingdom in relation to a period ("the other campaign period") which is not a period during which the parliamentary general election is pending but which either—

    (i) falls wholly within, or

    (ii) ends at any time falling within,

    the period mentioned in paragraph (a).

    (2) In such a case—").
    Page 133, line 11, leave out ("a registered") and insert ("the").
    Page 133, leave out lines 28 to 33.
    Page 133, leave out lines 36 to 45 and insert—

    ("(1) This paragraph applies where—

    (a) a limit under paragraph 3 would (apart from this paragraph) apply to campaign expenditure incurred by or on behalf of a registered party in England, Scotland, Wales or Northern Ireland (as the case may be);

    (b) another limit under paragraph 4, 5, 6, 7 or 8 applies to campaign expenditure incurred by or on behalf of the party in that part of the United Kingdom in relation to any period ("the other campaign period") which either—

    (i) falls wholly within, or

    (ii) ends at any time falling within,

    the period which would (apart from this paragraph) be the relevant period for the purposes of paragraph 3 in relation to the parliamentary general election; and

    (c) paragraph 9 does not apply in connection with that expenditure.

    (2) In such a case—").

    Page 134, line 2, leave out ("a registered") and insert ("the").
    Page 134, leave out lines 34 to 42.
    Page 134, leave out lines 43 to 49.
    On Question, amendments agreed to.
    Schedule 8, as amended, agreed to.
    Clause 75 [Returns as to campaigns expenditure]:
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendments Nos. 208T and 208U:
    Page 48, line 41, leave out from second ("the") to second ("that") in line 43 and insert ("relevant election (or, as the case may be, the polls for the relevant elections)").
    Page 49, line 10, leave out ("68(1)") and insert ("68").
    On Question, amendments agreed to.
    Clause 75, as amended, agreed to.
    Clause 76 [Auditor's report on return]:
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 208V:
    Page 49, line 32, leave out ("an auditor appointed") and insert ("the appointment of an auditor").
    On Question, amendment agreed to.
    Clause 76, as amended, agreed to. Clause 77 agreed to.
    Clause 78 [Declaration by treasurer as to return under section 75]:
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 208W:
    Page 50, line 24. leave out from ("71") to end of line 27.
    On Question, amendment agreed to.
    Clause 78, as amended, agreed to.
    Clause 79 agreed to.
    Lord Bach: I beg to move that the House do now resume. In moving this Motion, I suggest that we return to the Committee stage on the Bill not before half past eight.
    Moved accordingly, and, on Question, Motion agreed to.
    House resumed.

Single European Currency
7.30 p.m.
Lord Harrison Lord Harrison rose to ask Her Majesty's Government what are the practical advantages of the United Kingdom joining the single European currency.
The noble Lord said: My Lords, in opening the debate may I say how much I am looking forward to the contribution of my noble friend Lord Fyfe in his maiden speech. I hope that he will join with me in commending the urgency of the debate. It is high time that we set out for the British people what the euro can do for them, their friends and their families. I hope that tonight we can acquit that task.
Everyone in this Chamber believes in a single currency. Indeed, everyone outside in the streets of London believes in a single currency. Everyone in the towns, villages and hamlets of the United Kingdom understands unblinkingly the case, the concept and the utility of a single currency. How can I assert that with such confidence? Because the pound sterling is that single currency; our current single currency, operating in the four countries of the United Kingdom. Aye, and there's the rub.
This single currency works across the four countries of the UK, and despite devolution, and despite the aspiration of national parties such as Plaid Cymru and the SNP for independence, I have never heard that robust belief in the efficacy of a single currency challenged. Even the insensitivity of retaining the name of our national bank as the Bank of England has not provoked nationalist parties to advocate, say, the "red dragon" or the "blue thistle" as their single currency and emblem of national sovereignty. Rather the reverse. They support the introduction of the euro to help them enshrine independence.
I make these points to show that people understand the concept of a broader, trans-national single currency very well indeed. Why do they? Because they can see the chaos which would result if Britain were to fracture into four tribes supporting four separate national currencies. I live in the city of Chester in England and used to work in Wrexham, just over the border in Wales. Fortunately, I was never required to show a passport or change currency going to and from work. Indeed, I would have been very annoyed, returning across the border, to be paid in red dragons and to find that some of my hard-earned wages would

1109
disappear in the tax of currency exchange. Say I wanted to visit Chester racecourse and place a bet—a couple of red dragons on Red Rum perhaps. How annoying to win and then pay some of my winnings back because of those currency exchange costs.
The British people, then, back a trans-national single currency. What is in dispute is whether to trade up to a bigger version—that is, the euro. I believe that in adopting the euro the man and woman in the street would continue to enjoy all the advantages of a single currency, with which they are already familiar, but would do so across the wider canvas of the single market and the European Union. In Chester we recall the last time Europe had just such a successful single currency. We still dig up Roman coins from under the turf of England's oldest racecourse.
A single currency, therefore, bequeaths market stability, transparency of competition, elimination of wasteful conversion costs and hedging costs, while spiking speculators impervious to the general good. The added value of a European single currency is the release of the huge currency reserves otherwise locked away in dark, dank, bank vaults, which can be applied to rebuilding Britain's crumbling infrastructure, as evidenced today so tragically by our creaking trains. The economic and political influence earned by being a world currency will also benefit Britain. We have lost an empire but can find a currency and a settled place in the modern world.
But how does this affect the lives of men and women outside this House. Eurosceptics, in repudiating this larger single currency, must answer these charges. Why do you reject the promotion of competition which currency transparency brings to the heart of a single market? Do you believe in fair and free competition? Why do you deny consumers access to better services and cheaper goods, offered in ever greater variety and choice in the bigger market? Indeed, do you believe in choice? Why are you happy for shoppers to pay twice on goods and services when, for example, holidaying on the Continent or surfing the Internet and buying with e-commerce? Why do you want to stop people purchasing the best cars at the cheapest prices? Indeed, do you even acknowledge that the single market and the single currency have already helped to bring down car prices for the benefit of the British consumer?
Again, why do you wish to place burdens on small businesses? Without a single currency, they have to pay extra in transaction costs to suppliers across the market, and to use costly price lists which are one removed from their target customers in that single market. And for small businesses which do not participate in that single market, why do you wish to deprive them of the opportunity of accessing easier finance, cheaper mortgages and competitive insurance, produced by lower inflation, by lower interest rates and by the deeper liquidity of the money markets fostered by the creation of the euro?
Again, what have British tourists going abroad ever done to you that you wish them to throw away holiday spending money before ever setting foot on the
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continent? Changing pounds into euros means charging pence in penalties of commission and conversion costs. Indeed, why do you hamper our home grown tourism and hospitality industries with the burden of a strong pound? A strong pound means weak profits. But now we have a bouncing pound. This summer alone the pound has declined by 8 per cent against the dollar. No wonder that in future the American tourists will by-pass Britain and in passing "Go" will collect 200 euros saved in exchange costs on their way to the continent. For the Americans and the Japanese it is the pound, not the euro, that will be tomorrow's "Monopoly" money.
To the Eurosceptics I say why do you want to kick the farmers when they are down? The NFU support Britain's entry into the euro, but you do not. Yet, if ever there was a single market that bellows out for a single currency, it is the common agricultural policy. Why lock the farm gate on our farmers competing in that market, where at the moment the vagaries of the pound/euro exchange rate wreaks havoc on farm incomes?
And what about the National Health Service? Recently the Government have come under fire for spending money on preparing the NHS for the advent of the single currency. In my view, such money is well spent. Access to the single market in health products will enable us to create an even more effective and efficient health service, especially in procuring goods and services in the single market. I note that many of the medicines that I use, courtesy of the NHS. are sourced within the EU—in France, Ireland, Spain and Denmark. Were we to join the euro, those savings for the health service would increase. If, like the Danes, we remain outside the single currency, we will be confining ourselves to a Legoland of missed opportunities.
And what of the blind and the visually handicapped, many of whom are older folk? The single currency will help them to see their way round Britain and Europe. Why? Because the embossed notes of the new euro currency, combined with varied shapes and sharply differentiated colours for those with some residual sight, will help users to distinguish more easily between different denominations of banknotes. Familiarity will breed content for those who have to use their hands to see the colour of their money. Notes and coins in Britain compared, say, to Dutch and Belgian money are a disgrace, so user unfriendly they are to our visually handicapped. Why have we never done anything about that scandal in Britain? Adopting the single currency will make us a more socially responsive nation—and about time too.
The most unfriendly currency of all is the American dollar, which our Eurosceptics want to join. Its uniform size, colour and feel is as inimical as it comes. The euro has all to play for in competing with the dollar as a world currency, to serve the world's citizens as well as the markets.
America and Europe are the world's two biggest markets, but at present the EU does not match that market strength with global influence. In the recent Olympic Games, for instance, America won 97 medals, but euroland scored 180.
Our task now, in this House of quiet reflection and debate, is to help the British people to form a rounded and unhurried view of the necessity yet again to trade up their currency for something better. Who now groans for the groat? The euro will be the successful coinage uniting a united Europe.
7.40 p.m.
Lord Howe of Aberavon: My Lords, I begin by joining the noble Lord in looking forward to the speech that is to be made by his noble friend Lord Fyfe. I go on to congratulate the noble Lord, Lord Harrison, on initiating this debate and on packing as much material into 10 minutes as I have ever heard in my life—everything from the Roman Empire to British Rail, to the Olympic games and the euro too!
I should like to pick up the central point of the noble Lord's theme. He well illustrated the value of the single currency to the United Kingdom. It was a useful starting-off point. I want to emphasise the extent to which currency stability for the United Kingdom in relation to the rest of the world is of such enormous importance.
We who argue in favour of the euro often understate the case when we say that it will enable us to enjoy currency stability in relation to more than half our exports—the half that goes to the European Union market. What in fact it will achieve is a single currency for the overwhelming majority of all business transactions, exactly as the noble Lord pointed out. All our domestic transactions and all our transactions with the European Union, 85 per cent or more of all our activity, will be in one currency. It is that that the United States enjoys in relation to the vast bulk of its world trade; it is that that we are depriving ourselves of if we rule out membership of the single currency.
The noble Lord drew attention to the fact that the pound sterling is not as strong as it used to be. People have scarcely noticed the extent to which it has slid in the past few weeks. That has not caused much discomfort yet, but it begins to illustrate what could happen if, as almost everyone believes, the dollar begins to weaken against the euro and the euro to strengthen against the dollar. The pound will find itself wobbling uncertainly between these two large currency zones. My great fear is that, if we do not become part of the single currency zone, the pound will be forever a punchball currency.
I speak with the experience of five or six particular years when I worked alongside my noble friend Lady Thatcher. During that time, for most of which I was in the Treasury, the pound moved between $2.45 at one extreme, and near parity at the other. That is the risk to which we are exposed. That is the consequence of claiming to exercise sovereignty over our currency. What kind of sovereignty? In the words of my noble
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friend, you cannot buck the market. The best way of overcoming that is by putting ourselves, as we can and should do, into a single currency zone and enjoying the immense benefit of stability over the huge bulk of all our commercial transactions, domestic as well as in the European Union. That is a sensible case, and it cannot be overstated or stated too often.
The risk is of ours becoming a punchball currency at the mercy of the markets in relation to our domestic market of 60 million people. That is not a risk that we should accept. It is not a risk that we need accept.
7.43 p.m.
Lord Newby: My Lords, in a poll conducted by MORI in August and September, some 200 directors of medium and large companies were asked about politics, economics and the euro. Two-thirds said that they were Conservative voters; yet over 60 per cent said that they wanted Britain to join the euro either as soon as possible or immediately after the general election.
Why did that predominantly Conservative group oppose their own party's policy and support early British euro entry? They did so for three intensely practical reasons. First, they said that, because they traded with the EU, it made business sense. Secondly, they said that it would reduce uncertainty in import and export prices. Thirdly, they said that it would reduce the level of sterling.
For business, the certainty and transparency in pricing which euro membership would bring are major potential benefits. Price transparency will, relatively quickly, force companies to have a single price for their products for the whole euro area. Competitive pressure will ensure that this price is at the lower end of the range that they currently charge. This will bring clear benefits for the consumer, in that prices across the EU will move inexorably towards those in force in the lowest cost region for each particular good and service.
But perhaps more importantly, the general competitive pressure on prices will stimulate more rapid productivity growth. Given that productivity levels in the UK already lag behind those in much of the euro-zone, the longer the UK remains outside the euro-zone, the more likely we are to lag even further behind.
The Question on the Order Paper is, by custom, to ask the Government to explain the practical advantages of the UK joining the euro. It is particularly appropriate that on this issue the Question is directed at the Government themselves. The Chancellor has set out as one of his principal economic goals the improvement in productivity levels in the UK. It would, therefore, seem logical that he, as the Minister responsible more than any other for policy on the euro, would spell out clearly and repeatedly that euro membership would help boost UK productivity. His failure to do so, or indeed to set out the many other practical benefits to business and consumers is one of the principal reasons why the population at large—unlike many of the companies which are actually grappling with the consequences of our being outside

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the euro-zone—is confused and sceptical about why Britain should join. Perhaps this debate might nudge him and his ministerial colleagues to be rather more proactive.
7.47 p.m.
Lord Fyfe of Fairfield: My Lords, this is my first contribution to the affairs of this House. Let me say at the outset that I am grateful for the welcome that I have received and for the unfailing courtesy and consideration of all Members, officials and staff. I have been in commerce all of my working life. So it is something of a culture shock to observe the elaborate courtesies that often take place in this Chamber. However, political opponents need not be political enemies.
My business experience stems from the Co-operative Movement, serving as chairman of the Cooperative Wholesale Society (CWS), deputy chairman of the Co-operative Bank, director of the CIS, and not least as chief executive of the Midlands Co-operative Society. So my background is in mutuality and co-operatives. One can pay as little as £1 to join a mutual or a co-operative—although a friend of mine who is not persuaded of the virtues of co-operatives and mutuals said that he would happily pay £1 not to become a member! I have no illusions that mutuals and co-operatives must earn their place in a highly competitive environment by achieving commercial success.
Over the next few months, the debate about the United Kingdom entering the single European currency will gather steam. I, for one, do not wish to be drawn into a debate about timing. Government policy is clear: the decision whether or not to enter the single currency will be put to the country by the Government when it is apparent that the economic case is clearly and unambiguously in support of the UK's interests. In shorthand, this has become known as "Gordon's five tests".
However, as the debate about "when" gathers steam, I believe it is imperative that we do not lose sight of the practical advantages that entry will bring to many thousands of businesses and millions of consumers throughout the UK. We are talking about real advantages that will make a real difference—a real improvement—to the lives of people throughout this country.
Although I am new to this House, I bring with me (in all modesty) over 40 years' experience in the retail sector. It is therefore fair to say that I am familiar with the business world and, crucially, with consumers. Responding to, indeed predicting, the changing needs and desires of consumers has formed the basis of my professional career. It is with that understanding that I believe I can say with some confidence that entry into the single currency will bring about a better, fairer deal for business; and, most importantly, for consumers.
For retailers, joining the single currency will bring many challenges. Few of us would dare suggest that the transition from sterling to the euro will be straightforward. I well remember the teething
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problems of decimalisation in the early 1970s. Indeed, it will not be without cost. The introduction of new IT systems and the provision of staff training are merely two areas of probable additional cost. I am pleased that retailers are, for the most part, preparing to rise to the challenge. Our entry into the single currency zone will, over time, bring very real advantages for retailers and consumers alike. Cheaper transaction costs, greater exchange rate stability, as referred to by my noble friend Lord Harrison, and increased price transparency all represent practical advantages for retailers with a beneficial impact for consumers.
I have mentioned my 40 years' experience in the UK's retail sector—the last 11 of which were spent as chair of the Co-operative Wholesale Society, which is Britain's biggest firm. For the first time since the 1920s, the CWS has lost money in its farming operation, despite general recognition that we are one of the most efficient and effective farming businesses in the country. The reasons for that are many and I shall not go into them. But the strength of sterling against the euro is the crucial one. The strong pound—or, rather, the weak euro—is bad news for the British agricultural community. In January 1999, the euro was worth 70 pence. In the summer of this year, it fell as low as 57 pence. That means that, compared with 18 months ago, we are getting 20 per cent less for our crops.
Increased price transparency will also be of great practical advantage to farmers who, let us not forget, are also consumers. Greater transparency and simplicity in the pricing of supplies and equipment, from fertilisers to tractors will enhance their consumer power.
With my past experience on the board of the Co-operative Bank and my current role as chair of Unity Trust Bank, I am also aware of the opportunities and the advantages that the UK's entry into the single currency will bring. I thank noble Lords for their forbearance. I look forward to working with noble Lords and making a positive contribution to the deliberations of this House.
7.53 p.m.
Baroness Greengross: My Lords, I am delighted to be able to congratulate the noble Lord, Lord Fyfe, on his extremely interesting and very well-informed maiden speech. He gave us a very clear picture of the benefits that we shall gain if we join the euro and outlined some of the difficulties that we shall have to overcome in the process. Many of us already know that the noble Lord chaired the CWS for many years and that, during his chairmanship, the society merged with the CRS (the retail society) thus creating one of the biggest business enterprises in Britain. The noble Lord, Lord Morris of Manchester, knows the noble Lord, Lord Fyfe, very well and holds him in the highest esteem, as I know the whole House will do as they get to know him better and benefit from his vast experience, which will certainly enrich our work.
I turn now to the debate. Perhaps I may, first, declare an interest in that I am closely involved in the "Britain in Europe" campaign; in fact, I am one of its

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vice-chairs. I want to make only a very brief and rather simple point this evening but one that I believe to be important. There is a very widespread but mistaken belief that joining the euro will inevitably mean the creation of a federal European state.
The American dollar was the common currency in the United States well before the federal structure was established. Indeed, Arizona (a state that we now know best for its high-tech and very successful industry), joined the United States only in 1912. Other states followed even later, with Hawaii and Alaska joining in 1959. Other independent countries, especially some in Latin America—for example, Argentina and Ecuador—have pegged their currencies to the dollar but have not become part of the United States. Indeed, the Republic of Ireland was in a currency union with the United Kingdom from 1921 to 1979 and was certainly not part of this country. Moreover, Belgium was in a currency union with Germany for some time before the introduction of the euro, but it in no way lost its independence as a country and kept its own identity.
7.56 p.m.
Lord Tomlinson: My Lords, perhaps I may also join other speakers and pay a very warm tribute to my noble friend Lord Fyfe for the excellence of his maiden speech and for the detailed commercial experience that lay behind it. I am sure that the whole House looks forward to hearing from him on many other occasions when he will have much greater opportunity to develop his thoughts and his advice to us.
It goes without saying that the United Kingdom is an important trading nation. But to improve our living standards, our people need to be able to trade from the solidarity of a successful single market. That successful single market will not be fully operational without it having moved further than being just a market that has eliminated trade barriers between the member states; it needs to have the solidarity of a single currency to make that single market operate fully and effectively.
The benefits of such a single currency are not only those that are identified and associated with the reduced transactional cost to business, important though those factors are; it is the fact that separate national currencies do lead to irrational fluctuations which, in turn, lead to great business uncertainty—uncertainty that certainly hits small and medium-sized enterprises even more dramatically than it sometimes hits our larger companies, which can hedge their forward currency needs.
There are also enormous benefits to be received in such a single market from the greater price transparency that a single currency would bring. No longer will multinational companies be able to charge in local currency whatever they believe a local market will be able to bear. We can see that to the advantage of European consumers in much of the European Union, without enjoying those benefits ourselves.
A single currency also introduces certainty, not only about the level of profitability of a particular transaction, but also the certainty that, when you trade
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with other eurozone countries, you will be able to remit those profits knowing what value they will represent to the company balance sheet. Only by joining such a single currency will we in the United Kingdom be able to prevent the fluctuations that we have seen and the damage that they have caused.
Finally, I turn to the most important question; namely, the political influence that we exert on economic decision making. It is salutary that we are already finding ourselves on a number of occasions excluded from important discussions in the Economic and Finance Council of Ministers. Indeed, we are having to reduce ourselves to writing minutes protesting at our exclusion and are thus sitting on the sidelines of policy making when we really ought to be fully at the heart of Europe.
7.59 p.m.
Lord Watson of Richmond: My Lords, perhaps I may also join in the congratulations expressed to the noble Lord, Lord Fyfe, on his most interesting and very authoritative maiden speech. I should declare an interest here as a member of "Britain in Europe". I certainly think that the noble Lord's contribution in this House, and similar contributions in the future, will be of real assistance in this critically important argument.
In Warsaw on 6th October, in what was surely a very significant speech about Britain and Europe, the Prime Minister said:
"We cannot and will not take risks with Britain's economic strength".
He was, of course, referring to the famous five criteria. There must be a fear—widespread, I suspect, in this House—that at the end of the day these five criteria may be all too similar to the criterion for ERM membership of the noble Baroness, Lady Thatcher, which was, "When the time is ripe". At the end of the day that appeared to be determined by short-term considerations which were perhaps as much political as economic.
The fact is that if we are not to take risks with Britain's economic strength, we cannot and must not exclude ourselves from the euro. I believe that the reasons for that have already been outlined in the debate. However, I touch briefly on them. First, because of the scale of our trade within the single European market, the success of the single European market is critical to our prosperity. A single currency is in a real sense the precondition for realising the potential of the single market. It is what gives it scale and pace. That is the experience of other single markets which likewise have required single currencies, including, of course, our own here in the United Kingdom, as well as those in Japan, India and, above all, the United States.
Secondly, it is not in our economic interest to have the pound "bob" between the euro and the dollar. The noble Lord, Lord Harrison, described it as the "bouncing" pound. The bouncing pound is not in our interest or that of our businesses.

