Political Parties, Elections and Referendums Bill

HL Deb 24 October 2000 vol 618 cc144-273

3.10 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 LORD CHANCELLOR in the Chair.]

Clause 103 [Designation of organisations to whom assistance is available]:

Lord Mackay of Ardbrecknish moved Amendment No. 233: Page 66, line 2, leave out from ("applies,") to ("specify") in line 3 and insert ("the Commission shall").

The noble Lord said: Clause 103 deals with the question of designating the umbrella organisations conducting a referendum with a view to giving them assistance. It is a simple enough matter when one question is asked in a referendum and the answer is either "yes" or "no". It does not take one too long to work out that there are therefore two sides and two umbrella organisations. However, subsection (3) deals with the situation in which there are more than two possible outcomes; that is, when there are two questions.

There were two questions in the Scottish referendum. The first asked whether voters wanted a Scottish Parliament and the second asked whether they wanted it to have tax-raising powers. Members of the Committee can therefore see that there are four possible outcomes: yes/yes; yes/no; no/yes; and no/no. Indeed, some people took up all four positions. Clearly, a majority answered "yes" to both questions and a minority answered "no" to both questions. However, some people decided that they wanted a Scottish Parliament but that they did not want it to have tax-raising powers and others did not want a Scottish Parliament but thought that, if there were to be one, it ought to have tax-raising powers. The problem is deciding how to define the umbrella organisations involved.

Interestingly, as the Bill stands, the Secretary of State will decide about the umbrella organisations as regards those outcomes. My first amendment suggests that it should not be the Secretary of State but the electoral commission. I believe that the case for that is unanswerable. If one is to make referendums acceptable in this country, the Government must not be seen to be taking things apart in deciding what the rules are and who is or is not playing. Therefore, I submit that the electoral commission should decide that matter.

My Amendment No. 234 addresses the question of how the commission should decide on the umbrella groups or "designated organisations" as they are called. Let us say that, for example, two different organisations decided to campaign for the same outcome in a referendum on proportional representation. I read in an extract from Mr Ashdown's diaries in this week's Times that the Prime Minister used almost exactly the same words in respect of such a referendum as he used last week in respect of a referendum on the euro; namely, that if there were a referendum tomorrow he would vote "no". That must come as interesting news to the Liberal Democrats who must be wondering about their bedfellows in such referendums. At least they know where I and my party stand on such issues, but they must be unsure about their partners.

As regards a referendum on proportional representation, it is possible that a significant proportion of the Labour Party will not want proportional representation and will want to set up an organisation in order to campaign for first past the post. "Labour For First Past The Post" might be a good title. I accept that some people in my party would approve of proportional representation but clearly the majority of them would be in favour of keeping the first-past-the-post system.

It may be that those two organisations would find it difficult to come together. Labour members advocating first past the post might find it uncomfortable to team up with Conservatives and therefore there would be two potential umbrella organisations. How will the commission deal with that? It is one of the points my amendment addresses by stating: Where the Commission is satisfied that more than one permitted participant has demonstrated … substantial support … [and a] principal reason for campaigning … they may designate two or more permitted participants". Perhaps some members of the Liberal Democrat party will want to form an organisation for "Liberal Democrats For First Past The Post" or "For a Fair Electoral System", as I believe first past the post is. They may not want to team up with either Labour or Conservative members.

One can see that a number of genuine outcomes could come from a decision to hold a referendum. I hope that my amendment is therefore helpful to the Government and, more importantly, to the electoral commission, which will have to make those difficult decisions. I look forward to hearing the noble Lord, Lord Bach, explain why the Government have decided that the Secretary of State should decide on the outcomes and what is wrong with my amendment which helps to guide the commission to its conclusion on how many umbrella organisations, if more than one, it should recognise. I beg to move.

3.15 p.m.

Lord Bach

These amendments are concerned with the designation of those permitted participants which may then benefit from the assistance specified in Clause 105, including a grant of up to £600,000 and free mailshots.

Amendment No. 233 is concerned with subsection (3) of Clause 103. This subsection addresses the possibility that there might be more than two possible outcomes to a referendum. Where that is the case it may or may not be appropriate to provide for the designation of a permitted participant in respect of each possible outcome. I say "may not" because certain possible outcomes may be contradictory or absurd.

Clause 103(3) provides that, in such circumstances, the Secretary of State may by order specify the possible outcomes in respect of which a permitted participant may be designated. I understand that the noble Lord objects to that provision. Such an order could be made only after consultation with the electoral commission and would be subject to the affirmative resolution procedure, thereby leaving the final say in determining such matters to Parliament.

Lord Mackay of Ardbrecknish

I am grateful to the Minister for giving way. The issue will arise later in another context, but I heard what he said about the electoral commission being consulted. Will its view be made public?

Lord Bach

It would be extremely difficult for the commission's view not to be made public. However, I shall seek further information so as not to mislead the noble Lord.