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Thirdly, the pound is too expensive for our own good. I declare another interest because I have for a long time closely studied Germany and I am president of the British-German Association. The Germans may have many reputations, but one they do not have is for being näve in terms of their own economic interest and particularly in terms of their own exports. If German tourists are good at landing their towels on the beach, German exporters are brilliant at maintaining and increasing their share of export markets. The fact is that German business has been united in its support for the euro. The reason for that is that, given German history, it has not been possible for Germany to reduce the value of the deutschmark in any way. It was the arrival of the euro which enabled Germany to do that. The result is what we now know: German exports are at an all-time high and the German trade surplus has risen extraordinarily.
To gain exchange stability at a competitive rate is clearly in the real economic interest of this country. If we are not to take risks—unacceptable risks, as the Prime Minister puts it—with the economic strength of Britain, the entry to the euro is something which must not, and cannot, be delayed.
8.3 p.m.
Lord Willoughby de Broke: My Lords, I am delighted that we are not having a referendum on the euro in the Chamber tonight because I feel that I might lose it!
This is rather like one of those radio games where you have three minutes to say how wonderful the euro is. I have not been disappointed in the speakers so far but they have skirted round the main issues. We usually hear empty threats that if we miss the various buses, trains, planes, bicycles and scooters that will take us to the promised euro dreamland, we shall be left eating dust if we do not join. That, of course, is utter rubbish. I pray in aid a quotation—I shall tell noble Lords who said this in a minute—
"Our economy is now the fourth largest in the world; at its strongest for decades; unemployment is at a 25 year low; record inward investment; long term interest rates below those of Germany".
The same speaker said on a different occasion:
"Britain boasts six of the top ten businesses in the whole of Europe, is a world leader in technology and communication and the businesses of the future … has overtaken France and Italy to become the fourth largest economy in the world".
The speaker also noted that Britain has the lowest overall tax burden of any large industrialised nation in the world except Japan and the USA and the lowest inflation rate in Europe. Who said that? I shall put noble Lords out of their misery; it was the Prime Minister, of course.
Therefore, I ask, why the euro? If we are doing so well, why do we need the euro? We have not heard a good reason tonight. Earlier this summer we heard threats that inward investment would disappear if we did not join the euro only a day before the bureau of inward investment—I believe that was its name—or some kind of government organisation announced that we had record inward investment far higher than
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any other country in the eurozone. Indeed, it appears that investment in the eurozone went down and ours went up. Therefore it seems clear to me that investment came in because we are not in the eurozone rather than because we are going to join it.
I worry a little about the euro. Who can forget the triumphalism at its launch and all the boasts that it would replace the dollar? How richly ironic that only a few weeks ago it was the dollar that scraped the euro off the floor like a punch-drunk boxer and led it back to its corner where it still remains breathing heavily and worth less than it was before the intervention.
But, of course, the real agenda, in spite of what the noble Baroness, Lady Greengross, said, is political; hence the result—that was extremely encouraging for us—of the Danish referendum. I should like to change the words of that wonderful song by Rodgers and Hammerstein to, "There is nothing like a Dane". If the Minister can explain why higher inflation, higher taxation and high unemployment are somehow good for Britain he will still have to explain why the euro project means political union. I shall sit down now as my time is up.
8.6 p.m.
Baroness Billingham: My Lords, I first thank my noble and excellent friend Lord Harrison for initiating tonight's debate. This is not the first time that my noble friend and I have sat in a parliamentary Chamber discussing this very issue, but it is the first time without headphones, instantaneous translation and 11 different languages ringing in our ears. So tonight is already significantly different and I want to add a further radical change and introduce yet a new language into our debate—the language of "lingua femina", a language to which women want to listen.
Why do I make this bizarre request? Look at the speakers' list; look around the House tonight; pick up the financial journals—where are the women in this debate? If they are not involved in it, why not? Equally seriously, look at any analysis of opinions of women on the subject of the euro. The majority of women are strongly against any change and frankly show little interest in the issue. Therefore we must change. We must talk about the euro in a way that relates directly to women's lives and to the lives of their families. Unless we do so we shall inevitably lose the argument.
The second thing I hope to do tonight is to sweep away some of the myths which surround the single currency and distort the debate, jeopardising rational argument and giving false justification for resisting change. There is one area in which I can claim parity with the Prime Minister; namely, in meeting with the WI. However, I have done much more. I have addressed women's groups up and down the country, business and professional women's groups, women in trades unions, women co-operators and lots and lots of WIs. The message from them is abundantly clear—they are fearful of change that could prove damaging to their families' finances. These are women most likely—although, I concede, not always—to have the day-to-day running of the family budget, balancing

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the books between buying food, paying rent, forking out for fares, putting trainers on lively feet and the other hundred items which form part of the family outlay. The last thing they need is a threat to an already tight budget.
The fear is real, but where does it stem from? Believe me, it goes back 30 years—my noble friend Lord Fyfe has already alluded to this—to decimalisation. I promise noble Lords that if I mention that "D" word in any room full of women it will be greeted with a groan.
Let us consider what some women currently believe on this subject. I give some examples from my own experience. I refer to myth 1 which I heard from a woman in the Northampton Trades and Labour Club who said,
"At the time of decimalisation inflation and interest rates soared, the value of our money was halved and the price of everything went up overnight".
The reality is that that is absolutely wrong; nothing like that happened. Any statistical record of the time will show that, following decimalisation, the economy was remarkably stable. There were no significant rises and the converted cost of goods was strictly controlled. But these myths colour judgment and must be rebutted at every opportunity. We must talk about the way this issue affects people's lives, whether in better jobs, better schools, better hospitals or better social welfare. That is the language we appreciate.
In conclusion, let us take heed of this agenda divide, for I believe that unless we do so we may win all the arguments but still lose the case, and that would be a very sad day for Britain.
8.10 p.m.
Lord Phillips of Sudbury: My Lords, I join other noble Lords in thanking the noble Lord, Lord Harrison, for this debate and congratulate the noble Lord, Lord Fyfe of Fairfield, on his maiden speech.
No one today has talked about the politics or political context in relation to the debate apart from a comparison by the noble Baroness, Lady Greengross, to America. I believe that that is no comparison. The Question asks what are the practical advantages of joining the single European currency. "Practical" is a funny little word sometimes used to fob off larger political issues. Until the Labour Party conference, that was consistently the Government's line on entry into the single currency; namely, that it is a purely economic issue to be decided according to five mechanical criteria. As a result of that and many other failures over 27 years to involve and consult the public, people are now suspicious and resentful. We need to start listening to the down to earth, concrete concerns of the man and woman in the street not just about the single currency but about the future of the European Union as a whole.
They are worried about its essentially bureaucratic nature; its impersonality and scale; its suffocating, clodhopping regulation; its oppressive complexity;
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and its uniformising and centralising tendencies. In short, so-called ordinary people feel utterly insignificant in relation to Europe. It is not "theirs".
It is frequently said in reply that the public are not interested in the European Union, or are ignorant or prejudiced, or all three. It is said that the duty of Westminster is to lead on the basis that the great unwashed will eventually catch up. Yet leadership implies followers and there are precious few behind those zealously marching towards ever closer union in Europe, in relation to which entry into the single currency would be a huge political step.
If noble Lords doubt that, let us consider the euro elections of May last year. Only 23 per cent of those entitled to vote did so. There were fewer still under-25 year-olds. Some ignore that writing on the wall saying that it was all the fault of the tabloids and the petty parochialism of most voters. Even if that were true—and I believe that it is a grossly patronising and out-of-touch judgment—it would only emphasise the democratic disaster of pushing on regardless. It would certainly intensify the existing estrangement of the British people toward the EU where, according to the EU's own six-monthly euro-barometer, only 22 per cent of our fellow citizens now think that membership is "a good thing". It would also play into the hands of the xenophobes.
My last point is the most practical. Democracy is bottom up or it is nothing. The EU is essentially top down. There is thus, I believe, a danger that its continuing integration so far outruns public allegiance here and elsewhere as to jeopardise its very survival. The realisation of that prospect would be as tragic as it is ironic.
8.14 p.m.
Lord Lea of Crondall: My Lords, I, too, congratulate my noble friend Lord Fyfe on an excellent maiden speech based on much practical experience.
It is true that we in this country have never been constitutional visionaries. Nothing could be further from our national history and temperament. We do not like taking steps into the unknown. But being outside the currency area will quickly be a step into the unknown. It is not we who are taking a step into the unknown. Those who would oppose our entry will be outside the superpower of which the central element will be the common currency. Who can then doubt that the real choice in Europe is between a two speed Europe with Britain outside or the difficult but historic compromise, which we can help to factor, between the continental and the global principles?
The pound will be caught between what I like to call the two tectonic plates of the euro and the dollar—to vary the metaphor of the noble and learned Lord, Lord Howe of Aberavon. But that leads to the next point in refuting a fallacy. We would be exposed to the shocks of external fortune, not the people in the eurozone. Those in the eurozone would be more protected against those shocks because of the extent of trade in their home market.

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We have to get the exchange rate right. But the announcement of serious negotiations would be the starting point towards reaching that result. I believe that the referendum could take place before or after the fixing of the rate. Perhaps the Minister will acknowledge that point, one way or the other, when responding.
I am glad that the noble Lord, Lord Willoughby, referred to inward investment. The living standard of the Republic of Ireland has now reached the European average. It stood at only 62 per cent 25 years ago. Let us make no mistake about it. The Irish are selling Ireland as the country inside the eurozone, full time, speaking English—not Britain. If noble Lords doubt me, that comes from the Irish investment board. Our labour agreements will also be in euros. I am sure that we shall be confident of winning this argument in a few years' time.
8.17 p.m.
Lord Taverne: My Lords, one of the crucial questions in a referendum debate will be the impact on consumers. I doubt whether there will be a more persuasive champion of the case for the euro than the noble Lord, Lord Fyfe, with his experience on the issue. He has given us a glimpse today of what he could contribute.
We have heard a great deal about the practical advantages of our joining the euro. I take up the point made by the noble Lord, Lea of Crondall, on the practical obstacle at present—the level of the pound. The noble Lord suggested that we must open negotiations as soon as possible. But he believed that the negotiations about the level of the pound could take place before or after a referendum. I take issue with him on that. The only way one could conduct the matter effectively is to have the negotiations before the referendum. We must know at which level we are going to go in. There must be some agreement; otherwise we appear to be arguing to buy a pig in a poke. Negotiations should take place once the Government have made up their mind. We should then aim at a rate that is sustainable.
The committee set up recently by the Liberal Democrats, chaired by Chris Huhne, MEP, produced a valuable report. It argued that a reasonable rate would be between 2.45 and 2.85 present deutschmarks and between 1.25 to 1.45 euros per the pound. The moment that those negotiations were opened they would have an effect on the market. Immediately the market would start to look at what would be a reasonable rate for the pound. I believe that the consequence would be favourable because the market would recognise that the present rate is not sustainable in the long term and that would have a downward effect on the pound.
We could also reasonably expect the level to stick once agreement had been reached. That would be beneficial. First, it would make the referendum realistic. Secondly, it would be beneficial because the downward pressure on the pound would help our farmers, manufacturers and those who now suffer
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from the high pound. We would expect it to stick because the experience of the other applicants was that in the period before they joined—the relationship between the currencies was fixed in January 1999—the very prospect of doing so steadied the market. It would be of great benefit in terms of the stability attained.
8.20 p.m.
The Earl of Northesk: My Lords, I thank the noble Lord, Lord Harrison, for bringing the matter to our attention. I also congratulate the noble Lord, Lord Fyfe, on his highly illuminating maiden speech.
I agree with the noble Lord, Lord Harrison, that the debate is urgent. The Chancellor of the Exchequer has observed that the decision on the single currency is probably the most important that this country is likely to take in our generation. That makes it essential that the issue is analysed in the round so that a balanced conclusion can be reached based on all the available evidence.
We can all perceive what the "practical advantages" may be. In addition, there are the Chancellor's five economic tests which, if satisfied—in my view, that is quite a big "if"—could translate into further practical advantages. The Minister will recall his recent reply to a Question from my noble friend Lord Blaker. He said:
"The treasury's five economic tests define whether a clear and unambiguous case can be made".
That is all well and good. The issue is important, if not crucial. However, just a few minutes later, in response to the noble Lord, Lord Marsh, who asked about the objectivity of the five tests, the Minister said:
"I do not know what is wrong with matters of opinion. We can agree that they"—
that is, the tests—
"are matters of judgment rather than of absolute certainty".—[Official Report, 3/10/00; col. 1261.]
If that is the case, it becomes more difficult to discern the practical advantages of joining the euro. As Victor Keegan has observed:
"Don't believe the proselytisers who argue that staying out would be suicidal or that entry would beget economic nirvana. They simply do not know. It is all a question of balancing unknown risks".
Here, it is the Minister's insistence (at col. 1263) that,
"if I say anything new, I apologise, because that is not my intention"—
that makes the Government's reticence towards the five tests so indigestible. It is an illusion to suppose that they are so set in aspic. As the Minister observed in the context of the Government's decision to intervene in the foreign exchange markets to support the euro:
"Circumstances change and we change with them; we did not we would be very foolish".—[Official Report, 9/3/00; col. 4.]
Which of those contradictory approaches do the Government believe to be correct? More importantly, would not a more pro-active approach define more clearly the potential advantages and disadvantages of the single currency?

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A counterpoint to the economic tests is the Government's attitude towards constitutional issues. To be fair, they have always maintained, even if more quietly than some would have wished, that entry to the single currency would involve some "pooling of sovereignty". However, the impression is that the Government's capacity to assess the issue in the round is constrained. At the very least, we, if not the public, should be told in detail the Government's view of what is involved. I hope that the Minister will address that. Flowing naturally from that, will he tell us whether the Government regard the "pooling of sovereignty", however it may be comprised, as a "practical advantage"? After all, the Government have called for a national debate on the single currency. Dare I say that they have a duty to engage in all aspects of that debate and to give it adequate time? Only then can the potential advantages and disadvantages of joining the single currency be properly understood.
8.24 p.m.
Lord McIntosh of Haringey: My Lords, it is no good the noble Earl, Lord Northesk, talking about adequate time. I am down to five minutes and I was supposed to have 12. I do not know how I am expected to answer under the circumstances.
It is all very well for you lot, because you can say what you like, whereas it is well known that I have to say exactly what the Treasury dictates. I have no shame in that, because it is right that we should have a consistent line, even though it is subject to the textual criticism that the noble Earl, Lord Northesk, enjoys. I sympathise with the noble and learned Lord, Lord Howe of Aberavon, who was reported in yesterday's Evening Standard as saying:
"I was made to say that we would join the exchange rate mechanism when the time was right. I repeated that so often that when I was asked about it on the continent, eventually people laughed at me each time that I used the phrase".
I am in that position and it is better for the Government that I should be.
Our policy on the single currency remains as set out by the Chancellor of the Exchequer in October 1997 and restated by the Prime Minister is February 1999. The Government firmly believe that, given the right economic conditions, a successful single currency within a single European market would be a benefit to Europe and to Britain.
The noble Lord, Lord Phillips, is right that there are political and constitutional issues as well, but the benefits would be realised only if the economic case for Britain joining economic and monetary union were clear and unambiguous. That has been shown by the vast majority of speakers, not least by my noble friend Lord Fyfe in his excellent, very well informed and authoritative maiden speech.
The national economic interest counts. The five economic tests, which I shall not repeat, are significant. I do not believe that the noble Lord, Lord Watson, was right to say that this is similar to the "time is right" argument on the exchange rate mechanism.
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They are real tests. Of course elements of judgment are involved, but the tests are so challenging that we do not believe that it is possible to make a decision on the basis of them during this Parliament. We need a period of stability and settled convergence before membership can be considered. The Chancellor has said that he will make another assessment of the five tests early in the next Parliament.
The noble Lord, Lord Willoughby, quoted the Prime Minister vaunting our economic success and suggested that that somehow showed that we should not join the euro. This country's economic success is a fact. I notice that the Conservative Front Bench makes no attempt to contest it. We have achieved a great deal of stability in the past three-and-a-half years in the public finances and in macro-economic conditions, but that does not mean that the advantages that have been described in this excellent debate are not still there.
We have made the necessary preparations during this Parliament so that if the tests are met, a decision to join can be made early in the next Parliament. Without preparation, that would not be a practical option. The British people should be able to exercise genuine choice.
Europe is fundamental to the economy. The issue is not just our existing trade with Europe. As the noble and learned Lord, Lord Howe, said, if we consider our internal trade as well, the vast majority of our economic activity will be in euros. As the Chancellor said in October 1997:
"The potential benefits for Britain of a successful single currency are obvious: in terms of trade, transparency of costs and currency stability".
There has been remarkable unanimity on currency stability in the debate. The noble and learned Lord, Lord Howe, drew attention to the risks of a punchball currency, the noble Lord, Lord Harrison, talked about the bouncing pound and the noble Lord, Lord Lea, referred to tectonic plates. They each made clear the importance of the issue.
I do not want to underestimate the importance of transaction costs—what the noble Lord, Lord Harrison, called the "red dragon"—but the issue goes much further. We need to make more progress and build on the foundations of the single market to improve the functioning of Europe's product, labour and capital markets. In product markets, for example, the emergence of price transparency should have a significant impact on price differentials across Europe. That has not happened yet. The noble Lord, Lord Tomlinson, was right to draw attention to the constraints that will be imposed on multinationals.
The transparency of the single market will make it easier for consumers to identify price differentials—the noble Baroness, Lady Billingham, made that point effectively—and encourage them to question why prices for similar products are so much higher in some European countries than in others. All those issues will be magnified by technological change and telephone sales. The Internet will make it easier for consumers to compare prices.

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One of the most serious challenges is for member states to push ahead with programmes of structural reform. We shall continue to argue that employability, flexibility, more structural reform of the product, labour and capital markets and stronger competition must be top priorities so that monetary union can be successful. Those measures are foundations for a modernised, high-skill, high-productivity European economy. They are the foundations for growth and job creation across Europe. They are ideas which lie at the heart of this Government's agenda, both domestically and in Europe, not only because of the euro but because they make sense in their own right. Britain is already playing a key role in taking them forward.

Political Parties, Elections and Referendums Bill
8.31 p.m.
House again in Committee.
Clause 80 [Controlled expenditure by third parties]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 208X:
Page 51, line 8, leave out subsections (2) and (3) and insert—
("(2) "Controlled expenditure", in relation to a third party, means (subject to section 82) expenses incurred by or on behalf of the third party in connection with the production or publication of election material which is made available to the public at large or any section of the public (in whatever form and by whatever means).
(2A) "Election material" is material which can reasonably be regarded as intended to—

(a) promote or procure electoral success at any relevant election for—

(i) one or more particular registered parties,

(ii) one or more registered parties who advocate (or do not advocate) particular policies or who otherwise fall within a particular category of such parties, or

(iii) candidates who hold (or do not hold) particular opinions or who advocate (or do not advocate) particular policies or who otherwise fall within a particular category of candidates, or

(b) otherwise enhance the standing—

(i) of any such party or parties, or

(ii) of any such candidates,

with the electorate in connection with future relevant elections (whether imminent or otherwise);

and any such material is election material even though it can reasonably be regarded as intended to achieve any other purpose as well.
(2B) For the purposes of subsection (2A)—

(a) the reference to electoral success at any relevant election is a reference—

(i) in relation to a registered party, to the return at any such election of candidates standing in the name of the party or included in a list of candidates submitted by the party in connection with the election, and

(ii) in relation to candidates, to their return at any such election; and

(b) the reference to doing any of the things mentioned in paragraph (a) or (as the case may be) paragraph (b) of that subsection includes doing so by prejudicing the
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electoral prospects at the election of other parties or candidates or (as the case may be) by prejudicing the standing with the electorate of other parties or candidates;

and, for the purpose of determining whether any material is election material, it is immaterial that it does not expressly mention the name of any party or candidate.").
The noble Lord said: I beg to move Amendment No. 208X, which is grouped with Amendments Nos. 208YA, 208YB and 208YG. I have already spoken to this group of amendments.
Viscount Astor: The noble Lord said that he has spoken to these amendments. He did not; he alluded to them in an earlier debate. We very purposely de-coupled them and, if the noble Lord bothers to look at the Marshalled List, he will see that they are de-coupled and are entirely separate. Frankly, it is not good enough for the Minister to skate over the issues that are raised on Clause 80. It is an important clause and some extremely important issues are part of it. We also referred to it to some extent during debate on an amendment to which the noble Lord, Lord Bach, replied on the subject of third parties. I have a number of questions relating to these amendments and the Minister will have to give a proper answer to the Committee this evening.
The government amendment which, as I said, was referred to in passing at an earlier stage effectively will rewrite in Clause 80 the definition of a "third party" for the purposes of elections. Amendment No. 208X is possibly the most important in the group. The definition of a third party in Clause 80 will affect dozens, and probably hundreds, of organisations. The definition of "controlled expenditure" in Clause 80 is crucial because it is by the very fact that organisations incur controlled expenditure that they are defined as third parties. The definition of a "registered political party" depends on whether or not it stands candidates at elections. That is quite straightforward.
However, the attempt to define third parties by reference to the type of item on which they spend money means that the situation is more complicated. Indeed, perhaps I should suggest to the Committee that this is something of a grey area.
Under Clause 83 an organisation is obliged to register with the electoral commission as a recognised third party if it spends more than £10,000 a year on controlled expenditure; otherwise, criminal sanctions kick in. The effect of registration as a recognised third party is to limit the amount of controlled expenditure that the organisation or individual can incur in a single year to £988,500 in the whole of the United Kingdom.
The definition of controlled expenditure is, as I said, crucial. The amendment broadens the definition considerably. Controlled expenditure is the money spent on what is termed as "election material". The amendment makes clear that election material is that which can "reasonably be regarded" as promoting or, indeed, prejudicing the electoral fortunes of a particular party or candidate. That includes the publication of material that may be related to issues on

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which candidates or parties have particular policies or opinions, even if the material does not mention the candidate or party by name.
The net is cast even wider by the words at the end of new subsection (2A) in Amendment No. 208X, which states,
"any such material is election material even though it can reasonably be regarded as intended to achieve any other purpose as well".
That definition is very wide. The definition,
"reasonably be regarded as intended to achieve",
is one that I feel is bound to end up in the courts. I do not understand how anyone can reasonably be expected to define that under the Government's thinking. I believe that as soon as the Bill becomes an Act, as night follows day we shall end up in the courts for definition. That is unsatisfactory.
As I said, both Amendment No. 208X and the Bill as drafted will cast the net very wide. I am thinking not only of organisations such as Britain in Europe and Business for Sterling which campaign for or against United Kingdom entry into the single currency. That was referred to by the Minister earlier during the Committee stage. Given that the euro is a hot political topic—certainly, one might say, a hot potato—for the Government and, indeed, probably for all political parties, the material issued by such organisations will mean that they must register as recognised third parties.
Earlier my noble friend Lord Cope talked about the example of the Royal Society for the Prevention of Cruelty to Animals. He raised various issues and the noble Lord, Lord Bach, kindly said that he would write to my noble friend. However, he raised issues on a rather narrow point and I believe that it is important that we expand on them because it is not only that one organisation which will be caught.
However, the RSPCA provides a good example. It runs campaigns on many issues. Earlier I looked at its website, which stated:
"The RSPCA is strongly opposed to the hunting of foxes, deer, mink and hares with dogs, believing that these activities are both cruel and unnecessary as control measures".
It gives a range of information in relation to hunting and urges visitors to the site to write to their MP in support of a complete ban on hunting. The noble Lord, Lord Bach, said earlier that that issue would come under, I believe, Part VI of the Bill but he was not sure to what extent it was covered.
Wider issues arise here. The RSPCA deals not only with single issues such as hunting; it lists campaigns on topics such as live animal transport, the welfare of pigs, cosmetic testing and, indeed, fur farming. That is the subject of a Bill which is before your Lordships' House at present; it is going through its Committee stage.
We need to know the Government's thinking on this matter, but the only view that we have heard so far is that the Government are not sure. However, when they tabled the amendment they must have had a view on whether the material produced by this type of
1128
organisation would fall within the scope of the definition of election material, whether on a website or not. All politicians who stand for election have opinions, and that is the term used in the government amendment on such controversial issues as, for example, fur farming. Therefore, as I understand it, campaigns on those issues by groups such as the RSPCA clearly would fall within the definition in new subsection (2A) in Amendment No. 208X, even if their primary purpose was not electoral, although we know, of course, that they may influence the result of an election.
If my analysis is correct, the result would be that the RSPCA would be forced to register as a recognised third party with the electoral commission and restrict its spending on such material to just under £1 million per year. I do not know how much that organisation spends and it probably spends a great deal more than that. Personally, I am entirely on the other side of the argument, so for my part the less it is allowed to spend the better. However, I have no idea whether it spends £1 million or more than £1 million. I do not have a clue. But that is not the point. I have just used the RSPCA as an illustration of what I am talking about.
Certainly, if such an organisation spent more than £10,000 in the year before an election, Schedule 19 tells us that its financial officers would be liable to a criminal conviction and, on indictment, to an unlimited fine.
I used that example because it was an example used earlier. But, indeed, there are many other groups dealing with a whole range of issues which are affected; for example, the Countryside Alliance, Friends of the Earth, the Road Haulage Association, the Refugee Council, the British Medical Association, the Confederation of British Industry and even the Electoral Reform Society might be caught by the Bill's provisions. All those bodies issue material on political issues which could fall within the definition provided by Amendment No. 208X.
Therefore, the Government are seeking to limit the spending of those organisations. That might be the purpose of the amendment. If so, the Government must come clean and say whether it is; whether or not it is meant to include those organisations. We do not know and the Government have not made it clear. The Minister did not make it clear when he alluded earlier to those amendments. Therefore, I shall press him to do so now.
One of the important effects of making those organisations part of that is that they then fall into the limits which relate to 365 days before an election. Those organisations may have less of an idea as to when an election is to be called than some of the political parties. Therefore, we need to have clearly on the record the Government's view on this matter as to what they believe will be caught by the provisions of this amendment.

1129
There is one other issue which I should mention. It seems to me that there are clear implications here relating to the Human Rights Act and freedom of speech. I should like to know whether the Government and the Minister have taken that into consideration and whether they are sure that the amendments do not fall foul of any of that legislation. I am sure that they have considered that matter but it would be useful to know from the Government that they have indeed considered it and they do not perceive that it is a problem.
8.45 p.m.
Lord Bassam of Brighton: Perhaps I may deal with the last matter first. I would not have signed the front of the Bill if I thought that the legislation which we were putting forward to your Lordships' House in any way contravened the Human Rights Act.
The noble Viscount has sought to see complexity and perhaps something more sinister about these amendments than pertains in reality. Amendments Nos. 208X and 208YB to Clause 80 merely seek to bring the definition of "controlled expenditure" into line with the revised definition of "campaign expenditure".
If an organisation runs a campaign urging people to vote for a party which favours retaining the pound or banning fox hunting, it is right that such an organisation should be subject to the controls contained in Part VI. If that means that, for example, the RSPCA has to register, then so be it. That seems to me to be entirely right. It should do so and should be regulated accordingly. If expenditure went unregulated, it would undermine the system of controls that we have put in place.
Material aimed at achieving, for example, a ban on hunting by inviting the electorate to vote for candidates of a party which supports a ban would fall within the closing words of the proposed Clause 80(2A). Although aimed at achieving a ban, it would also influence the election itself. Therefore, it must be right that that material would be caught by the provisions of the amendment.
The noble Viscount took exception to the final lines of the proposed subsection (2A). He seemed to be upset by the words,
"any such material is election material even though it can reasonably be regarded as intended to achieve any other purpose as well".
My guess is that that is designed to cover something which during an election period might promote the party, even though it did not promote an individual candidate. For example, it might promote a surgery that a candidate is running in the constituency. Although that in itself is not necessarily in the business of securing extra votes for the particular candidate, it would obviously be designed in part to offer a full range of services and enhance the attractiveness of that particular political party.
But in overall terms it is right that that should fall within the terms of incurring expenditure which should be attributed towards election expenditure. I
1130
hope that that answers the points which the noble Viscount raised. I ran through the issues perhaps not in the depth which the noble Viscount would have liked. But I believe that I have dealt with the issues which he raised and I trust that with those explanations he will feel contented with our amendments.
Viscount Astor: I am grateful to the Minister for his explanation. As he knows, I was not arguing for either the inclusion or exclusion of a particular organisation. I merely used the RSPCA as an example. But he has confirmed quite clearly that a large number of organisations which, whether they be charities, lobbying groups or whatever, will now fall within the provisions of Clause 80 as amended by these amendments.
It is important that we should all recognise that. I suspect that many of the organisations do not realise at the moment that they may be caught by the provisions of the Bill and some of them may be quite surprised to find that they must register. I do not know what consultation the Government have undertaken in regard to those organisations. We shall want to consider this matter between now and Report stage. I am sure that representatives of many of the organisations involved will want to come along and talk to the Government about it.
As amended, this clause has broadened the ambit of those organisations which might be included. The Government have made an important statement that they wish those organisations to be included. We shall all wish to read carefully what the Minister has said.
Lord Bassam of Brighton: We made it quite clear both in the White Paper and also when the draft Bill was published that those organisations would fall to be caught within the terms of the legislation if they campaigned in that particular way. They are on notice, understand and appreciate that.
The noble Viscount may well have a point on this matter but we have not received any particularly strong reaction or backlash against this. Charities and voluntary organisations understand the implications of the legislation and realise that it is quite right that they should be regulated.
Viscount Astor: I am sure that the Minister is right but he will not receive representations until the organisations concerned have seen the amendments which define and explain the Government's thinking. Amendment No. 208X crosses the "i"s and dots the "t"s. I believe that this will come as surprise for some of those organisations. I do not comment as to whether it will be a good or bad surprise. That is an issue which we shall want to consider. However, the reason for this debate is to clarify the government thinking behind Clause 80 and the issues raised. I am grateful for the Minister's explanation. I am sure that we shall look at this area again when we come to Report stage.
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendments Nos. 208Y to 208YB:
Page 51, leave out lines 40 to 43 and insert—

("(a) if the third party is an individual, that individual;

(b) if the third party is a registered party—

(i) the treasurer of the party, or

(ii) in the case of a minor party, the person for the time being notified to the Commission by the party in accordance with section 83(3)(b)(iii); and

(c) otherwise, the person or officer for the time being notified to the Commission by the third party in accordance with section 83(3)(c)(ii).").

Page 52, leave out lines 1 and 2 and insert—
("(b) subject to subsection (7A), any registered party.
(7A) In connection with the application of subsection (2) in relation to expenses incurred by or on behalf of a third party which is a registered party, any reference in subsection (2A) to a registered party or registered parties or to any candidates does not include—

(a) the party itself, or

(b) any candidates standing in the name of the party at any relevant election or included in any list submitted by the party in connection with any such election,

as the case may be.").
Page 52, line 2, at end insert—
("( ) In this section "candidates" includes future candidates, whether identifiable or not.").
On Question, amendments agreed to.
Clause 80, as amended, agreed to.
Clause 81 [Notional controlled expenditure]:
Lord Bach Lord Bach moved Amendments Nos. 208YC to 208YF:
Page 52, line 3, leave out subsections (1) and (2) and insert—
("(1) This section applies where, in the case of a third party—

(a) either—

(i) property is transferred to the third party free of charge or at a discount of more than 10 per cent. of its market value, or

(ii) property, services or facilities is or are provided for the use or benefit of the third party free of charge or at a discount of more than 10 per cent. of the commercial rate for the use of the property or for the provision of the services or facilities, and

(b) the property, services or facilities is or are made use of by or on behalf of the third party in circumstances such that, if any expenses were to he (or are) actually incurred by or on behalf of the third party in respect of that use, they would be (or are) controlled expenditure incurred by or on behalf of the third party.

(1A) Where this section applies, an amount of controlled expenditure determined in accordance with this section ("the appropriate amount") shall be treated, for the purposes of this Part, as incurred by the third party during the period for which the property, services or facilities is or are made use of as mentioned in subsection (1)(b).
This subsection has effect subject to section 82.
(1B) Where subsection (1)(a)(i) applies, the appropriate amount is such proportion of either—

(a) the market value of the property (where the property is transferred free of charge), or

(b) the difference between the market value of the property and the amount of expenses actually incurred by or on behalf of the third party in respect of the property (where the property is transferred at a discount),

1132
as is reasonably attributable to the use made of the property as mentioned in subsection (1)(b).
(1C) Where subsection (1)(a)(ii) applies, the appropriate amount is such proportion of either—

(a) the commercial rate for the use of the property or the provision of the services or facilities (where the property, services or facilities is or are provided free of charge), or

(b) the difference between that commercial rate and the amount of expenses actually incurred by or on behalf of the third party in respect of the use of the property or the provision of the services or facilities (where the property, services or facilities is or are provided at a discount),

as is reasonably attributable to the use made of the property, services or facilities as mentioned in subsection (1)(b).").
Page 52, line 30, leave out ("and") and insert ("or").
Page 52, line 37, leave out subsection (4) and insert—
("(4) Where an amount of controlled expenditure is treated, by virtue of subsection (1A), as incurred by or on behalf of a third party during any period the whole or part of which falls within any period which is a regulated period (as defined by section 89(6)(a)), then—

(a) the amount mentioned in subsection (4A) shall be treated as incurred by or on behalf of the third party during the regulated period, and

(b) if a return falls to be prepared under section 91 in respect of controlled expenditure incurred by or on behalf of the third party during that period, the responsible person shall make a declaration of that amount,

unless that amount is less than £200.
(4A) The amount mentioned in subsection (4) is such proportion of the appropriate amount (determined in accordance with subsection (1B) or (1C)) as reasonably represents the use made of the property, services or facilities as mentioned in subsection (1)(b) during the regulated period.").
Page 52, line 45, at end insert—
("( ) Paragraph 2(3) and (4)(a) of Schedule 10 shall apply with any necessary modifications for the purpose of determining, for the purposes of subsection (1), whether property is transferred to a third party.").
On Question, amendments agreed to.
Clause 81, as amended, agreed to.
Clause 82 [Expenditure by third parties which is not controlled expenditure]:
Lord Bach Lord Bach moved Amendment No. 208YG:
Page 53, line 5, leave out ("(otherwise than by the third party)").
On Question, amendment agreed to.
[Amendment No. 209 not moved.]
Lord Bach Lord Bach moved Amendment No. 209A:
Page 53, line 10, leave out from ("of") to end of line 12 and insert ("expenses falls (in accordance with any enactment) to be included in a return as to election expenses in respect of a candidate or candidates at a particular election,").
On Question, amendment agreed to.
Viscount Astor Viscount Astor moved Amendment No. 210:
Page 53, line 15, leave out paragraph (a).
The noble Viscount said: I understand the purpose of the Government's intentions in this Bill. The Bill reads:
"publication of any matter relating to an election, other than in an advertisement".
It then mentions "newspaper or periodical". This is a probing amendment. Supposing, like the noble Lord's friend, Mr Robinson, a Member in another place, one buys a magazine such as the New Statesman, what would happen if one wanted to publish an advertisement that is covered by the Bill? Buying a magazine may be cheaper than buying a newspaper, but plenty of newspapers appear to be up for sale at the moment so it may be cheaper to buy a newspaper or a magazine than to place an advertisement. Would that count? I beg to move.
Lord Bassam of Brighton: Perhaps I should explain what this clause achieves before I answer the point raised by the noble Viscount. The clause exempts from the controls on third party expenditure the print and broadcast media and it reflects the current situation under the Representation of the People Act 1983. The answer to the question posed by the noble Viscount is that it would depend who bought the newspaper. If a party bought the newspaper and the party used it as a campaigning tool, my guess is that it probably would not be exempted. We shall have to look at that. I believe that is the situation.
Viscount Astor: What would happen if I bought the newspaper or the noble Lord, Lord Alli, who I see is in his place, bought the newspaper? Would that count?
Lord Bassam of Brighton: Would that we were all as rich as the noble Viscount and could afford to buy a newspaper. That was a facetious observation. Apparently, there is case law on the equivalent provision in the 1983 Act to the effect that a "newspaper" is not something issued purely for political purposes. That would not be the case in respect of the publications to which the noble Viscount has referred, including the Daily Telegraph.
Viscount Astor: I thank the Minister for that reply. Of course, at one point my family owned newspapers in this country, but we gave that up quite a long time ago. I have no intention of buying a newspaper unless I find a generous benefactor. Someone may come along and back the Minister to buy a newspaper. One never knows. I beg leave to withdraw the amendment.
Lord Bassam of Brighton: While I do not own the Evening Argos, it gives me ample support from time to time!
Lord Alli: Perhaps I may say that I can give no such undertaking!
Amendment, by leave, withdrawn.
Clause 82, as amended, agreed to.
Clause 83 [Third parties recognised for the purposes of this Part]:
Lord Bach Lord Bach moved Amendments Nos. 210A to 210E:
Page 53, line 34, leave out paragraphs (a) to (c) and insert ("the third party is—

(a) an individual resident in the United Kingdom or registered in electoral register (as defined by section 49(8)),

1134

(b) a registered party, or

(c) a body falling within any of paragraphs (b) and (d) to (f) of section 49(2).").

Page 53, line 41, at end insert ("or (if he has no such address in the United Kingdom) his home address elsewhere").
Page 53, line 43, leave out from beginning to end of line 15 on page 54 and insert—
("(b) if given by a registered party, state—

(i) the party's registered name,

(ii) the address of its registered headquarters, and

(iii) (in the case of a minor party) the name of the person who will be responsible for compliance on the part of the party with the provisions of Chapter II,

and be signed by the responsible officers of the party (within the meaning of section 59); and
(c) if given by a body falling within any of paragraphs (b) and (d) to (f) of section 49(2), state—

(i) all such details in respect of the body as are required by virtue of any of sub-paragraphs (4) and (6) to (8) of paragraph 2 of Schedule 5 to be given in respect of such a body as the donor of a recordable donation, and

(ii) the name of the person or officer who will be responsible for compliance on the part of the body with the provisions of Chapter II,

and be signed by the body's secretary or a person who acts in a similar capacity in relation to the body.").
Page 54, line 18, leave out ("relevant notification date") and insert ("date on which it is received by the Commission").
Page 55, line 4, leave out subsection (9).
On Question, amendments agreed to.
Clause 83, as amended, agreed to.
Clause 84 agreed to.
Clause 85 [Restriction on incurring controlled expenditure]:
Lord Bach Lord Bach moved Amendment No. 210F:
Page 55, line 28, at end insert—
("( ) Where, in the case of a recognised third party that is a registered party, any expenses are incurred in contravention of subsection (1), the expenses shall not count for the purposes of sections 89 to 94 or Schedule 9 as controlled expenditure incurred by or on behalf of the recognised third party.").
On Question, amendment agreed to.
Clause 85, as amended, agreed to.
Clause 86 agreed to.
Clause 87 [Restriction on making claims in respect of controlled expenditure]:
Lord Bach Lord Bach moved Amendments Nos. 210G to 210L:
Page 56, line 9, after ("party") insert ("during any period which is a regulated period (as defined by section 89(6)(a))").
Page 56, leave out lines 14 and 15 and insert ("not later than 21 days after the end of the regulated period").
Page 56, line 16, leave out from ("paid") to end of line 17 and insert ("not later than 42 days after the end of the regulated period").
Page 56, line 32, at end insert—
("( ) Subsection (2) is without prejudice to any rights of a creditor of a recognised third party to obtain payment before the end of the period allowed under that subsection.").
Page 56, line 38, at end insert ("; and
( ) any reference to the treasurer or deputy treasurer of the registered party were a reference to the responsible person in relation to the recognised third party.").
On Question, amendments agreed to.
Clause 87, as amended, agreed to.
Clause 88 [Disputed claims]:
Lord Bach Lord Bach moved Amendments Nos. 210M to 210S:
Page 56, line 41, after ("party") insert ("as mentioned in section 87(1)").
Page 57, line 3, leave out ("section 87(1)") and insert ("that provision").
Page 57, line 12, leave out subsection (3).
Page 57, line 16, leave out ("Subsections (4) to (7) of section 72") and insert ("For the purposes of this section—
(a) subsections (4) and (5) of section 87").
Page 57, line 19, after ("claim") insert ("(whether it is disputed or otherwise) which is").
Page 57, line 19, leave out (" 72(1)") and insert (" 87(1); and
(b) subsections (6) and (7) of section 72 shall apply as if any reference to subsection (4) of that section were a reference to section 87(4) as applied by paragraph (a) above.").
On Question, amendments agreed to.
Clause 88, as amended, agreed to.
Clause 89 [Limits on controlled expenditure by third parties]:
Lord Rennard Lord Rennard moved Amendment No. 210T:
Page 58, line 8, leave out ("£10,000") and insert ("£2,000").
The noble Lord said: Amendments Nos. 210T and 210U restrict undeclared third parties to spending a maximum of £2,000 in England or £1,000 in each of Scotland, Wales and Northern Ireland. I believe that the purpose is to reduce potential abuse by third parties. It seems to me that it is too easy for someone to spend £10,000 asking people to vote for or against a particular proposition, affecting a particular candidate or group of candidates. However, it is not too difficult to register for third party expenditure so that it can be controlled properly.
My main concern is in relation to the size of expenditure for third parties when they are registered. That is dealt with in Amendments Nos. 211 to 214. I ask the Committee to think back to the Scottish parliamentary by-election earlier this year. Effectively, it was hijacked by large, expensive campaigns focusing on the Scottish Section 2A issue.
This highlights the problem of a third party being allowed to spend up to £1 million. Several different like-minded organisations may also be allowed to spend £1 million each during an election campaign. Let us say, for the sake of argument, that 10 or even 20 Eurosceptic organisations grouped together and each was able to spend £1 million during an election campaign; between them they would be able to spend as much as the Labour Party or Conservative Party or the Liberal Democrats, if we had the money. I feel that the agenda of a general election could effectively be hijacked.
Instead of standing as candidates for a party, or influencing policy within parties, are we to see anti-abortion, anti-European or anti-gay organisations able to derail the democratic process because they have sufficient money and are allowed to spend it? The overarching principle of this Bill is that money should
1136
not buy influence over policy. Of course there should be freedom of speech, and of course we should be mindful of the human rights legislation guaranteeing freedom of speech. But limiting each third party to around £300,000 of expenditure will breach that principle.
The danger is, if we allow a £1 million limit for each third party, then just six organisations, possibly campaigning on a common platform, will be able to spend more money in a general election campaign than all of the candidates for a specific party put together will be able to spend even if they stand in every constituency in the country. The £1 million limit puts disproportionate power in the hands of third party organisations. We accept that they have a right to have their say, but not to use their money to buy control of the political agenda and the outcome of elections.
Third parties can have their say in many ways, and most of those ways do not require money. Let us try to limit the influence of money in elections, whether spent by political parties or by so-called third parties. I beg to move.
9 p.m.
Viscount Astor: The Liberal Democrats never cease to surprise me. Earlier this evening they were arguing about raising limits to get away from a cumbersome and bureaucratic process. They were talking of changing £100 to £500.
Lord Rennard: The noble Viscount may have missed my point. I was arguing for a reduction in national expenditure limits. When it comes to the accountancy principles for the vouchers we have to provide, perhaps fewer vouchers need to be provided. My overarching principle is consistent; that is, that less money should be used to influence elections.
Viscount Astor: The noble Lord may think it is consistent, but I fail to see it. In effect his amendments seek to reduce the threshold at which third party organisations have to register with the electoral commission. That means more organisations will fall in and I do not see the logic behind that argument.
I wish to make only one small further point. The Neill committee recommended that a third party should be able to spend up to 5 per cent of the maximum limit for any political party. These amendments would change that and we feel that the proposals in the Neill committee are the ones that should be followed.
Lord Bach: The purpose of this group of amendments is to reduce the various monetary limits that apply to third parties under Part VI of the Bill. Amendments Nos. 210T and 210U are concerned with the threshold at which a third party is required to register with the electoral commission. Clause 89 currently sets the threshold at £10,000 in the case of a third party incurring controlled expenditure in England and £5,000 in the case of Scotland, Wales and

1137
Northern Ireland. The noble Lord's amendments would reduce those thresholds to £2,000 and £1,000 respectively.
I remind the noble Lord that the thresholds set out in Clause 89 are already significantly below the £25,000 proposed in the Neill committee report. To reduce the threshold further to the figures he mentioned would be difficult to justify. These are relatively modest sums. Anyone spending up to such limits would have very little impact on an election campaign. I cannot therefore see the case for bringing these minor players within the electoral commission's regulatory remit.
The purpose of Amendments Nos. 211 to 214 is to reduce the overall expenditure limits to which recognised third parties are subject. Amendments Nos. 203 and 204 proposed that the limits on political parties' expenditure be reduced by a quarter. In this context it is proposed that the limits be reduced by two-thirds. The figures set out in the Bill derive from a clear and unambiguous recommendation in the Neill committee report. I am conscious when I say that, that all sides in this Chamber use Neill when it suits them and do not use it when it does not. I am about to use it.
As ever, when considering amendments to the Bill, it is often instructive to go back to the committee's report to remind ourselves of how the committee came to its various conclusions. At paragraphs 10.83 and 10.84 the committee said:
"we are conscious that the Bowman judgment in the European Court of Human Rights accepts that such [third party] limits may he imposed, but also makes it clear that the limit must not be so low that, in effect, it deprives the third party of its right to free expression. Against this background, we propose that registered third parties should be able to spend up to 5 per cent of the permitted maximum for parties contesting more than 600 parliamentary constituencies".
We fully acknowledge that setting the third party limits, or indeed any of the limits in the Bill, is not an exact science. But the point the Neill committee was making was that the limit must be sufficient to afford an individual or organisation the opportunity to put their views across throughout the whole country. It is questionable whether the lower limits proposed in the amendments would enable a person to mount an effective national campaign.
Some might seek to draw a comparison with the £500 limit we intend to introduce on third party expenditure at the constituency level. It would be a false comparison. In proposing an overall spending limit of £20 million for political parties, the Neill committee did not take the limit on what a candidate may spend as its starting point. The £20 million limit for political parties is considerably more than the aggregate of a candidate's limit in each of 659 constituencies. The national third party limit must be determined against that background. The £500 constituency limit is quite simply a red herring in this context.
We entirely accept that general elections are, first and foremost, contests between the political parties and it is right that the focus of the campaign should be upon them. But elections are not exclusively a matter
1138
for the parties. In a democratic society all individuals and bodies have a right to have their views heard. It would clearly distort the democratic process if any one individual or body were able to bring unlimited resources to bear on a campaign. To that extent the noble Lord is correct. But we should avoid going to the other extreme and so constrain third parties as to leave them without a fair opportunity to put their views across. We believe that the Neill committee got the balance right and that we should adhere to the figures in the Bill.
Lord Rennard: I thank the Minister for that reply, in particular for his honesty and candour in admitting that all sides in the Committee have a tendency to use the Neill committee in their defence when the arguments suit them and to disagree with it when they do not.
His brief obviously suggested that I might refer to the fine and constituency limits. I did not do so because I did not think it appropriate. However, I urge the Minister to think again about the issue because he did not quite address my concern about "ganging up". It was referred to by the noble Lord, Lord Mackay, at Second Reading when he feared that there may be a capacity for some third party organisations to co-operate in such a way as to ensure that they can drive a coach and horses through the principle of the legislation.
We saw how in previous elections third party expenditure may cause serious problems; for example, inelections to the Scottish Parliament. I fear that it may be a real issue in the general election unless the Government address it hut, in the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 210U not moved.]
Lord Bach Lord Bach moved Amendments Nos. 210V and 210W:
Page 58, line 9, at end insert—
("(5A) Where—

(a) at any time before the beginning of any regulated period any expenses within section 80(2) are incurred by or on behalf of a third party in respect of any property, services or facilities, but

(b) the property, services or facilities is or are made use of by or on behalf of the third party during the regulated period in circumstances such that, had any expenses been incurred in respect of that use during that period, they would by virtue of section 80(2) have constituted controlled expenditure incurred by or on behalf of the third party during that period,

the appropriate proportion of the expenses mentioned in paragraph (a) shall be treated for the purposes of this section, sections 91 to 94 and Schedule 9 as controlledexpenditure incurred by or on behalf of the third party during that period.
(5B) For the purposes of subsection (5A) the appropriate proportion of the expenses mentioned in paragraph (a) of that subsection is such proportion of those expenses as is reasonably attributable to the use made of the property, services or facilities as mentioned in paragraph (b).").
Page 58, line 10, leave out ("Chapter") and insert ("this section, sections 91 to 94 and Schedule 9").
On Question, amendments agreed to.
Clause 89, as amended, agreed to.
Schedule 9 [Limits on controlled expenditure]:
[Amendments Nos. 211 to 214 not moved.]
Lord Bach Lord Bach moved Amendments Nos. 214A to 214D:
Page 138, line 28, after ("period") insert ("for the purposes of this paragraph").
Page 138, line 36, leave out ("(except in the context of a period mentioned in sub-paragraph (2))").
Page 139, line 16, after ("period") insert ("for the purposes of this sub-paragraph").
Page 142, leave out lines 4 to 10.
On Question, amendments agreed to.
Schedule 9, as amended, agreed to.
Clause 90 [Control of donations to recognised third parties]:
Lord Bach Lord Bach moved Amendment No. 215:
Page 58, line 25, leave out ("other than registered parties") and insert ("which either are not registered parties or are minor parties").
On Question, amendment agreed to.
Clause 90, as amended, agreed to.
Schedule 10 [Control of donations to recognised third parties]:
Lord Bach Lord Bach moved Amendments Nos. 216 to 218P:
Page 142, line 16, leave out ("other than registered parties")and insert ("which either are not registered parties or are minor parties").
Page 142, line 19, at end insert ("other than a minor party").
Page 142, line 21, leave out from ("donation") to end of line 22 and insert ("to the recognised third party for the purpose of meeting controlled expenditure incurred by or on behalf of that third party").
Page 142, line 23, after ("2") insert (", 2A").
Page 142, line 23, at end insert—
("( ) References to a permissible donor falling within section 49(2) do not include a registered party.").
Page 142, line 27, at end insert—
("(aa) any sponsorship provided in relation to the recognised third party (as defined by paragraph 2A);").
Page 142, line 28, leave out ("a recognised third party or a person authorised to act on its behalf)") and insert ("or on behalf of the recognised third party)").
Page 142, line 30, after ("by") insert ("or on behalf of").
Page 142, leave out line 36.
Page 142, line 40, leave out sub-paragraph (2) and insert—
("(2) Where—

(a) any money or other property is transferred to a recognised third party pursuant to any transaction or arrangement involving the provision by or on behalf of the recognised third party of any property, services or facilities or other consideration of monetary value, and

(b) the total value in monetary terms of the consideration so provided by or on behalf of the recognised third party is less than the value of the money or (as the case may be) the market value of the property transferred,

the transfer of the money or property shall (subject to sub-paragraph (2B)) constitute a gift to the recognised third party for the purposes of sub-paragraph (1)(a).
1140
(2A) In determining—

(a) for the purposes of sub-paragraph (2)(c), whether any money lent to a recognised third party is so lent otherwise than on commercial terms, or

(b) for the purposes of sub-paragraph (2)(d), whether any property, services or facilities provided for theuse or benefit of a recognised third party is or are so provided otherwise than on such terms,

regard shall be had to the total value in monetary terms of the consideration provided by or on behalf of the recognised third party in respect of the loan or the provision of the property, services or facilities.
(2B) Where (apart from this sub-paragraph) anything would be a donation both by virtue of sub-paragraph (1)(aa) and by virtue of any other provision of this paragraph, sub-paragraph (1)(aa) (together with paragraph 2A) shall apply in relation to it to the exclusion of the other provision of this paragraph.").
Page 142, line 44, after ("member") insert (", trustee").
Page 142, line 45, leave out second ("and") and insert ("or").
Page 143, line 8, at end insert—

Political Parties, Elections and Referendums Bill

  Sponsorship
  2A.—(1) For the purposes of this Schedule sponsorship is provided in relation to a recognised third party if—

  (a) any money or other property is transferred to the recognised third party or to any person for the benefit of the recognised third party, and

  (b) the purpose (or one of the purposes) of the transfer is (or must, having regard to all the circumstances, reasonably be assumed to be)—

  (i) to help the recognised third party with meeting, or to meet, to any extent any defined expenses incurred or to be incurred by or on behalf of the recognised third party, or

  (ii) to secure that to any extent any such expenses are not so incurred.

  (2) In sub-paragraph (1) "defined expenses" means expenses in connection with—

  (a) any conference, meeting or other event organised by or on behalf of the recognised third party,

  (b) the preparation, production or dissemination of any publication by or on behalf of the recognised third party, or

  (c) any study or research organised by or on behalf of the recognised third party.

  (3) The following do not, however, constitute sponsorship by virtue of sub-paragraph (1)—

  (a) the making of any payment in respect of—

  (i) any charge for admission to any conference, meeting or other event, or

  (ii) the purchase price of, or any other charge for access to, any publication;

  (b) the making of any payment in respect of the inclusion of an advertisement in any publication where thepayment is made at the commercial rate payable for the inclusion of such an advertisement in any such publication.

  (4) The Secretary of State may by order made on the recommendation of the Commission amend sub-paragraph (2) or (3).

  (5) In this paragraph "publication" means a publication made available in whatever form and by whatever means (whether or not to the public at large or any section of the public).").

  Page 143, line 19, after ("2(1)(a)") insert ("(other than money)").
  Page 143, line 24, at beginning insert ("the total value in monetary terms of").

  1141
  Page 143, line 24, at end insert—
  ("(2A) The value of any donation falling within paragraph 2(1)(aa) shall be taken to be the value of the money, or (as the case may be) the market value of the property, transferred as mentioned in paragraph 2A(1); and accordingly any value in monetary terms of any benefit conferred on the person providing the sponsorship in question shall be disregarded.").
  Page 143, leave out lines 27 to 30 and insert—

  ("(a) the total value in monetary terms of the consideration that would have had to be provided by or on behalf of the recognised third party in respect of the loan or the provision of the property, services or facilities if—

  (i) the loan had been made, or

  (ii) the property, services or facilities had been provided,

  on commercial terms, and

  (b) the total value in monetary terms of the consideration (if any) actually so provided by or on behalf of the recognised third party.").

  Page 143, line 31, leave out sub-paragraph (4).
  Page 143, line 34, leave out ("or (4)").
  On Question, amendments agreed to.
  [Amendments Nos. 219 and 220 not moved.]
  Lord Bach Lord Bach moved Amendment No. 220A:
  Page 145, line 13, leave out ("relevant donation") and insert ("recognised third party").
  On Question, amendment agreed to.
  [Amendment No. 221 not moved.]
  Lord Bach Lord Bach moved Amendment No. 221A:
  Page 145, line 34, after ("donor") insert ("(whether or not falling within paragraph (a))").
  On Question, amendment agreed to.
  Schedule 10, as amended, agreed to.
  Clause 91 [Returns as to controlled expenditure]:
  Lord Bach Lord Bach moved Amendments Nos. 221B and 221C:
  Page 59, line 4, leave out ("except where the third party is a registered party,") and insert ("in a case where the third party either is not a registered party or is a minor party,").
  Page 59, line 24, leave out ("during the regulated period").
  On Question, amendments agreed to.
  Clause 91, as amended, agreed to.
  Clauses 92 and 93 agreed to.
  Clause 94 [Declaration by responsible person as to return under section 91]:
  Lord Bach Lord Bach moved Amendments Nos. 221D and 221E:
  Page 60, line 45, leave out from ("him") to end of line 3 on page 61.
  Page 61, line 4, leave out ("the case of a recognised third party other than a registered party,") and insert ("a case where the third party either is not a registered party or is a minor party,").
  On Question, amendments agreed to.
  Clause 94, as amended, agreed to.
  Clause 95 agreed to.
  Clause 96 [Auditor's report on return]:
  9.15 p.m.
  On Question, Whether Clause 96 shall stand part of the Bill?
  Lord Bach: This group of amendments is concerned with controls on election and referendum publications. The amendments build on the existing Clauses 96 and 121 which we propose to replace by two new clauses. Therefore, when the time comes we shall oppose the Question that Clause 96 stand part of the Bill.
  Before I turn to the detail of the changes made by the amendments, it may assist the Committee if I set out the purpose of the existing provisions in the Bill. Clauses 96 and 121 are modelled on Section 110 of the Representation of the People Act 1983 which requires the name and address of the printer and publisher of an election publication to be included on the face of the document. I do not suppose that there is a single Member of the Committee present tonight who has not faced a crisis of conscience or concern about the simple rule that I have just set out.
  In the context of the Bill this requirement meets two objectives. First, where an advertisement is published which is designed to promote the election of a party or its candidates or a particular outcome in a referendum the electorate has a right to know who is behind the advertisement. In the case of an election, the fact that this or that organisation supports a particular party and is prepared to campaign vigorously in its favour may sway some people to vote one way or the other. The electorate should be able to make an informed judgment on such matters. For that purpose they need some basic information; namely, who has published a particular advertisement.
  The second purpose of Clauses 96 and 121 is to assist the electoral commission with the enforcement of the controls on election and referendum expenditure. Advertising costs are likely to be one of the main expenses incurred by campaigners in an election or referendum. A requirement that the name and address of both the printer and publisher appear on any advertisement provides the commission with an immediate point of reference for further inquiries, should they be needed, as to the cost of the advertisement and the identity of the person or body on whose behalf it is published.
  The need for both the electorate and the electoral commission to be properly informed about who is behind a publication is not restricted to publications which take the form of a printed document. Printed documents, be they posters, leaflets or newspaper advertisements, remain at present the dominant form of communication at elections, but they are no longer the only form of communication and the position may be vastly different in 10 or 20 years' time. At the time of the previous general election many Members of the

  1143
  Committee will have received a video from, for example, the Referendum Party. During the primary elections in the United States earlier this year one or two would-be presidential candidates made considerable use of e-mail and website advertising. If we do not take account of these new—and some not so new—forms of communication, the existing Clauses 96 and 121 will quickly become out of date, as will Section 110 of the 1983 Act. Therefore, Amendments Nos. 243B, 280C and 259P replace Clauses 96 and 121 and Section 110 respectively.
  The three amendments are in many respects identical. I shall set out the key changes by reference to the new clause to be inserted by Amendment No. 243B. Subsections (2) to (5) of the new clause are concerned with printed documents. Subsection (2) sets out the relevant details to be included in any such document. As with the existing Clause 121, the relevant details include the name and address of the printer of the document. On reflection, we do not believe that it is apt to require the publisher's name and address on a printed document. It does not help the electorate or the electoral commission to know that an advertisement relating to a referendum that appears in, say, The Times has been published by Times Newspapers Ltd. What the electorate and the commission need to know is who placed the advertisement and on whose behalf.
  Subsections (3) to (5) set out where the relevant details are to appear on different types of printed documents. Subsection (3) is concerned with single-sided documents such as a poster. Subsection (4) deals with printed documents that consist of two or more sides, such as a leaflet or referendum address. Subsection (5) is concerned with advertisements in newspapers and periodicals. Subsections (6) and (7) enable the requirements in respect of publications other than printed documents to be prescribed by regulations. We have opted for a regulation-making power as we need flexibility to adjust the requirements as new methods of publishing referendum material come on stream in years to come. As with other regulation-making powers in the Bill, this one is exercisable only after consultation with the electoral commission.
  The new clause to be inserted by Amendment No. 280C and the new Section 110 of the 1983 Act to be inserted by Amendment No. 259P both make similar provision in respect of election material. The new clause to replace Clause 96 is inserted in Part X rather than Part VI of the Bill. This reflects the fact that the new clause is designed to apply to election publications issued by registered parties and third parties. As the Bill stands there is no equivalent to Clause 96 in Part V of the Bill. The other amendments in this group are consequential on the three main amendments to which I have referred.
  The four amendments to Clause 120, in particular Amendment No. 243A, ensure that the same definition of "publish" is used throughout the Bill. Amendment No. 317C has the effect of preserving the existing Section 110 of the 1983 Act in respect of local
  1144
  government elections in Scotland. Amendments Nos. 307A to 307C make adjustments to the penalty provisions in Schedule 19. Amendment No. 321D amends Section 201 of the 1983 Act to provide that regulations made under the new Section 110 of that Act are subject to the negative resolution procedure. This ensures consistency with the parliamentary procedure that will apply to regulations made under the new clauses inserted by Amendments Nos. 243B and 280C. Finally, Amendment No. 322P repeals spent provisions in the Representation of the People Act 1985. I hope the Committee will agree that these are sensible changes which properly anticipate new forms of electoral communications.
  Baroness Byford: The noble Lord said that he wishes the regulations to be flexible. The new clause states:
  "The Secretary of State may, after consulting the Commission, by regulations make provision for",
  and so on. Do the Government anticipate that the commission will approve the decision, or will the regulations need to return to the House for approval? In other words, is the flexibility to which the noble Lord referred a requirement that Parliament must approve the regulations, or can the commission decide the issue itself? I should be grateful for some clarification.
  Lord Cope of Berkeley: The Minister was quite right to say that probably all Members of the Committee have experience of the way in which provisions of this kind have operated in the past. None of us would disagree with the intention behind these clauses. It is important that the kind of arrangements that have applied to printed material in the past should apply to material on the Internet, on videos or in other ways. So that is correct.
  I am sorry that even after this passage of time the arrangements applying to videos, the Internet, e-mails and so on, are still unformed, as it were, and extremely vague. It is clear that the Home Office needs to work fast on this issue when the Bill is enacted if these provisions are to be in place by the time we have elections in May—there could be a general election or council elections—or October. The Home Office has had a long time to consider the Bill. It has produced a huge number—100 pages or so—of amendments. Yet there is still vagueness about these particular provisions which will apply within a few months.
  However, that is the case at the moment. Neither we nor anyone else has put forward alternatives in the form of amendments at the moment. I shall certainly not oppose these amendments to the Bill. The fact that these huge changes have been made to a comparatively simple part of the Bill emphasises part of the Home Office's problem this year; it has had too many Bills. It has not been able to draft them properly. The departmental officials and the parliamentary draftsman have all had the same trouble in trying to draft the Bills. That is why on Bill after Bill we have had enormous numbers of important amendments to comparatively simple matters. However, that perhaps is a matter for another time. As I say, we shall not

  1145
  oppose these clauses. They should stay in the Bill. My noble friend Lady Byford asked a very interesting question.
  Baroness Blatch: I support my noble friend when he talks about the vagueness of some of these changes. Given that the Bill had its first airing back in the spring, and given that there have been all these months to think about the matter, it seems quite extraordinary that the Bill is still as imperfect as it is.
  Perhaps I may ask the noble Lord another question. In speaking to the amendments and in giving an explanation for them, the noble Lord said that one of the reasons was the need to take into account new technology. But the new technology was there in April. It has been there for quite a long time. That issue could have been foreseen. Why was it that in April it was completely ignored, and only now, at this very late hour, does the amendment to the Bill take into account the application of new technology?
  Lord Bach: I am grateful for what has been said. The noble Baroness, Lady Byford, asked about the regulations. The regulations will be made after consultation with the electoral commission, not on its recommendation, and will be subject to the negative resolution procedure. So Parliament will, if it wants it, have the last word on the regulations.
  Baroness Byford: I presume that the regulations will come before the House as a statutory instrument.
  Lord Bach: Yes, by way of negative resolution.
  The matters of electoral law that we are changing are both complicated and very old-fashioned in many respects. It is not a simple matter, as may have been suggested, to alter something as important and complex as electoral law. The Second Reading debate was as long ago as May, but the fact is that we have come forward today with what are generally accepted to be sensible amendments. I hope that they will be seen as such.
  Baroness Fookes: I am concerned about further provisions being placed in the form of regulations, partly because they have to be either swallowed whole or not accepted at all. There is no arrangement in this House or in another place for regulations to be amended. In the circumstances, that gives a great deal of power to the executive at the expense of the legislative procedure. Does the noble Lord care to comment on that?
  Lord Bach: I take the noble Baroness's point and will take away that issue. I think I know what she is getting at. I shall write to her with our considered view on that important matter.
  Clause 96 negatived.
  Clause 97 [Referendums to which this Part applies]:
  9.30 p.m.
  Lord Owen Lord Owen moved Amendment No. 222:
  Page 62, line 38, at end insert (", or
  (ii) a referendum held on the provisions contained in a Bill in pursuance of a certificate issued by the Speaker of the House of Commons under section (Bills of first class constitutional importance: Speaker's certificate)").
  The noble Lord said: Amendment No. 222 stands in my name and in the names of the noble Lords, Lord Prior, Lord Healey and Lord Skidelsky. I realise that this is a big issue for the Committee to be discussing at this time but it is very unusual to get an opportunity to have such a debate. The issue has been discussed on many other occasions but rarely on the Floor of the House, the last time being during the proceedings on the Parliament Act 1911.
  We are all conscious of the fact that our constitution is unique in that we make constitutional change through normal legislative procedures. No special arrangements are made for constitutional legislation. It can be argued that that has suited us fairly well in the past but there is no doubt that there has been a slow, steady change over the past 30 years in the way that we approach some aspects of constitutional change. It is worth considering now whether we ought to be enacting some specific procedure rather than use the ad hoc arrangement of referenda.
  The first referendum on constitutional change was advocated for Northern Ireland in the early 1970s. Indeed, a good deal of constitutional change first starts in Northern Ireland. I have in mind voting systems and other aspects. I had some reservations about it—giving one section of the United Kingdom in effect a droit de regard on a constitutional question which affected the whole of the United Kingdom. But it seemed to work. The next referendum concerned the controversy over the European Union. The referendum was held on the question of whether we should ratify the treaty of accession. I was not wildly keen on holding a referendum then.
  At the time, the suggestion was put forward in a manner which certainly led people to believe that it was not being done objectively, but rather that it was being done for political reasons. Of course, in reality that is the history that lies behind a great many referendums. If I may be allowed to say so, all parties introduce them largely to cover themselves in difficult political circumstances. In fact, it was said that a referendum could be likened to a small rubber life-raft on to which some might wish to clamber. I believe that the noble Lord, Lord Callaghan of Cardiff, first used that analogy. I admit that, with some relief, I clambered on to that life-raft in the 1974 election. It provided a way of settling some of the disputes raging inside the then Labour Party opposition on the question of accession to the Treaty.
  However, many of us were strongly influenced by the consequences of the 1975 referendum. It did not put the argument to bed as completely as many of us thought it would, but it made it virtually impossible, or

  1147
  at least incredible, to believe that that decision could be changed without recourse to another referendum. When an attempt was made to introduce a measure to take us out of the European Union without a referendum, it was treated with derision. I believe that we viewed the 1975 referendum as a success.
  Later in the 1970s, a referendum was held on the question of devolution for Scotland and Northern Ireland. I supported devolution then and I have supported it ever since. The referendum was being held against the cause for which I campaigned. Nevertheless, particularly in retrospect, most people would agree that that was a salutary referendum. It slowed up the process and thus allowed time for more careful thought and for a better devolution package to be developed. To the credit of the present Government, that was the one that has been introduced in both Scotland and Wales—with the full support of the people of those two nations.
  We can now see a pattern of referendums which has been building up over the past 30 or so years. They are beginning to add, I believe, some strength to the validity of constitutional change. However, the question is: can we and should we take the pure party politics out of the process and try instead to develop a mechanism whereby we can introduce constitutional change of considerable importance subject to certain special procedures? When I first looked at this, my attention was drawn to the argument first advanced in 1945 by the then Lord President of the Council, the late Herbert Morrison. He used the term which we have employed in this amendment; namely,
  "Bills of first class constitutional importance".
  In 1945 the Labour Government, with a large majority, wished to introduce a great deal of constitutional change. Hitherto, the tradition had been that pretty much all Bills were dealt with on the Floor of the House. They wished to avoid delay and put Bills into Committee. It was at that time that the pledge was made that Bills of "first class constitutional importance" would be taken on the Floor of the House. That precedent was established in 1945 and has largely been followed ever since by dint of arrangements made between the parties. For those who are interested, that explains from where the words "first class constitutional importance" come. They form a reasonably widely accepted classification of serious constitutional Bills.
  The next question to answer was: if a Bill was of "first class constitutional importance", should one resort virtually automatically to a referendum? That is what happens in some European countries; Ireland is practically in that situation. However, the problem with that course is that referendums are held on essentially non-controversial but important constitutional legislation. The notion of holding a referendum just for the sake of form when there is already a broad consensus in both public and party opinion is a little hard to justify.
  Some noble Lords believed that the Second Chamber could be a constitutional safeguard; that that might be one of the new powers to come to a reformed
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  House of Lords. It was certainly a credible possibility. The issue was much discussed in research papers, by your Lordships' Committee and in other places, but when it was discussed by the Royal Commission chaired by the noble Lord, Lord Wakeham, it was rejected.
  When those of us who have tabled the amendment discussed the matter among ourselves, we came to the conclusion that, a Royal Commission having looked at the issue and having rejected the idea of giving this special power to a reformed House of Lords, it would be trying to push water uphill to argue that case.
  So we looked for a mechanism. Here we come to the well-known procedure of the certificate of the Speaker of the House of Commons, which has been used in a number of circumstances but classically for finance Bills following the Parliament Act 1911. Its advantage is that it puts the decision back in another House. I see some merit in that— maybe because I spent too long there—because a procedure on constitutional issues grounded in this House would not have the same acceptability in another place.
  The question then arose as to upon what criteria would the Speaker make a judgment. We thought it necessary to have two criteria. First, controversy. Speakers are fairly good at deciding whether matters are controversial—that is one of the reasons they are there—but it needed to be for matters which are controversial in the country as a whole or within Parliament. Therefore we gave a double reason for calling a constitutional Bill of first-class importance—that is, for issues on which there were significant divisions of public opinion, parliamentary opinion, or both.
  That is the core of the amendment. I know that it is late and I do not wish to go on too long. I do not believe that it should be used for any particular kind of constitutional change. Some people have suggested that it should be used only for European constitutional changes, but I do not believe they differ in substance from other changes. However, it is fair to say that we are now seeing IGCs in the European Union coming at us at a fairly rapid rate. We are being asked to make constitutional changes more rapidly than many people envisaged, and the procedures for surveying, criticising and monitoring those constitutional changes through the EU are not as effective as in the past.
  For a variety of reasons we should not concentrate only on European legislation. However, we should bear in mind that that is now the principal way in which we make constitutional change. Therefore the amendment, if it is agreed to, should be phrased—and is phrased—so that it covers both European Union constitutional change and constitutional change generated purely within the United Kingdom. It is therefore not specifically a European issue, although I do not deny that it would have European implications.
  The question then arises of how frequently would there be referendums. A useful assessment was made in research paper 97/53, which was published on 20th May 1997, in regard to the Committee stages on

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  Constitutional Bills in the Commons. It contains an annex of all the Second Readings and Committee stages of constitutional Bills since 1945. It is difficult to make assessments, but if one excludes Bills which have been the subject of referendums and looks only at Bills which were controversial, either in the country or between the parties, one finds that there were few in number. My estimate was three, perhaps four. So, if this amendment had been enacted in 1945, we would probably have had three or four referendums between then and the present day. I do not think that is excessive. So it is with the idea of trying to have a trigger mechanism which makes sense, which has universal application and which would appeal to Members of another place as well as this, that we put forward this amendment. I beg to move.
  Viscount Cranborne: I support the noble Lord's amendment, for all the reasons that he gave. I do so with one reservation to which I shall come shortly.
  Along with a number of interested parties, the Government have consistently told us over the past few years that they are worried about the reputation of Parliament. Anyone who holds that Parliament's importance is as the central part of our national life will share the Government's concern. It arises, at least in part, from an increasing belief that Parliament is felt by the electorate to be distant from their everyday concerns. Indeed, so often, when they are considered by Parliament, those concerns are considered "way behind the curve", as the military is wont to put it.
  I suspect that part of that concern could be addressed by examining the day-to-day procedures of both Houses. Indeed, as a result of the welcome initiative by the noble Lord, Lord Peston, that is something that this place is intent on doing. I say in parenthesis that I hope it will do so not in a way that accelerates the avalanche of ill-digested legislation that we have to consider—of which this Bill is a prime example—but in such a way as to control it, so that its quality can be improved.
  As I understand the amendment, it does not seek to address the day-to-day aspects of parliamentary life, but another aspect entirely: an aspect that affects national life on very great issues, and in particular issues which are not only self-evidently substantial but which are by their nature, whatever the theory, virtually irreversible if approved.
  As the noble Lord made clear, increasingly since the early 1970s we have witnessed Parliament making substantial constitutional changes which are in most cases and to all intents and purposes irreversible. The obvious example cited by the noble Lord was our act of joining what was then the EEC. Since 1997, the incidence of such examples has multiplied. I am not sure that I wholly go along with the noble Lord when he says that there have not been many such examples. There have been a number of examples—some of which, of course, the Government have made the subject of referendums. I refer to issues such as devolution for Scotland and Wales and the London Assembly. Other examples are the incorporation of the ECHR, which we all recognise will have substantial
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  consequences no matter which side of the argument we espouse; reform of this House, if indeed we ever get to a proper stage of reform; and, as the noble Lord mentioned, a great deal of Northern Ireland legislation. Those are obvious cases.
  Effectively, such major constitutional changes can, at least in theory—and substantially have been in practice on occasion—be forced through Parliament on a majority of one in another place and, in the case of manifesto Bills, through this place without it having the oportunity to push the matter to the Parliament Act if it so wanted. There is one exception: the extension of the life of a Parliament under the Septennial Act. In theory, in a number of these cases, the electorate need have no direct say in the matter at all beyond taking part in any national debate that may be cobbled together at the time. That is particularly true—I was struck by the noble Lord's descent, if I may so put it, into anecdotage of the 1970s—when parties are split on the matter and when a referendum can readily become an easy way off the party unity hook.
  For that reason, above all, it seems to me that it would be extremely sensible for Parliament to consider one way in which it could reconnect with the electorate in between parliaments on very big issues which are essentially, irreversible; namely, by giving the electorate the final say on matters that have enormous, long-term constitutional consequences. Indeed, one of the by-products of accepting the principle of the noble Lord's amendment is that it would give the electorate a feeling that it did have the ultimate say so on matters of this kind.
  I turn to the exception to my general support for the noble Lord's amendment. It seemed to me that he gave extremely cogent reasons why the initiative should come from the Speaker in another place; in other words, that it should be a Speaker's initiative. In a fully reformed House of Lords I should infinitely prefer the initiative to come from this Chamber. If one believes, as I do, that this House has as its central role the objective of making another place do its job properly—I put that perhaps rather crudely—especially in legislative matters, there is also by extension a very useful job that this Chamber could do by developing its role as a constitutional longstop. As I say, we already have one such unequivocal function under the Septennial Act, where the Parliament Act does not apply over the extension of the life of a parliament.
  We are developing the strictures of what was formerly called the delegated powers and scrutiny committee—something which during my time as Leader of this House I did my best to encourage; indeed, I pay tribute to the present Government in that I believe they have also pursued the same path—and these should always be observed by the Government in matters of Henry VIII clauses and too many delegated powers. Therefore, in day-to-day matters we are also beginning to develop what I believe is an extremely effective constitutional check, as well as developing our role as a constitutional longstop.

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  Although I am the first to admit that the pragmatic reason for keeping the power with the Speaker that the noble Lord proposes may be a more practical and immediate way of seducing another place into agreeing with his views, in a purist world there is a great deal to be said for this House, if it were to accept the amendment, suggesting that it would, in its role as a developing constitutional longstop, be a more appropriate place for the initiative to originate.
  If a very substantial constitutional change were proposed, it would make considerable sense for this Chamber not to take upon itself the decision about whether or not that constitutional change should go through. Even in its fully reformed state, which I hope will come about fairly shortly, I suspect that this House would not carry the authority to enable it to do that on its own. However, it might be able to carry the authority to refer the matter to the electorate, with whom the ultimate decision should rest, particularly in matters of a very substantial constitutional type. If we used the power suggested for the Speaker in this amendment with wisdom and judgment, I suggest that it would do much to increase the standing of this House in the estimate of the electorate, which is something that I feel is much to be desired.
  In spite of that one reservation I believe that this is an important principle which is well worthy of consideration by this Chamber. It closes a circle which at the moment needs to be closed and in which there is a gaping gap. If the noble Lord were to withdraw the amendment and bring it back at Report stage, it would be well worth our while debating it again more fully, perhaps at a more sensible hour of the day.
  Noble Lords: What is wrong with now?
  Viscount Cranborne: I hear the question asked from the other side of the Chamber, "What is wrong with now?". There is nothing wrong with now, particularly as it is delightful to see so many Members on the Government Back Benches and on other Benches paying close attention to this important debate. However, it may not have escaped the Committee's attention that occasionally the Chamber is even fuller before dinner than it is now. There will be many people with enormous experience who may feel able to take part in such debates earlier in the day rather than later.
  Finally, I draw attention to Amendment No. 228 which stands in the names of my noble friends Lord Mackay of Ardbrecknish and Lord Astor in which they suggest that referendums should always be post-legislative rather than pre-legislative. I hope that the Committee will also give sympathetic consideration to that amendment for one simple reason; namely, that it seems to me that the history of pre-legislative referendums has not been a happy one. I believe this is true of pre-legislative referendums in other countries. I suspect that if we were honest with ourselves we would admit that pre-legislative referendums in the past three years have not been universally satisfactory either. Certainly I would be the last to suggest that if the referendum had been better conducted in
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  Scotland—whatever quibbles one might have with it—a different result would have been obtained. It is perfectly clear that it would not have done. However, I am not sure that we can say the same about the referendum in Wales.
  It seems to me that the overwhelming objection to pre-legislative referendums is that they emasculate parliamentary consideration of the Bill giving effect to the measure under consideration. It is all too easy, particularly in another place, to force through a Bill without proper consideration. We all know that was done by the spadeful, if I may put it that way, on the Welsh Bill. It is all too easy to force through consideration of a Bill with the spoken, and sometimes even unspoken, accusation that those who oppose the Bill, even in detail, are going against the spoken will of the people in the pre-legislative referendum. How much better to look at the Bill in detail—as this Parliament does—and then if a referendum is to be called, for it to be submitted as a post-legislative referendum with the full details available to those who are interested enough to look at them before they vote one way or the other. That does not emasculate parliamentary consideration of what is going on.
  I hope that the Committee will see the merit in what the noble Lord proposes, not only from the point of view of the electorate—which is what really matters—but also from the point of view of the standing of this Chamber.
  Lord Acton: Before my noble kinsman sits down, I followed his remarks with care but could not fully understand them. Did he say that the power should be given to this Chamber after stage two is complete or to the current transitional Chamber?
  Viscount Cranborne: My noble kinsman always reproaches me when I am not as clear as I should be. I apologise for not being clear. My feeling is that such a power would really only be sensible after a full reform had been implemented, when it was clear that this Chamber had been given as much authority as the electorate wanted it to be given. I suggest that it would be sensible for a measure fully reforming this Chamber to be the subject of a referendum.
  Lord Goodhart: We should all be grateful to the noble Lord, Lord Owen, for tabling this amendment. It is an important subject which requires an airing. The noble Lord made a characteristically thoughtful and well-reasoned speech in putting forward his proposals. I regret, therefore, to say—I think that it will not surprise him—that we on these Benches are unable to support him.
  We have had only one referendum which was a referendum throughout the United Kingdom: the 1975 European referendum. We have had a number of sub-UK referendums. We have had two each in Wales and Scotland. I shall not refer to the Northern Ireland situation because I understand my noble friend Lord Alderdice, wishes to speak on that. However, the fact that we have had referendums does not mean that we

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  should always have a referendum even on what can be regarded as a matter of first-class constitutional importance.
  We have the difficulty of deciding what is a Bill of first-class constitutional importance; and of deciding whether there is a significant division of opinion on it. If we consider only the Bills which have been brought forward during the current Parliament one has to say, obviously, that the Scotland Act and the Government of Wales Act were Bills of first-class constitutional importance. They were plainly controversial. One effect of the noble Lord's amendment would be that the referendums on Scotland and Wales would have had to be held not only in Scotland and Wales but across the United Kingdom. The noble Lord shakes his head but the constitutional implications seem to me not in any way confined to Scotland and Wales. They plainly apply to the United Kingdom as a whole. If the Scotland Bill (now an Act) had been rejected by a majority entirely resulting from English votes, while it was supported by a substantial majority of Scottish votes, the consequences would have been horrendous.
  Other Bills have been of first-class constitutional importance. The House of Lords Act was one. Others may have been more doubtful. The European Parliamentary Elections Act substituted a new and previously untried form of voting. The Human Rights Act was a matter of major constitutional importance. The Freedom of Information Bill now before your Lordships' House is a matter of arguably first-class importance. The Bill we are debating is probably of first-class importance, particularly in so far as it seeks to impose limits on the election spending of political parties and third parties. I believe that there would be far more referendums than the noble Lord contemplates.
  There is a more fundamental question. We are a parliamentary democracy. The classical theory has always been that we elect our Members of Parliament to govern the country. It is for them to take the decisions; and if they get those decisions wrong it is for them to face the consequences at the following general election.
  It is impossible now to continue to say that there is no place for referendums in our political system. There clearly is; we have had a number of them. We have been promised by the Government, with the support of this party, that there will be a referendum before this country joins the euro. There would have to be a referendum before there was a change of the electoral system throughout the country. But it is plain that referendums need to be used sparingly. For one thing, a referendum should be held only on a single, simple issue that can be answered by a straightforward "yes" or "no". It would he wholly inappropriate to have a referendum on this Bill, even if it is regarded as being of major constitutional importance. It is even more obvious that it would be inappropriate to have a referendum on changes in European treaties, many of which are very complex and do not present a single question that can be answered "yes" or "no". Some aspects of the treaties are welcome and some are not.
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  It would be wholly wrong to impose a mandatory requirement to have a referendum in certain circumstances. It is for Parliament to decide when there should be a referendum. It should not be laid down for all time in a statute. The issue should be decided on each occasion. A referendum is a useful servant. It should not be made a master of the political process. That is why I regret that my colleagues and I are unable to support the amendment.
  10 p.m.
  Lord Norton of Louth: I oppose the amendment. I have always had a principled objection to referendums. The fact that they may be held has not shifted my principles. The fewer referendums we have, the better. In an ideal world we would not have them.
  I do not intend to rehearse the principled arguments about referendums. If anybody wants the best arguments on principle, they need look no further than Margaret Thatcher's first speech as Leader of the Opposition in the other place. It was an excellent exposition of the case against referendums. The arguments that she advanced then have not changed. Unlike some, I intend to stick to the arguments.
  The amendment is flawed in two important respects. The first has already been touched on in part. There is a difficulty in defining terms on two levels. First, there is a distinction to be drawn between issues of first-class constitutional significance and those of second-class—or even upper-second-class—constitutional significance.
  Some measures would clearly be recognised as being of first-class constitutional significance. Others might be constitutional measures which are clearly not first-class. That is not the problem. The issue is where the line is drawn between first and second class. That is difficult. The noble Lord, Lord Owen, says that the criteria will be related to controversy. That is not adequate. There have to be objective criteria for determining what is of first class constitutional significance.
  The noble Lord, Lord Owen, has introduced a further difficulty by saying that the issue must be controversial. Where does a controversial issue stop and an issue that is widely debated but not controversial start? Where is the precise dividing line between that which is controversial and that which is hotly debated but not controversial? How far does the controversy have to extend? The noble Lord, Lord Goodhart, referred to the Government of Wales Bill. It was controversial in Wales but it may not have been a pubs and clubs issue in the rest of the UK.
  The amendment is fundamentally flawed in its definitions. To some extent the amendment itself recognises the problem because the determination has to be made by somebody else. It will not be obvious what is a first-class constitutional issue, so there will have to be a figure who decides. The amendment confers that duty on the Speaker of the House of Commons, who is by reason of office a neutral figure. The Speaker is meant to transcend politics, not get involved in political issues. Determining whether an

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  issue is controversial and of first-class constitutional significance is a highly political function. It would draw the Speaker into political controversy. That is not desirable for the office of Speaker and I do not think that the occupant of the office would particularly want that.
  It is quite correct to say that in the other place decisions as to what matters should be dealt with on the Floor of the House are made depending on their constitutional significance. Such decisions are not based on a objective test; they are political decisions taken between the parties. I do not believe that such a decision could be hived off to the Speaker; I do not believe that the Speaker would want that to happen because it would serve to undermine the neutral role of that office.
  I understand the argument advanced by my noble friend Lord Cranborne, who believes that the House of Lords may be the best body to handle the matter. I understand the argument for that. I can see that the House has the expertise to decide such an issue: it may be more detached and may be able to look at the matter more objectively. However, a fundamental practical problem lies in that route. Giving the House of Lords the power to decide when referendums will be held is one way to ensure that this amendment will not be acceptable to the other place. Therefore, in practical terms, that idea will not get far.
  I believe that the amendment itself is fundamentally flawed. Wider issues or other problems may be raised. A problem also exists in that, if a referendum is triggered in relation to Bills that may be controversial, none the less they may not be issues which persuade people to get on their feet and take part in a referendum.
  I take as an example an issue which is close to home—the House of Lords Bill. That Bill was certainly controversial within the Palace of Westminster. It may be determined that it was somewhat controversial outside. If the matter is considered objectively, it was a Bill of first-class constitutional significance. However, in all honesty, I do not believe that, if that issue were put to the country in a referendum, there would be a massive turnout on either side of the argument. It was a vital and important issue and was properly debated here. However, I do not believe that Parliament would do its reputation any good by allowing such a matter to be dealt with in a referendum. That would be my response to the argument advanced by my noble friend Lord Cranborne. I do not believe that one enhances the reputation of Parliament by handing over its responsibilities to other bodies.
  Therefore, I believe that the amendment is fundamentally flawed. If we are to have referendums—and, for the reasons that I mentioned at the beginning, I prefer that we do not; but I recognise that as a fact of political life we may do—it should be
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  for Parliament to decide when to hold one and on what basis and for Parliament to be held responsible for such a decision.
  Viscount Cranborne: Before my noble friend sits down, in the context in which he used the word "Parliament", does he not really mean "the government of the day"?
  Lord Norton of Louth: My view is that it is up to Parliament to decide those issues. If Parliament has the political will, that is a matter for Parliament. If Parliament is not strong enough, that is an argument for strengthening Parliament and not for passing decision-making to other bodies.
  Baroness Blatch: Before my noble friend sits down, perhaps I may ask a second question. Does he not agree that on a matter of such importance Parliament should have the last word? Does he agree that, given that the Thatcher government had a large majority and that the present Government have a large majority, as my noble friend Lord Cranborne said, the matter would be in the hands of the government of the day as opposed to Parliament, although technically Parliament would make the decision? Does he not agree that at least a threshold should be passed in deciding something of such constitutional importance and that one suggestion—the suggestion enshrined in this amendment—would be one way to make a judgment? If that is not acceptable, would he at least accept in its place a threshold that must he passed?
  Lord Norton of Louth: I would accept that completely, and I look forward to receiving the support of my noble friend when shortly we deal with my amendment which seeks to impose a 40 per cent threshold in any referendum.
  Lord Dean of Harptree: I support the principle of the amendments, although I am doubtful about the details. Having heard my noble friend just now, I am even more doubtful. As is well known, our constitution is largely unwritten. The advantage of that is that it suits the way in which we deal with matters in this country. It has flexibility which enables us to react to immediate situations without having to go through a ponderous procedure of amending rules and regulations. However, the danger is that changes can be rushed through with undue haste and without proper consideration for the consequences. That happens whichever government are in office. This is not a party political point at all.
  What goes for the constitution of the country in general goes also for parliamentary procedures. In your Lordships' House, we have relatively few Standing Orders. We proceed by consensus and common sense and by self-regulation. In another place, there are more Standing Orders but there too, consensus is necessary. My noble friend the Chief Whip will agree that neither House could function properly without the co-operation of the usual channels.

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  There are two principles. The first principle is that the government of the day are entitled to get their business after due debate if they can command a majority. Equally, the opposition of the day are entitled to have adequate time to debate, to probe weaknesses and to persuade.
  That is a delicate balance which can work only with give and take. That applies in particular to Bills of major constitutional importance. We are now in a position where those Bills of major constitutional importance are subject to the same procedure as that for Bills of minor significance. There was a time when there was a convention in another place, which the noble Lord, Lord Owen, and my noble friend Lord Cranborne will remember very well, whereby Bills of major constitutional importance had certain procedural safeguards. They were taken without a guillotine; and they were taken completely on the Floor of the House rather than being sent upstairs.
  That convention has been discarded in this Parliament. Whatever people may feel about the merits of the constitutional Bills which have gone through in this Parliament, many people feel that that is an erosion of parliamentary procedure.
  What is to he done? I am delighted that your Lordships' House has agreed that we shall have a constitutional committee which will alert the House to the constitutional implications of all Bills which are brought before it. I hope that that new committee, when it is set up, will be as valuable as the Delegated Powers and Deregulation Committee which alerts the House to the advisability or otherwise of delegated powers in Bills. I hope that the new committee will fulfil a similar function and will be able to point the House to the need to consider constitutional points in Bills which require special attention.
  I suggest to the Committee that that is a good start and I hope that that committee will be up and running very soon. But is it enough? I doubt it. We need new procedures, both in Parliament and for the electorate, which will give more time for mature consideration and more protection against governments of any colour who are in a hurry.
  I do not expect the Minister to accept any of these amendments this evening. But I hope that he will at least give a fair wind to the principle which has come out very clearly in all the speeches which have been made on the amendments.
  Baroness Fookes: I share the views of my noble friend Lord Norton about the inadvisability of holding referenda. For my part, I should prefer that there were none at all. But since we are to have them, it is extremely important that we should set down clear and proper rules on the subject.
  I turn to the proposals of the noble Lord, Lord Owen. I am extremely concerned about giving the Speaker of the House of Commons what seems to me an intolerable burden. For five years, I was a Deputy Speaker in the other place and there are only three Deputy Speakers plus the Speaker. Therefore, it is an extremely tight-knit arrangement. One saw at very
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  close hand the normal strains and stresses placed on a Speaker, without this quite different arrangement which must, or would, draw the Speaker into considerable political controversy. I do not see how the Speaker could maintain impartiality in those circumstances.
  If this amendment were to be agreed, I wonder what would happen if the Speaker refused to exercise such a decision. I should have thought that it would be within the powers of the Speaker to do that. I do not know what sanction there would be if the Speaker made that choice. Therefore, I believe that this would he a difficult provision to have on the statute book. Although I regret to differ from the noble Lord, Lord Owen—after many years as a neighbour in Plymouth—I cannot support this amendment.
  10.15 p.m.
  Lord Alderdice: The Committee has every reason to be grateful to the noble Lord, Lord Owen, for bringing this matter to your Lordships' attention. He has pointed out that in recent times we have seen substantial constitutional changes—we must regard them as exciting constitutional changes—and they have stimulated him to encourage the Committee to consider how such matters may be dealt with properly, which is extremely helpful.
  The noble Lord has also suggested that the Speaker of the House of Commons is a person of such wisdom and integrity that the responsibility should be placed in that office. I am the last person to suggest that Speakers, whether of the House of Commons or other places, are not people of enormous wisdom in all matters. However, in so far as they have a role to play, it is largely within the House in which they operate. The noble Lord has said that it is often the fortune or otherwise of the Speaker to determine how to deal with matters of controversy and political difficulty. That is absolutely true; at least it is certainly true in the part of the world from which I come.
  However, the problem with referendums is that not infrequently the controversy is not between the parties in the Chamber, but outside in the country. The Speaker has no particular mandate to address matters of controversy outside the Chamber and in the country as a whole. Whatever mechanism one chooses, this one, however immediately and superficially attractive it may be, does not appear to me to be appropriate.
  There are other difficulties. The speed of the constitutional changes to which the noble Lord has drawn our attention, has changed the context. One constitutional change has been devolution, not only for Scotland and Wales, but also for Northern Ireland. Under the Good Friday agreement, a principle that had been in existence for a long time was enshrined in an international treaty: that is, that it would be for the people of Northern Ireland to determine whether they remain part of the United Kingdom. Prior to that it was for the parliament of Northern Ireland, but now it is for the people of Northern Ireland.
  It seems to me curious to suggest that that is not a change of first-class constitutional importance. If the people of Northern Ireland were determined to leave

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  the United Kingdom, the United Kingdom would no longer exist; it would return to being Great Britain. The presence of Northern Ireland makes it the United Kingdom. Therefore, one could not suggest that it was not a change of first-class constitutional importance.
  It would also seem a little strange to leave the decision on whether there should be such a referendum in the hands of the Speaker of the House of Commons when it is already clear in law and in international treaty that it is for the people of Northern Ireland to address the matter. I suspect that as far as that decision is concerned, it would be right that the people of the Republic of Ireland would also have a say, as they would have to live with us after that, but that is not a matter for the Committee or another place.
  The constitutional changes to which the noble Lord draws our attention have changed the context in such a way that the solution that he proposes is no longer sufficiently encompassing. But we should be grateful to the noble Lord, Lord Owen. He pointed out for us the changes that have taken place and that are taking place, and that we must think about those matters. All that is true. It may be that extra belts and braces should be added to constitutional change by referendums. But there are many other mechanisms that could be used. The use of weighted majorities in Parliament has not been canvassed, nor mechanisms such as the involvement of your Lordships' Chamber.
  So we should take the amendment of the noble Lord, Lord Owen, as a trigger for thought and perhaps discussion over a prolonged period of time as we see the developments that take place. We could then find an appropriate way, at some later stage, to address how we deal with the exciting constitutional changes that are taking place and, as we saw rather sadly today north of the Border, point up that we no longer have one Prime Minister, but a number of Prime Ministers; no longer one Parliament, but a number of Parliaments; no longer one Speaker but a number of Speakers. We now have a constitutional variegation; a variable geometry of politics which makes the simple solution proposed in the amendment neither simple nor appropriate to the times.
  Earl Russell: In the University of London I used to teach the optional subject constitutional history. When we came to syllabus reform, we had to consider what was a matter of major constitutional importance. To do that for myself I found extremely difficult. To do it to produce the agreement of a committee I found totally impossible. Constitutional importance is like beauty; it is in the eye of the beholder. What is perceived as constitutionally important in one generation may be perceived as profoundly unimportant in another.
  I also deeply share the misgivings expressed by the noble Baroness, Lady Fookes, about giving those powers to the Speaker of another place. I know that the Speaker has to be dragged to the Chair; I do not want that to become more literal than it is at present. With this amendment in place, it could become very literal indeed.
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  Madam Speaker, or Mr Speaker as he might be on another occasion, is trained to make decisions according to the procedural rules of the House of Commons. That is her or his special excellence. That special excellence does not confer a power to decide what is of major constitutional importance. Those are extremely sensitive political decisions falling on an office supposed to be impartial. If they fall on the judges, that would be better because they take decisions according to rules which are themselves not at all political; they are quite different rules—statutory construction, interpretation of words and precedents.
  Also, it would be extremely difficult for the Speaker of another place if the question of alleged constitutional importance concerned the relations between the two Houses of Parliament. I have absolutely no doubt that the Speaker's decision would be impartial; whether it would be perceived to be so by everybody in this Chamber is a question on which I have some misgivings. Even if it were possible to reach agreement on what is a matter of first-class constitutional importance, it does not follow that everything that follows is suitable for a referendum. For example, I could argue that the abolition of the Joint Committee on Statutory Instruments was a matter of first-class constitutional importance, for it would allow the executive to make law without the consent of Parliament. But I dread the thought of explaining the case for a referendum on that to the voters.
  We should remember what happened in the referendum in France on the presidential term. The turn-out was more dismal than anything we have had here. If this amendment were to be put in place, it would open not a can, but a magnum of worms.
  10.30 p.m.
  Lord Cope of Berkeley: The Committee will be grateful to the noble Lord, Lord Owen, and his colleagues for setting up the debate. It has been interesting and important. In the course of introduction, the noble Lord reminded us that as regards general referendum, the issue dates back to 1975 when the referendum took place on the European Community. That was undertaken in order to deal with the Labour Party's problem, as he rightly set out.
  However, it did not decide the issue. The issue had been decided in the previous Parliament by an Act of Parliament. As my noble friend Lord Dean and other noble Lords will remember, as a Bill, it was subjected to the process of constitutional Bills; that is, a long and elaborate Committee stage on the Floor of the House, which is unusual in another place. The noble Lord, Lord Owen, also said that the purpose was to take party politics out of the decision on when to have a referendum. I disagree with that. I do not believe that in practice that would be achieved.
  However, several other matters have received attention in the debate. First, I turn to the definition of the phrase "first class constitutional importance". No one has attempted a definition or much in the way of guidelines, and nor does the amendment. The

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  amendment avoids the question by offloading it on to the Speaker. However, as has been pointed out by a number of speakers in the debate, including my noble friends Lord Norton and Lady Fookes, the noble Lord, Lord Alderdice, and the noble Earl, Lord Russell, the Speaker does not make decisions of this character. The Speaker in another place interprets and enforces the Standing Orders of the House of Commons.
  Those of us who were Members of another place know that its Standing Orders are far more elaborate than those in your Lordships' House. Here, the Standing Orders are extremely brief. The Companion is almost as forceful as the Standing Orders and is more detailed but in the House of Commons everything that is in the Companion, and a good deal more, is covered by the Standing Orders. The Speaker's primary duty is to run the House in accordance with those Standing Orders.
  It is true that daily that involves important and difficult decisions by the management of the House, but it does not involve the controversial decisions which could be involved in this matter. It would put in danger the independence of the Speaker. Occasionally the independence of the Speaker has been challenged. People have thought that the Speaker of the day was not as independent as he or she might have been, and therefore that difficulty has not been wholly avoided by the chair. Nevertheless, the amendment would introduce that provision more strongly. Reference is made to "the Speaker" in order to avoid the difficulty of defining what is "of first class constitutional importance", but I do not think we can get out of it that easily.
  We all expect that in due course there will be a referendum on the euro. Sometimes the Government argue that because that is only an economic matter, not a constitutional issue, it must be decided by economic tests and the constitutional element is unimportant. That view is not shared by a large number of people, including myself, who believe that the constitutional aspects of the euro are as important as the economic aspects. But if the Government's view that the constitutional aspects are very much subsidiary to the economic ones prevailed, presumably that matter would be regarded as being of second-class, not first-class, constitutional importance.
  The other part of the test is the question of divisions of public or parliamentary opinion. There are ways to measure levels of controversy. As far as concerns public opinion, one measure is the turn-out at referendums. The turn-out in the Welsh referendum was extremely low and showed that that was not a matter in which the people of Wales had as much interest as had been first thought. As has emerged in the course of the debate, there are all kinds of issues which can be regarded as being of first-class constitutional importance in which the wider public have little interest and knowledge. This was expressed to an extreme degree by the noble Earl, Lord Russell, who referred to the Joint Committee on Statutory Instruments.
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  I believe that the underlying difficulty is the lack of a written constitution. Although I do not advocate for a moment that we have one, most of the constitutions that exist in the world have a number of features. One is that the constitution sets out the powers of the parliament, judges and so on and then provides a mechanism for altering the constitution itself. Invariably, that has more complicated hurdles—larger majorities, and so on—than a mere change in legislation by way of Act of Parliament or whatever. In that way the countries decide in their written constitutions exactly what is to be regarded as of sufficient constitutional importance to place greater hurdles in the way of change.
  It is not quite true to say that we have no written constitution; we do, but it is combined in all kinds of different documents; for example, Acts of Parliament. For that matter, the Standing Orders of both Houses are in a sense part of our constitution. There are also constitutional conventions which are set out only in books, commentaries and so on, rather than in a definitive piece of legislation. But the difficulty of a provision of this kind, which is not avoided in this particular amendment, lies in deciding what constitutes a matter of first-class constitutional importance.
  In Amendment No. 226, reference is made to,
  "divisions of public opinion or parliamentary opinion".
  Amendments Nos. 223 and 227 in the name of my noble friend Lord Mackay of Ardbrecknish (who I am delighted to see has joined us) are directed to this point. My noble friend's proposal is that a referendum should also be held on receipt of a petition signed by 5 per cent of the relevant electorate. That is a substantial hurdle, but it is an objective measure to decide where, in respect of a particular matter, there is a significant amount of public opinion in favour of a referendum. It has that advantage over the primary amendment in this group, Amendment No. 226.
  My noble friend has another amendment in this group, Amendment No. 228. That goes to the question of when the referendum should be held. It was expressed in the debate as being a question of whether there should be a post-legislative referendum or a pre-legislative referendum. My noble friend Lord Cranborne gave the example of the pre-legislative referendums in the Welsh and Scottish cases two years ago. That should not encourage us to have pre-legislative referendums.
  Lord Goodhart: I am grateful to the noble Lord for giving way. Does he regard the pre-legislative referendums on Scotland and Wales in 1998 as being a worse example than the post-legislative referendums in 1978?
  Lord Cope of Berkeley: The short answer to that is yes. It is better to have a fully formed proposal that has passed through Parliament and become an Act of Parliament and is then confirmed or not by the electorate, rather than a vague suggestion, which is what was incorporated in the two pre-legislative

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  referendums in Wales and Scotland two years ago. That makes the referendum a much more sensible and reliable guide to what is happening. Otherwise, people when voting for a vague idea, as it were, do not necessarily know exactly what it is they are voting for, or, for that matter, against.
  Amendment No. 222 moved by the noble Lord, Lord Owen, is neither pre-legislative nor post-legislative because the Speaker's certificate is granted after the Bill has been introduced into the House of Commons. The referendum takes place presumably before further stages of the Bill proceed. It is only when the referendum has been completed—if it is approved—that the Bill would then proceed on its parliamentary course. I am assuming that from reading the exact terms of the amendment.
  That is probably the least satisfactory of the options that are available. But it flows from the Speaker making the decision of constitutional importance. It would frequently get us into trouble with the sessional business because if a Bill was introduced into another place, the Speaker would make up his or her mind, the referendum would take a number of months to set up and to be put in place and then the Bill would restart again quite a long way through that parliamentary session, even if it had started on day one. Therefore, we might need a further provision to carry over such a Bill. I am not in favour of that as a principle, but I think it is an awkwardness of the way in which the amendment has been drawn up. This has been an extremely interesting debate. I have no doubt that the questions raised by this group of amendments will continue to be matters themselves of controversy. They will also be matters of first-class constitutional importance.
  Lord Bassam of Brighton: We should be grateful to the noble Lord, Lord Owen, for joining us tonight in this stimulating and interesting constitutional debate.
  This group of amendments turns on the whole question of the circumstances in which referendums are held. I should say from the outset that this is not a matter on which the Government have ever had any intention of legislating in the context of the Bill. It is not an issue that was even addressed by the Neill committee. Nor is it a matter in which the Nairne commission on the conduct of referendums made any prescription. That is not to side-step the issues raised by this debate. They are issues of the utmost constitutional significance. But they would take the Bill into wholly new territory.
  So far referendums have always been held at the instance of government and Parliament. The proposition in Amendment No. 226, on the other hand, is that a referendum must be held, whether or not the government of the day want it and whether or not Parliament wants it, on any Bill which makes any significant constitutional change. I have noted that in their comments today the Official Opposition have given a measure of support to the proposal. I shall allow myself a little scepticism as to the reasons behind
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  the Opposition's apparent conversion to the doctrine that constitutional legislation demands the holding of a referendum.
  Whatever the motives of noble Lords who favour the amendment, no one can deny that it is a very large proposal to bring forward, which, if passed, would itself make a profound change to the constitution of this country. Parliament would be binding itself not to proceed with a certain class of legislation unless it had been approved in a referendum. I do not believe that Parliament will want to do that out of the blue as a mere side-show to a Bill dealing with other matters.
  If the view were ever taken that a change of this kind was desirable, the method of setting it up would certainly need further consideration. Amendments Nos. 222 and 226 would provide for a mechanism whereby a Bill certified by the Speaker could not be passed into law unless its provisions had been approved in a referendum. The grounds for certification of such a Bill would be that its provisions were of first-class constitutional importance and that there existed significant divisions of opinion on its provisions either inside or outside Parliament. The amendments place a great deal of weight on it being possible to identify a Bill as being of first-class constitutional importance.
  The noble Lord suggests that in deciding such matters it ought to be possible to take a cue from the procedure in another place in respect of the Committee stage of a Public Bill. Since 1945 it has been the practice that only in the case of a Bill of first-class constitutional importance is the Committee stage taken on the Floor of the House. I fear that the amendment would put a weight on such a distinction that, in this context, it simply could not bear.
  While the idea of a Bill being regarded as of first-class constitutional importance clearly has a precedent, there nevertheless exists no reliable definition of quite what the concept means. Questioned on the point by the Procedure Committee in 1945, Herbert Morrison suggested that it should mean,
  "something that will make a material change in the working of the Constitution".
  But, in the absence of a written constitution, the question of whether a particular measure will make a material change to the workings of the constitution will inevitably be a matter of opinion and dispute. The decision as to whether or not a measure is tackled on the Floor of the House can bear that sort of fuzziness. In the end it is something which is thrashed out through the usual channels. It is not, frankly, a matter of the highest importance in the general scheme of things. It is certainly not a sound basis for deciding whether a decision by Parliament on a particular issue should be made subject to the outcome of a referendum.
  Viscount Cranborne: I am extremely grateful to the noble Lord for his usual courtesy. In the context of this extremely interesting debate, can he explain what were the criteria used by the Government in deciding

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  whether to call referendums on the matters that they have called referendums on since 1997; and indeed what were the grounds for calling a referendum in 1975? That might be a useful illustration as regards the noble Lord's argument.
  Lord Bassam of Brighton: I think that it was a matter of our own political priorities.
  Noble Lords: Oh!
  10.45 p.m.
  Lord Bassam of Brighton: That is beyond doubt, is it not?
  It is quite conceivable that the question whether Parliament is or is not transferring its powers would also be very much at the heart of the debate. It is not a reliable and objective criterion for deciding whether there should be a referendum.
  In any event, the noble Lord has suggested that nothing like all those measures in which the Committee stage would be reserved for the Floor of the House would also be certified by the Speaker as requiring a referendum. Clearly, it is difficult to see that some of the measures which, since 1945, have had their Committee stage taken on the Floor of the House would have merited a referendum. The Ministerial and Other Salaries Act 1975 and the House of Commons Disqualification Act 1975 are two examples. One might assume that this is where the additional criterion about there being a significant division of public or parliamentary opinion comes in, but I suspect even some of the dullest constitutional legislation is capable—the noble Lord, Lord Norton of Louth, gave the Committee an excellent example—of provoking a significant division of parliamentary opinion.
  Furthermore, it is the Opposition's job to oppose. So the implication is that the noble Lord has in mind some narrower definition of what constitutes a measure of first class constitutional importance than that which has operated to date. Where the dividing line lies is anyone's guess. If he is saying that, of those Bills which since 1945 have been classed as constitutional Bills, only a minority would have been certified as requiring a referendum, I would be intrigued to know exactly which ones he has in mind. I believe that the noble Lord, Lord Goodhart, had a pretty good stab at telling the Committee what such a list would look like. In the life of the current Government we have introduced Bills on Northern Ireland, on Scotland, on Wales and on the creation of the Greater London Authority. Some might argue that certain parts of the legislation before us tonight are of profound constitutional importance. Others might argue that the Representation of the People Act passed earlier in this parliamentary Session is of profound constitutional importance. Is the Immigration Act 1971 of profound constitutional importance, or the Referendum Act 1975? Would we need a referendum to decide whether to hold a referendum?
  What is certain is that, were these amendments to be accepted, this Bill would itself clearly fall into the category of measures requiring the holding of a
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  referendum. It seems that the noble Lord would have us hold a referendum on whether to adopt controls on referendums. That does not seem to be a sensible move.
  What is also clear is that the burden of deciding whether a particular measure should be the subject of a referendum would fall squarely upon the Speaker of the House of Commons. A number of Members of the Committee—the noble Baroness, Lady Fookes, the noble Lord, Lord Alderdice, and others—have voiced ample and fulsome criticism of that proposal. It would be for the Speaker to consider both the constitutional implications of a measure and the extent to which it divided opinion, both inside and outside Parliament. I believe that that would represent an enormous burden. It would politicise that office in a manner which I do not believe any Member of your Lordships' House would ever countenance. Furthermore, it would add a whole new dimension to the forthcoming election of the Speaker of the House. The views of the holder of that office would become the subject of the most intense scrutiny.
  Even if the Speaker were able to exercise the judgment of Solomon in deciding such matters, why should the decision to hold a referendum be left to any one person? A particular constitutional reform could be subject to intense debate during its passage through both Houses. The opponents of the measure might table amendments to the Bill to require a pre-legislative referendum before the reform could come into force. Those amendments might be soundly rejected in each House. Is the Speaker then to be given a free hand to overturn the will of Parliament? That would hardly seem right.
  I shall come back to the point that the constitutional implications of the amendments have not been thought through; they are enormous. As long as the matter of holding a referendum lies at the discretion of Parliament, it may plausibly be argued that the holding of a referendum does not signify an abdication of parliamentary supremacy. The amendments would completely alter the picture. Not only would the amendments require that an entire class of business be put to a referendum, they would also require that such measures be approved by a referendum before they could pass into law. In other words, there would exist a whole class of business in respect of which Parliament would no longer be competent to decide. If the amendments were made, they would be fairly well entrenched since any Bill to effect their repeal would itself require the holding of a referendum.
  There are many in this Committee who decry what they regard as the loss of parliamentary sovereignty over the past 30 years. It is ironic that those very same people now seek to perpetrate a further major constitutional shift with seemingly little thought for the long-term implications.
  With that, I turn to the remainder of this group of amendments. The purpose of Amendment No. 228 is to require that referendums be held only on a post-legislative basis. The intention is that a referendum should be held only in circumstances where Parliament

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  has already passed an Act which, subject to the outcome of the referendum, will effect the policy on which the referendum is to be held. The arguments for and against pre-legislative and post- legislative referendums are no doubt familiar to many of those here today. They are arguments which were rehearsed fairly comprehensively during the passage of the Referendums (Scotland and Wales) Act 1998. The great merit of a post-legislative referendum is that voters will know precisely what they are voting for or against. By contrast, it is argued, a consultative or advisory referendum may enable the voter to pass judgment on the principle behind a policy but leave the voter with no opportunity to pass judgment on precisely how that policy is to be implemented.
  In practice, however, things are not so cut and dried; the arguments are finely balanced. I would remind the House that the merits of pre-legislative and post-legislative referendums were examined by the Nairne commission on the conduct of referendums. Its conclusion was that the question of whether to use a pre-legislative or post-legislative referendum was simply a matter of political judgment. There may well be circumstances in which a consultative or advisory referendum is the appropriate course. Where the execution of a policy will require complex legislation and will occupy a good deal of Parliament's time, it may well be prudent to seek the view of voters on key issues before proceeding with legislation. In such cases, it would be perfectly possible for the government of the day to set out its legislative intentions in advance of the poll. Returning to the example of the Referendum (Scotland and Wales) Act 1998, the Government issued a White Paper setting out its proposals for devolution in some detail.
  It will of course be argued that there is no guarantee that proposals touted in advance of a consultative referendum will reach the statue book unscathed. That is so. But the scenario in which Parliament considers and refines measures with the hindsight of a referendum debate and outcome does not seem at all absurd. No more so than the scenario in which Parliament labours over a piece of legislation only to submit the finished package to the public for an unqualified yes or no.
  Moving on, Amendments No. 223 and 227 take us again into different territory. Essentially, what is proposed is that upon receipt of a petition signed by 5 per cent of the electorate the government of the day will be obliged to hold a referendum. My initial reaction to the proposed amendments was that the Opposition Front Bench seemed an unlikely source for what looks uncannily like a recipe for Swiss-style democracy.
  I am not going to argue that citizen-inspired referendums have no place in our system of governance. After all, the Local Government Act 2000 provides for referendums to be triggered by public petition. We would, however, need to go further afield for examples of systems which provide for referendums to be held on issues chosen by a requisite number of petitioners. Switzerland is the well-known
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  example, but such arrangements also exist in New Zealand and a number of American states. The subjects of the referendums held under those arrangements have often been surprisingly mundane. The first referendum held in New Zealand as a result of a petition concerned, would you believe it, staffing levels in the fire service. In the United States, as a result of one such petition, Idaho polled its citizens on whether non-dentists should be able to fit dentures. We must assume that the noble Lord has stronger meat in his sights.
  The noble Lord, Lord Mackay, is well aware of the possible concerns about any general resort to referendums. He has articulated them very eloquently in the past. Perhaps I may take the House back to the debate on the Referendums (Scotland and Wales) Act. The noble Lord said:
  "Those of us who have had to seek election know that one of the constant questions we are asked is why we do not hold a referendum on the death penalty…Every Member of the Committee who has ever had to argue with a difficult constituent on the matter knows how difficult it is to tell him or her that one has to leave that decision to Members of Parliament…The position would be made even more difficult if we had asked people their views in a referendum and then decided not to accept the result of that referendum".".—[Official Report, 1/7/97; col. 116.]
  I think that many of those here today would agree with that. I am surprised, therefore, at the suggestion of a general provision for referendums to be held at the behest of the public.
  I do not wish to follow up that objection of principle with a lengthy examination of the drafting of the amendment. But I would point out that a key matter on which the amendment is unclear is how the question to be put in a referendum following a petition is to be determined. I can only assume that it is intended that the question should be that proposed by the petitioners. If that is so, it begs the question: how would you avoid the possibility that such a poll might deliver a verdict that no government or Parliament could act upon, either because the question was unfair or because the proposition provided no real basis upon which to frame a policy?
  We have had an interesting debate on this group of amendments. However, we are clearly in very deep constitutional waters. Whatever the merit of the arguments that have been put forward, I do not think that the role that referendums might have either in ratifying constitutional legislation or in restricting the ability of Parliament to provide for the holding of consultative referendums is a matter to be dealt with by means of amendments to this Bill. As I have said, the Government have sought with this legislation to give effect to the recommendations of the Neill committee as to how referendums should be conducted. The issues raised by these amendments are persuasively argued as being of a different order. On that basis, I urge their withdrawal.
  Lord Owen: We have had an extremely interesting debate. I fully agree that this is an issue of far greater importance than can be determined, first, by a

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  Committee of this House and, secondly, at this late hour. I have no doubt, therefore, that this can only be a probing amendment.
  The underlying issue is clear. Can we continue with our present system; or are we being driven by a number of different circumstances to look at arrangements which exist in other countries? There were times during the noble Lord's response when this was made to seem a unique provision. A large number of our fellow countries in the European Union hold referendums on constitutional issues; or they have another safeguard—namely, there must be a threshold, a majority. In our Parliament we have only one vote—the straight voting system. There is no weighting at all. I examined the whole question of whether there could be two-thirds majorities or some such provision.
  The hour is late, and I shall not take up all the detailed points. Much was made of whether this is a matter of constitutional importance. I do not think the decision is as hard as has been suggested. First, there are the precedents of establishing this in the House of Commons. After all, those are discussions between the usual channels.
  On the question of the Speaker, the noble Baroness made a fair point. But, as she knows, the Speaker takes account of what is being said by the parties and consults deeply, whether he or she is making a decision on hybridity or on the certification of a Bill as a Money Bill, and on many other matters. The Speaker rarely makes his or her decision in a vacuum. It is the result of listening to the pressures that are brought upon him. It would only be in a context in which at least one political party was demanding that there should be a referendum, and he or she would have to make a judgment as to whether this was a purely opportunistic movement or whether it was well rooted on constitutional grounds.
  Of course, the argument that the noble Lord, Lord Norton, raised against a referendum in principle and basically in favour of the constitution as it is, is a very powerful one. The constitution has actually served us pretty well, despite all the problems. However, there are signs of "creakiness" in the constitution and there are signs that we are, to some extent, getting a written constitution in through the backdoor by other means—whether it is the European Convention on Human Rights or, as is now being discussed in the European Union, the charter on fundamental rights. I do not want to go into all these areas, but this House will not be able to move away from this for as long a period as it has in the past. This debate is with us. As the noble Lord, Lord Alderdice, said, events in Ireland have introduced a number of very substantial changes as regards giving the people the right to make a decision by, for example, act of treaty. All those changes will have to be taken into account.
  I, for one, should like to think quite hard about all the points that have been raised tonight. It may be for someone wiser and cleverer than I to come back with some form of an amendment proposing another procedure. Apart from anything else, I know full well that this issue would normally be referred to the
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  Procedure Committee in the other place; and, if it was at all possible, the parties would try to find a measure of consensus on the matter. I personally think that that would be so.
  I leave this final marker. I do not believe that we shall be able to sustain our present procedures. Important constitutional Bills will need a different procedure from the one currently in operation. However, that is a matter for future debate and argument. I can only thank noble Lords who have taken part in this debate and apologise for not having replied to all the points raised. With the leave of the Committee, I beg leave to withdraw my amendment.
  The Deputy Chairman of Committees (Baroness Hooper): Is it your Lordships' pleasure that this amendment be withdrawn?
  A noble Lord: No. Not Content!
  The Deputy Chairman of Committees: The Question is, That Amendment No. 222 be agreed to. As many as are of that opinion will say, "Content"; to the contrary, "Not Content"—
  Noble Lords: Not Content!
  The Deputy Chairman of Committees: The "Not-Contents" have it.
  On Question, amendment negatived.
  [Amendment No. 223 not moved.]
  11 p.m.
  Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 224:
  Page 63, line 1, leave out subsections (4) and (5).
  The noble Lord said: I believe that some of us will have noted that "little Division" from one part of the Chamber. We shall remember it when it comes to other issues in this Bill.
  This is a very small amendment. It is very much a probing amendment. Clause 97 introduces some general points about referendums. Towards the end of it, in subsections (4) and (5), it empowers the Secretary of State "by order" to carry out certain actions. I wonder why these two subsections have been included in the clause. That applies especially to subsection (4)(b) which says that,
  "any specified provisions of this Part shall apply, subject to any specified modifications, in relation to any specified referendum for which provision is made by the Bill".
  That is a pretty wide power to be given to a Secretary of State to change things in this referendum part of the Bill. I wonder what the Government have in mind.
  It is possible that this provision is perfectly innocent in its intent and that it has been included only in case a referendum takes place before the Bill is enacted. That certainly looks like what subsection (4)(a) says. However, subsection (4)(b) does not say so and reads—at least to a non-lawyer like myself—as if it will apply for all time to come; in other words, that

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  somehow or other a Secretary of State could make any specified modifications in relation to any specified referendum. That seems to me to be a pretty broad power to give to Secretaries of State. I should like some indication from the Minister as to why the Government feel that these two subsections are necessary. I beg to move.
  Lord Bach: Clause 97 specifies the referendums to which the arrangements set out in Part VII of the Bill are to apply. Subsection (2) provides that, for the purposes of Part VII, "referendum" means a referendum held in pursuance of any provision made by or under an Act of Parliament; in other words, were the Bill to make no further provision on the point, the arrangements set out in Part VII would only have effect in relation to a particular referendum once the legislation providing for that referendum to be held had reached the statute book. As a result, the referendum period in relation to a given referendum could start only from the date the Bill providing for the referendum to be held had been enacted. This could seriously impact on the effectiveness of the provisions set out in this part of the Bill.
  It is quite possible that only a relatively short period may elapse between the passing of a referendum Bill and the date of the poll. In the case of the 1975 referendum on Britain's continued membership of the European Community, the Referendum Act was passed on 8th May 1975 and the poll was held on 5th June 1975, just 28 days later. The two sides in the referendum did not, of course, wait for Royal Assent before they started campaigning. There was some acknowledgement of that fact in the legislation. Section 3 of the 1975 Act required the two designated umbrella organisations—namely, "Britain in Europe" and the "National Referendum Campaign"—to produce accounts showing their income and expenditure from 26th March 1975, the date that the Bill was introduced. Without such backdating the accounts would at best have told only half the story.
  It is clear from the example of the 1975 referendum that there may be too little time after a referendum Bill is enacted for the controls in Part VII to impact on the referendum campaign. An obvious response to that is to delay the holding of the poll until a reasonable time had elapsed after the enactment of the Bill or the making of an order providing for the referendum to be held. That is all very well but there may well be instances where it is desirable that there is only a short interval between the passage of the necessary legislation and the holding of the poll. The referendum in Northern Ireland to endorse the Good Friday agreement was a case in point.
  Commencing the referendum period on or after the date of Royal Assent would also ignore political reality. As in 1975, the referendum campaign in the country will be in full swing at the same time as the referendum Bill is making its way through Parliament. Those in favour or against the proposition to be put to the people in a referendum will not be biding their time. They will be forming their umbrella groups,
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  raising campaign funds and spending those funds to advance their cause. The controls on donations and the limits on campaign spending must be in force at this time if they are to have any real impact.
  Subsections (4) and (5) of Clause 97, which the amendment seeks to delete, enable the provisions of Part VII of the Bill to be applied to a referendum Bill which has been introduced into Parliament as if it were an Act. As a result, it would be possible to provide for the referendum period in a particular case to commence on, for example, the date of the First or Second Reading of the Bill under which the referendum is to be held. Once the referendum period starts, the controls on referendum expenses and the arrangements for designating the two umbrella organisations come into play. By designating the umbrella organisations at an early stage, they will then have sufficient time to make best use of the public funding provided under Clause 105 to launch their campaigns.
  The purpose of Clause 97(4) and (5) is therefore simply to ensure that the arrangements set out in this part of the Bill can be applied in good time to any referendum campaign. If these subsections were to be removed and the arrangements could only be applied from the date a referendum Bill is enacted, the effectiveness of this part would be greatly diminished.
  The spending limits in Schedule 13 apply to a United Kingdom-wide referendum. The order-making power which the noble Lord asked about would be used to set different limits in the case of a referendum in, say, Scotland alone.
  Lord Mackay of Ardbrecknish: I am grateful for the noble Lord's comments. I followed what he said and I understand the point about the umbrella organisations perhaps needing to be identified and the spending limits needing to be put in place before the legislation is finally passed for a specific referendum. I shall read carefully what the noble Lord said with a special eye to making sure that the order-making powers do not encompass wider matters than the items he mentioned, as I have suspicions—I cannot think why I should have—about giving Ministers too much power. I am never entirely sure whether they can always be trusted and in every circumstance. I am grateful for the noble Lord's explanation. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 97 agreed to.
  [Amendments Nos. 225 to 228 not moved.]
  Clauses 98 and 99 agreed to.
  [Amendment No. 229 not moved.]
  Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 230:
  After Clause 99, insert the following new clause—

  VALIDITY OF REFERENDUM: THRESHOLD OF VOTES CAST
  (" . Any referendum to which section 97(1) applies shall be considered valid only if more than 60 per cent. of eligible voters cast a valid ballot.").
  The noble Lord said: In moving Amendment No. 230, I wish to speak also to Amendment No. 244 which stands in the name of my noble friend Lord Norton of Louth. I am delighted that I have arrived back in time to discuss this amendment. It is partly a probing amendment. It introduces the question of thresholds and referendums. We went over that in some detail during the passage of the referendums measure in the summer of 1997 on the Scotland and Wales legislation. We probably touched on it when setting up the referendum about the government of London.
  While I do not particularly approve of referendums, I accept that we are beginning to see more use made of them. The problem then is this. At what stage would a turnout in a referendum be considered inadequate to allow us to come to any conclusion about the will of the electorate? I am pleased to see at least one member of the Nairne Commission present in the Chamber today. That commission discussed the issue. To be fair, it did not come to a hard and fast conclusion, but it posed the question which we, now dealing with a general Bill on referendums, should address. Whether this is the right time to address the various options that could he considered for thresholds in referendums I am not entirely sure.
  What is true, as the Nairne Commission points out in paragraph 96, is that in other countries which hold referendums there are some threshold qualifications. Australia requires a majority of voters nationally —that is what we would require in this country—but more particularly it requires a majority of voters in at least four out of the six states. The position in New Zealand has changed, but for a while it required a 60 per cent "yes" vote. Italy—Members of the Committee will not be surprised that I know a little about it—requires a 50 per cent turnout. Unless there is a 50 per cent turnout the results of the referendum do not count. I may return to that in a moment. I do not think that the other countries are relevant to our argument.
  After paragraph 100 of the Nairne report, guideline 8 states:
  "The use of thresholds is a political decision".
  That is a good piece of pass-the-parcel. It continues:
  "If a threshold is used, it should be a set percentage of the votes cast and not a percentage of the eligible electorate".
  The Committee will see that my amendment infringes that; I hope that that is neither here nor there when we discuss the principle. The guideline states:
  "If thresholds are set, a clear explanation of the meaning of the threshold for the electorate should be included in the public information provided".
  One of the most controversial aspects of the 1979 referendum on devolution was that a threshold was set of 40 per cent of the electorate voting in favour. That 40 per cent was not reached. The "yes" vote won a very narrow majority. I do not want to go into too many of the arguments, but I could argue, and have argued, that if there had not been a threshold of 40 per cent it is possible that the "no" votes might have won. In addition to the "yes" campaign trying to get "yes"
  1174
  voters out—which it did—it indicated that one did not have to go out to vote "no". Mathematically that was strictly accurate. If the "yes" vote could not pull out more than 40 per cent of the electorate it could not win, so the "no" votes could stay at home. I submit that there is a possibility that if that had not been the case, some "no" votes would have voted who did not do so and the "no" vote would have won and, dare I say,—the course of history would have been markedly changed.
  I do not go over the issue as spilt milk but put it forward as an example of a referendum where the threshold looked arguable at the time but had a reverse consequence for the people who proposed it; they wanted the "no" vote to win. It may have been better for them if the referendum had been carried out in a straightforward manner. The "no" vote might have won, instead of which the "yes" vote failed to win but the "no" vote did not win either. Therefore, it was a little like the Battle of Killiecrankie, about which the poem says:
  "Some say that we won
  And some say that they won
  And some say that nane won at all".
  I cannot remember the rest, but one thing is sure: there was a battle there. Perhaps it is just as well for Hansard that I cannot remember the rest.
  That is the danger of thresholds. However, on the other side lies the question: if the threshold is very low, is that good for democracy? After all, all Members of this Committee and, indeed, politicians outside the Chamber worry about low turnouts in local elections. Equally, we should worry—in fact, I submit that we should worry more—about low turnouts in referendums. While a very low turnout in a local election can perhaps put one party in power for three or four years, a referendum can change the whole nature of the constitution of a country, as did referendums in Scotland and Wales and, in a lesser way, in London. Therefore, I believe that referendums are quite different. We may be concerned about low turnouts at local elections, but we should be much more concerned about low turnouts in referendums.
  The Scottish referendum in 1997 had, in my view as one of the losers, a perfectly satisfactory turnout and, more importantly, the result was overwhelmingly "yes". Therefore, it almost passed two tests. There was a good turnout—not terrific, if my memory serves me correctly, but good—and there was a substantial majority. It was not simply a balanced majority; it was substantial. Therefore, no one in Scotland now questions the settlement. Those who, like me, opposed it, accept it absolutely. My party sits in the Scottish Parliament and does its bit to try to make it work. Therefore, that was a clear-cut referendum.
  I believe that the Welsh referendum was different. Indeed, if it had been held on the same day as the Scottish one, I do not believe that we would have a Welsh Assembly. However, the Government were aware of that and, despite my best endeavours to persuade your Lordships to the contrary, we did not succeed in holding the referendums on the same day. Be that as it may, the real problem in relation to the

  1175
  Welsh referendum was that the turnout was fairly dreadful. Today I am very reliant on my notes about statistics. I always like to check my own statistics, but I believe that the turnout was approximately 25 per cent. Perhaps it was not quite as low as that but it was very low. However, certainly only 50.5 per cent voted "yes" and, by my arithmetic, 49.5 per cent voted "no". It was a fairly unsatisfactory position.
  As it happens, the Welsh Assembly is staggering on and, perhaps fortunately, the Conservative Party in Wales has accepted the outcome. Like the Conservative Party in Scotland, it is working inside it. However, if that had not been the case and if the people who were defeated on a very low turnout took the same view as those who were defeated in 1979 in Scotland and kept revisiting the issue, can Members of the Committee imagine the constitutional instability that that would cause in Wales?
  We then moved on to London, where the turnout was under 25 per cent—if I may submit, a very unsatisfactory turnout for such a change.
  In this amendment I ask whether we should have a threshold. I mentioned Italy, which has a threshold of a 50 per cent turnout. Interestingly, twice in recent times—probably within the past year or so—referendums have been held to change from proportional representation, which is such a disaster for Italian politics, to the first-past-the-post system, which we in this country should treasure and not give up. Unfortunately, in both those referendums, the turnout has not reached 50 per cent. Despite the fact that in the last referendum, if my memory serves me correctly, something like 90 per cent of the people who voted voted to change the system to first past the post, the referendum was declared invalid.
  I believe that that outcome is a pity for Italian politics. It is a great pity that 51 per cent did not vote. Mr Berlusconi very foolishly told his supporters to boycott the referendum in the hope that it would bring down the government. If ever there was a short-sighted policy when there was a long-term, sensible objective to be gained, that was it. But I shall not indulge too much in Italian politics. The important point is that the turnout did not reach 50 per cent. I believe that there should be some form of threshold.
  My amendment provides a figure of 60 per cent of eligible voters. My noble friend Lord Norton of Louth has a different formula. When we were dealing with the Scotland Bill I tried to devise a rather more complicated formula which was a mixture of the turnout against the majority, so that in a very large turnout a narrow majority was more than sufficient. In a very small turnout the "yes" vote had to achieve a much larger majority but it could still win so long as a sufficiently large majority of a small turnout voted "yes". I shall not go into the complications, although I may do so at Report stage when we can discuss it if that is one of the problems raised by the question of thresholds.
  The real point is that this is a general referendums Bill. We consider some form of threshold. I have chosen the figure of 60 per cent. I shall not embark on
  1176
  any form of horse-trading with the Minister or anybody else but I should accept a slightly lower figure than that.
  I want some sort of threshold that a 25 per cent turnout just will not do. As I said, in the future we may be deciding very important constitutional issues for the future of our country, just as we did with Scotland and Wales. Very low turnouts are not a sufficient reason for us then to change the constitutional arrangements of our country. This is a serious issue. I am sorry that it is being discussed at this late hour. I am sure that the Minister will address it seriously. I look forward to both his reply and the contribution of my noble friend, from his status as a professor of politics. I beg to move.
  [Amendment No. 230ZA, as an amendment to Amendment No. 230, not moved.]
  Lord Goodhart: I am afraid that I am unable to agree with either of these amendments. The amendment moved by the noble Lord, Lord Mackay of Ardbrecknish, is subject to a very serious flaw; namely, that it is dependent on a proporiton of the eligible voters turning out to vote. That could produce an entirely absurd result. Somebody may go to the polls in order to vote "no" but because he has cast his vote that may result in the "yes" campaign winning the election because his is the vote which is necessary to bring the total number of voters up to 60 per cent. Something very much along those lines seems to have happened in Italy, as the noble Lord, Lord Mackay, pointed out, because Mr Berlusconi persuaded his supporters not to vote and as a result the necessary 50 per cent turnout was not achieved. Anything which can produce a result as absurd as that seems to be wrong.
  The system proposed by the noble Lord, Lord Norton of Louth, is somewhat technically better in that it requires not the total vote to be a certain proportion of the electorate but the number voting in favour to be a certain proportion of the electorate.
  But that too suffers from defects. In particular, 40 per cent is an absurdly high figure. It would result in a relatively close vote in having to produce a turnout that would be extremely high; for example, if there is a referendum in which 39 per cent of the people vote "yes" and 32 per cent vote "no", one would say that that is a fairly clear majority. Seventy-one per cent of the electorate voted, which is roughly equivalent to the turnout in a general election and certainly far higher than is usual in referendums, but the vote would not have counted.
  If there is to be a minimum figure, it would have to be something much lower and certainly no higher than 25 per cent of the electorate. However, it seems to me that there are strong arguments for saying that there ought to be no minimum figure at all. Clearly, that is undesirable because one may end up in the Italian situation where it is clear that the overwhelming majority who are interested in the subject will vote one way, but their views will not take effect because, although there are hardly any votes against, a large number of people have not bothered to vote.

  1177
  The answer to that goes back to the debate on the amendment tabled by the noble Lord, Lord Owen, that referendums should be used only in circumstances where there is a serious issue that attracts a high level of public interest. That certainly has been the case with referendums held in Northern Ireland and it was the case in relation to the last one held in Scotland. I believe that the answer is not to set a minimum figure, but simply to ensure that in practice the Government do not hold a referendum unless there is a subject of sufficient interest to attract a large turnout. We do not want another result like the London referendum, where the turnout was frankly derisory.
  Baroness Blatch: Can the noble Lord comment on the Welsh referendum, in which 75 per cent of the Welsh people either did not vote for the Assembly or voted against it?
  Lord Goodhart: Undoubtedly the Welsh referendum was a difficult matter, as the Neill committee concluded. Aspects of it, particularly regarding the funding of the "no" vote, were matters for serious concern. Having said that, it would be consistent with the views that I expressed that the Welsh vote had to stand, because I do not believe that it was appropriate to impose a minimum requirement. As it happened, there was a narrow victory, but, more than a year after the Assembly was set up, it is fairly clear that there is no prospect, or no wish, to return to the previous situation.
  11.30 p.m.
  Lord Norton of Louth: I rise to speak to Amendment No. 244 standing in my name. I appreciate the point that has been made already by my noble friend Lord Mackay. It is fairly late and I am conscious that I am addressing an audience of about the same size as would attend one of my seminars on this subject. I do not propose to detain the Committee for as long as I would normally detain a seminar.
  Earlier I made clear my stance on referendums. In principle, I am opposed to them. If they are to be held, some degree of regulation must be imposed. As has been mentioned, my amendment would impose a threshold requirement of 40 per cent of those eligible to vote. At Second Reading I indicated my view on the desirability of a threshold. The Minister, in replying to the debate, did not have time to touch upon it, but with his usual courtesy he wrote to me on the subject. As in an earlier debate, I intend to respond to the argument that he kindly indicated in his letter. His basic and straightforward proposition—essentially the one advanced by the noble Lord, Lord Goodhart—is that a simple majority should be sufficient. The argument of the noble Lord, Lord Bassam, was that that was the normal practice.
  As an academic, I shall answer "yes and no". I accept that it is an entirely appropriate and normal practice from which we have not deviated for elections to public office. However, there is an important qualitative distinction between elections to public office and referendums. In elections, we elect people to
  1178
  hold office for a set period. If we do not like what they do, they can be turned out. My noble friend Lord Mackay of Ardbrecknish has pointed out that the decision made in a referendum may last for a considerable period—it may even be permanent. That is not always the case. Referendums do not settle issues to the extent that many people believe. None the less, they may put in place a ratchet effect that is very difficult to reverse. That is the essential argument in principle for having a threshold in a referendum and not in a normal election of candidates.
  There is also a distinction to be drawn on tarn-out, which tends to be lower for referendums than for elections of candidates. However, that is not an argument of principle.
  Following the point made by the noble Lord, Lord Goodhart, the qualitative distinction requires a relatively high threshold. I have chosen 40 per cent for two reasons. The first is that there is a precedent, which I shall come back to. The other is that it is not an absurdly high limit. My proposal seems quite modest compared with that put forward by my noble friend Lord Mackay.
  I understand the objection to the proposal of 60 per cent. If 59 per cent of those who were eligible turned out and voted in favour, that would be a remarkably high majority. One can anticipate the argument that would be advanced by those on the winning side, because they would feel that they had been robbed. My proposal is for less than an absolute majority of those eligible to vote.
  Bearing in mind the time, I shall not go into great detail on the arguments, but there is a powerful case for setting a threshold at a level that would require a substantial turn-out. An issue that is put to a referendum would normally be of some significance and a significant turn-out would be required to justify passing it.
  The other aspect of my "no" answer to the Minister's argument is that it is not a consistent practice in the holding of referendums. The referendums in Scotland and Wales in 1979 had 40 per cent thresholds. Excluding early plebiscites on the border in Northern Ireland, there have been just five referendums in this country in which a simple majority has sufficed. Five against two does not establish sufficient precedent to justify arguing that it is normal practice.
  There is a powerful case for considering a threshold, and 40 per cent is an appropriate figure. There is a precedent for it and we have used it before. It is even more appropriate now, because if we are moving towards a rolling register, it will be easier to ensure that 40 per cent of eligible electors relates to roughly 40 per cent of those capable of voting. There will not be a hidden additional threshold built in by a dated electoral register.
  That practical point facilitates my argument, but my main point is one of principle. We have had thresholds before and my proposal would counter the problem of an extraordinarily low turn-out, which would

  1179
  undermine the legitimacy of significant change. For those reasons, I believe that Amendment No. 244 is eminently desirable.
  Lord Bassam of Brighton: I always feel in these debates that I am completing an important part of my education, particularly when the noble Lord, Lord Norton of Louth, speaks. It also reminds me of my youth. One of the things that famously brought me into an interest in politics was falling out with my mother over the fate of our village green, which was then subjected to a referendum. I won and she lost. I became involved in politics and she held it against me for many years afterwards because the village did not get its village hall for another 15 years.
  However, Amendments Nos. 230 and 244 offer two alternative proposals for thresholds in relation to referendums. Amendment No. 230 would provide for a turnout threshold requiring that at least 60 per cent of the electorate voters cast a valid ballot in order for the result of the referendum to be valid. Amendment No. 244 would require that, for the result of a referendum to be valid, a proposition must have the support of a qualified majority; that is, one consisting of at least 40 per cent of the electorate. In effect that amendment would provide for both a voting and a turnout threshold.
  I should perhaps point out that that would run against the guidance given in the Nairne report which suggested that the use of a threshold was a political decision but that if thresholds were used it should be a set percentage of the votes cast, not a percentage of the eligible electorate. If thresholds are set, a clear explanation of the meaning of the threshold should be included in the public information provided. That is eminently sensible and seems reasonable to me if that is the course one wishes to travel.
  It is one of the curiosities of this debate that those who are pre-eminently concerned to defend our existing arrangements—even those who do not like referendums—for choosing who governs the country suddenly find the principle of simple majority wanting when it comes to a referendum. Indeed, in that context, the noble Lord, Lord Mackay, pointed to the irony of the situation, as always with great wit, in Italy when in a recent referendum there 82 per cent voted in support of abolishing PR and the development of a first-past-the-post system but that was negatived by the threshold set.
  Our parliamentary democracy operates on the principle that a simple majority of those voting is enough. The Nairne Commission in its 1996 report on the conduct of referendums observed that,
  "A simple majority of those who cast their votes carries a natural authority".
  That is our view. The commission went on to note that the justification for the use of thresholds in those countries where referendums are used to approve constitutional changes is that they,
  "provide a safeguard against basic laws being changed too easily".
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  However, it might be argued that under our system of government it is the supremacy of Parliament, which could not be bound by the result of a referendum, that offers precisely such a safeguard. Parliament is at liberty to decide whether the result of a referendum is sufficiently conclusive. Nevertheless, it may be that in the case of a particular referendum, as happened in relation to the 1979 referendums on devolution, Parliament may decide that the use of a threshold is appropriate. That is a matter which should be addressed, if at all, in the specific legislation providing for the referendum in question. But it is not a principle to be conceded in the context of these generic provisions.
  The Government fully agree that high turnouts are desirable. It is important for the health of a democracy that people have sufficient interest in how they are governed to exercise their right to vote. That is why we too were disappointed at the level of turnout for the Welsh referendum in particular, a turnout, as I recall, of 50 per cent. The Government are firmly committed to increasing voter turnout and the electoral commission will have an important role to play in that respect. But it is a very different sort of proposition to argue that the validity of the outcome of a poll is fatally undermined simply because an insufficient number of voters voted for the proposition or bothered to vote at all. I suspect that few local councils are elected on the kind of turn-out that Amendment No. 230 would require, but does that invalidate the outcome of those local elections? I suggest that it does not, even though it is a matter of considerable regret.
  I know that Members opposite will argue that it is the fundamental nature of the decision being made in a referendum that requires that a conclusive mandate be maintained. But that argument could be used in the context of elections. The imposition of a threshold based on a proportion of the electorate may not be the best means of addressing the point. Indeed, the logic of the argument might point to compulsory voting rather than a turn-out threshold. With a turn-out threshold in place it is not merely the way you vote which may determine the outcome of the referendum but, as the noble Lord, Lord Mackay, graciously conceded, whether you bother to vote at all. It may turn out to be expedient for those campaigning for a particular outcome to persuade their supporters to stay at home, as Berlusconi apparently did, in order to ensure that the referendum is inconclusive and, in that case, to attempt to bring down the Government. Should those who do not vote be able to exercise a veto over the will of those who do?
  The kind of thresholds which these amendments provide would also place a premium on the accuracy of the electoral register. It has been calculated in the case of the 1979 referendum on Scottish devolution, where such a threshold was employed, that around 14 per cent of those included on the register were either unable or not entitled to vote. The Government have introduced measures which will ensure that the electoral register is more up to date with registration. Nevertheless, if a

  1181
  threshold were to be used in a referendum, one based on a proportion of those voting may be more reliable than one based on the electorate.
  As I have said, these are issues to which Parliament will undoubtedly return when it comes to legislate for a particular referendum. In the context of this Bill, however, the general assumption that a referendum should be decided on the basis of a simple majority of those voting should, and in our view does, prevail. I hope that having heard that explanation Members opposite will feel inclined to withdraw their amendments.
  Lord Mackay of Ardbrecknish: I am grateful to the Minister for that detailed reply and to the noble Lord, Lord Goodhart, for intervening in the debate. It came about as a result of my amendment and that tabled by my noble friend Lord Norton. The noble Lord, Lord Bassam, told us that arguing with his mother brought him into politics. Perhaps I may say that his mother has a lot to answer for!
  Lord Bassam of Brighton: That is exactly what I told her.
  11.45 p.m.
  Lord Mackay of Ardbrecknish: I accept that there are defects in the figure of 60 per cent of the eligible vote—even 50 per cent—because the electoral register is never entirely up to date. However, as the Minister fairly said, that will change and improve with the rolling register. There is no doubt that in 1979 in Scotland it was not up to date. I believe that the referendum took place in the autumn but I had better not pursue that point because I honestly cannot remember.
  I accept that the register was not entirely up to date, whereas rolling registers will be much better but not perfect. Honours are even between the Minister and myself as regards the accuracy of the register. They will certainly be more accurate in the future.
  The Minister said that we on these Benches cannot have it both ways. He said that we like the first-past-the-post system and a simple majority for elections but that we do not like it for referendums. I suggest that when one moves from the football field to the rugby field the rules change because they are two different games. I believe that a general election, or a local government election, and a referendum are two different ball games. A referendum is a single-issue decision, although it might be divided into two parts. There is no election of individuals; there is one issue and everybody in the country decides the matter one way or the other.
  When one comes to parliamentary or council elections, people elect candidates on the basis of a range of issues, not just one. I do not believe that any election has ever been fought on one issue. Occasionally, parties have attempted to do so, but all the evidence suggests that they have failed. Elections also elect Members of Parliament or councillors who then go on to make decisions on a range of issues. Therefore, one is not looking at like for like.
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  I do not believe that we are being inconsistent in saying that referendums are different and we should look very carefully at what we do. Referendums also tend to have irreversible outcomes, unlike elections to either local authorities or Parliament. The outcome of one election can be reversed at the next, which is the nature of politics. It is hard to believe that any of the referendums in the past few years could be easily reversed. A great head of steam would be required before one was in a position to hold such a referendum. Therefore, I believe that there is a very significant difference.
  Both the Minister and the noble Lord, Lord Goodhart, quite rightly pointed out some of the defects in my amendment. As the noble Lord, Lord Goodhart, said, simply by failing to vote people can keep the turnout down and in that way prevent the other side winning. I accept that that is one of the defects. Ironically, in Italy some of the people who wanted change did not vote. I could never understand the logic of it, despite efforts by my daughter to explain it to me. I find Italian politics even more difficult to understand than British politics. I still believe—dare I say it?—that a threshold has great relevance. Even though I totally favour the outcome that the Italians sought, it is right that less than half of them wanted to make a major constitutional change such as to alter drastically the system of voting. One questions whether one should make such a major constitutional change.
  At times I thought that the noble Lord, Lord Goodhart, was moving towards the amendments that I tabled eventually to the Scotland Bill which tied majority to turnout. I apologise to the noble Lord if I do not give the exact figures. I believe he suggested that if 38 per cent of the electorate voted "yes" and 32 per cent "no"—a 70 per cent turnout—it should be more than enough. I wholly agree with the noble Lord. My point is that, if there is only a 25 per cent turnout—at this time of night I am not sufficiently quick on my feet—and it is a 38:32 split, do we really regard that as sufficient? For the Minister to say that that matter can be left until there is an individual issue before us is not satisfactory. When that individual issue is before us the battle lines are drawn, just as potentially we have the battle lines on the euro referendum hanging over the whole of this debate on the Bill, as we shall probably see shortly. I want to look at referendums in the round, regardless of the subject and whether I am for or against it. What kind of ground rules and thresholds should be laid down?
  I accept the problem with my amendment. I am much more attracted by the amendment in the name of my noble friend Lord Norton. To try to tempt the noble Lord, Lord Goodhart, to come into my camp, I may even try on him thresholds which balance turnout as against majority. Therefore, the larger the turnout the nearer one comes to an overall simple majority. The smaller the turnout the greater the need for some form of qualified majority. If the Minister wants a little preview, he will know exactly what I mean if he looks at the proceedings on the Referendums (Scotland and Wales) Bill in the summer of 1997. I shall not go any

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  further at this time of night. I thank Members of the Committee who have taken part in the debate and beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 230ZA, as an amendment to Amendment No. 230, not moved.]
  Clause 100 [Permitted participants]:
  Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 230A:
  Page 63, line 43, at end insert ("resident in the United Kingdom or registered in an electoral register (as defined by section 49(8))").
  The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 231, which no doubt will be moved by the noble Lord, Lord Mackay, and Amendments Nos. 232E, 232H and 233A in this group. The purpose of Amendment No. 231 is to narrow the definition of a permitted participant so as to provide that only an individual included on an electoral register, or entitled to be included on such a register, may qualify as a permitted participant.
  I should point out that the Government, in response to concerns raised at Committee stage in another place, brought forward amendments at Report stage to narrow the definition of recognised third parties and permitted participants so as to exclude foreign companies and unincorporated associations. We did not, however, consider it appropriate to narrow the definition in respect of individuals. The Government are, as the noble Lord has pointed out, committed to banning the foreign funding of political parties in the United Kingdom. It is right that the ban should extend to the foreign funding of participants in a referendum campaign here. The justification for that policy is that those who participate in our political processes should not be dependent upon funding from those who do not live, work or carry on business here.
  How parties are funded is one matter. The freedom of individuals to express their own opinions is quite another. The Government believe that to restrict the ability of individuals, whether or not they are entitled to vote, to express and promote their own opinions would be an undue restriction and fettering on their freedom of expression. Such considerations do not, however, apply to foreign nationals who are not resident in this country. The Government's Amendment No. 230A therefore makes it clear that only those individuals either resident in the United Kingdom or resident abroad but registered to vote here are eligible to be a permitted participant. That feeds through to Amendment No. 232E, which recognises that an overseas voter would not have a home address in this country and must therefore supply the electoral commission with an address elsewhere.
  Government Amendments Nos. 232H and 233A simply ensure that the definition of the term "outcome" in Clause 101 applies both to that clause and to Clauses 103 and 104. I beg to move.
  Lord Mackay of Ardbrecknish: Perhaps I may respond to what the Minister has said and refer also to
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  my Amendment No. 231. The Minister is right to see what I am about. We are really looking at the definition of those people who are permitted participants in a referendum. In my amendment I have taken from the Neill report—although not from the Bill because the Bill did not actually do what the Neill report suggested—the definition of who is a permitted donor for general elections; namely, someone who is registered or is eligible to be registered. So far as concerns donations, that is what the Neill report recommended. We have already had an argument over that, because the Government decided that they did not want the "eligible to be registered". Therefore, it is only someone who is registered on an electoral register who can donate. My amendment proposes that the same narrowing of the rules should take place with regard to who is a permitted participant in referendums. That includes a donor.
  Amendment No. 230A goes some way towards meeting me in that it defines people who can take part as,
  "resident in the United Kingdom or registered in an electoral register".
  That is fine. But I am puzzled about "resident in the United Kingdom". The noble Lord will recall that I have occasionally talked about the American who is over here and lives next door to a Canadian. The Canadian can register on our electoral register. He can therefore donate to a British party. The United States man, who may work in the same bank in the City and have the same interest in British politics, cannot register. Therefore, he cannot donate. Am I correct in thinking that the words "resident in the United Kingdom" would actually allow the American to be a permitted participant in referendums? I am interested to know the answer to that question. Otherwise, I do not understand why we have to have the words,
  "resident in the United Kingdom".
  However, in every other way the Government have gone a little way towards me. We will study what the Minister has said and the way the amendments hang together when we see the whole Bill. I am sure that noble Lords appreciate the complexity of looking at all these amendments and trying to fit them into the Bill. Perhaps that will satisfy us; perhaps I shall want to return to the matter. If the Minister could help me about the American—
  Lord Bassam of Brighton: The answer to the noble Lord's question is yes.
  Lord Mackay of Ardbrecknish: I shall have to consider whether that is entirely right and proper, given the limitations we put on the said American when it comes to British general elections. However, with that clarification raising another little problem for me to try to resolve between now and Report stage, I shall sit down.
  On Question, amendment agreed to.
  [Amendment No. 231 not moved.]
  The Deputy Chairman of Committees (Lord Geddes): Before calling Amendment No. 231A, I must advise the Committee that if it is agreed to I cannot call Amendment No. 231B.
  Lord Bach Lord Bach moved Amendment No. 231A:
  Page 64, leave out lines 1 to 3 and insert ("or
  ("(ii) any body falling within any of paragraphs (b) and (d) to (f) of section 49(2).").
  The noble Lord said: This amendment has already been spoken to. I beg to move.
  On Question, amendment agreed to.
  [Amendment No. 231B not moved.]
  [Amendment No. 232 had been withdrawn from the Marshalled List.]
  Lord Bach Lord Bach moved Amendments Nos. 232A and 2328:
  Page 64, line 6, at end insert (", or
  (ii) in the case of a minor party, the person for the time being notified to the Commission by the party in accordance with section 101(2)(b)").
  Page 64, leave out lines 8 to 10 and insert—
  ("(c) otherwise, the person or officer for the time being notified to the Commission by the permitted participant in accordance with section 101(4)(b)(ii).").
  The noble Lord said: These amendments have already been spoken to. I beg to move.
  On Question, amendments agreed to.
  Clause 100, as amended, agreed to.
  Clause 101 [Declarations and notifications for purposes of section 100]:
  Lord Bach Lord Bach moved Amendments Nos. 232C to 232H:
  Page 64, line 17, at end insert ("; and
  1186
  (b) if made by a minor party, must be accompanied by a notification which states the name of the person who will be responsible for compliance on the part of the party with the provisions of Chapter II").
  Page 64, line 18, leave out (", company or unincorporated association") and insert ("or body").
  Page 64, line 27, at end insert ("or (if he has no such address in the United Kingdom) his home address elsewhere").
  Page 64, leave out lines 29 to 45 and insert—
  ("(b) if given by a body falling within any of paragraphs (b) and (d) to.(f) of section 49(2), state—

  (i) all such details in respect of the body as are required by virtue of any of sub-paragraphs (4) and (6) to (8) of paragraph 2 of Schedule 5 to be given in respect of such a body as the donor of a recordable donation, and

  (ii) the name of the person or officer who will be responsible for compliance on the part of the body with the provisions of Chapter II,

  and be signed by the body's secretary or a person who acts in a similar capacity in relation to the body.").
  Page 65, line 12, at end insert ("; and
  (b) any reference to subsection (4) shall be read, in relation to a notification under subsection (2), as a reference to subsection (2).").
  Page 65, line 13, leave out subsection (7) and insert—
  ("( ) In this section and sections 103 and 104 "outcome", in the case of a referendum, means a particular outcome in relation to any question asked in the referendum.").
  The noble Lord said: These amendments have already been spoken to. I beg to move.
  On Question, amendments agreed to.
  Clause 101, as amended, agreed to.
  Clause 102 agreed to.
  Lord Bach: I beg to move that the House do now resume.
  Moved accordingly, and, on Question, Motion agreed to.
  House resumed.
  House adjourned at two minutes before midnight.