Amendment No. 233 would vest the decision in the electoral commission alone, removing any parliamentary scrutiny. We do not believe that to be appropriate. Parliament determines whether a referendum is held. Parliament would ultimately agree the form of the proposition or question to be put to the electorate. Equally, it is entirely appropriate that Parliament should have the final say in determining which of the possible outcomes should be supported from public funds. Of course the electoral commission should have an important say in this matter and its views will carry considerable weight.

However, there is a wider political perspective to determining such matters which an independent electoral commission cannot properly bring to bear. We have provided for proper parliamentary scrutiny of the Government's decision and I suggest that the order-making power set out in Clause 103 is the right way for these matters to be determined.

Amendment No. 234 provides for the designation of more than one permitted participant in respect of a particular outcome in a referendum. It raises drafting points but, suffice it to say, by replacing the existing subsection (5) of Clause 104 it is not clear on what basis the commission could decide to designate only one permitted participant in respect of a particular outcome where there had been more than one applicant.

The amendment envisages that the commission may designate more than one permitted participant in respect of a particular outcome if certain criteria are met; namely, that the commission is satisfied that more than one applicant enjoys substantial support and has a distinct reason for campaigning for that outcome, and that it would be unreasonable to refuse designation. In those circumstances the commission will apportion such assistance as is available between the designated permitted participants as it thinks fit.

That is clearly contrary to what the Neill committee envisaged. In framing its proposals the committee's intention was to ensure that each side should be able to mount a campaign so that each side of the argument was heard. The committee recommended that the available core funding should, therefore, be sufficient to cover the establishment of a campaign headquarters with basic equipment and staff. The committee considered that a sum equivalent to that provided to the two umbrella organisations in the 1975 referendum would be appropriate.

The committee did not envisage that more than one group on each side should receive a grant. I quote briefly from paragraph 12.35 which states: No more than one organisation on each side should be funded Still less did it envisage that that assistance should be carved up among a number of disparate groups, which would defeat its purpose. The Neill committee came to the view that if no single suitable recipient could be identified on one side of the argument, neither side should benefit from such core funding.

As drafted, the Bill simply requires the commission to identify the permitted participant which "to the greatest extent" represents those campaigning for a particular outcome. That broad-brush test points to the designation of an umbrella organisation which represents the broad spread of opinion on one side of a referendum question: it is essentially the test used in the 1975 referendum. The White Paper on that referendum indicated that assistance would be available to organisations "which adequately represent" the two sides. However, the noble Lord's amendment would involve the commission in an altogether different kind of exercise. Its task would not be to ask which, if any, of the organisations stood out as representing the case for the particular outcome, but, instead, whether each of the competing claims, on its own merits, deserved a slice of the pie.

To assist the commission with this altogether more difficult task the noble Lord seeks to devise some rather more specific criteria, such as the separate levels of support enjoyed by different groups and their distinct reasons for campaigning. Although they might look objective on paper, inevitably they would open up the commission's decision to challenge; indeed, the proposal that the commission should grant an application if it would be unreasonable to do otherwise would positively invite it.

Nor is it easy to see how the assistance available to designated organisations might be apportioned as proposed. Certainly, the grant might be divided up but we do not see how the free mailing facilities could be. If there is to be only one mailshot, are the two or more designated organisations on a given side of the campaign supposed to divide up the country between them? Or perhaps it is the noble Lord's intention that each designated organisation on a particular side should benefit from a free mailshot so that it could explain its distinctive arguments to the electorate. If so, each additional designated organisation would cost the public purse £3.6 million for a mailing to each household. More to the point, it would give one side in the campaign an unfair advantage over the other, which was the very thing that the Neill committee sought to overcome.

The whole purpose of the designation procedure is to ensure that there is an adequately resourced "yes and no" campaign in any referendum. To make provision for the designation of a number of organisations on each side would limit the resources available to them and could thereby result in the arguments on one side or the other not being properly heard. We believe that that would defeat the object of these provisions. For those reasons, I invite the noble Lord to withdraw his amendment.

The noble Lord asked whether the views of the commission would be made public. As the noble Lord is aware, that matter is not covered in the Bill. However, the views of the commission will undoubtedly be published either by the commission itself or by the Government. I refer to the next line of my advice with some trepidation: the provisions of the Freedom of Information Bill would also probably apply.

Lord Elton

As to the first of my noble friend's amendments, I am a little anxious about the Minister's suggestion. Presumably, the issues to be decided by referendum will be highly political, and they may also be complex. The decision as to which organisations shall be funded to campaign depends on the possible outcome to be specified in relation to permitted participants. I do not suggest that the following example would have happened in this case but it illustrates the mechanics of it. Let us suppose that the governing party at Westminster had a very large majority and wished to have a devolved assembly elsewhere in the United Kingdom but that it should not have tax-raising powers. The specified permitted outcome might be that there could be a devolved assembly but not one with tax-raising powers. That would be such a broad, blunt and controversial issue that, no doubt in the light of public pressure, it would be decided that both outcomes could be possible.

In trying to provide for the unforeseen future, in which perhaps some of our citizens regard certain matters as of great importance but central government do not agree and may not want others to be persuaded to that view, one is giving to the executive of the day a very powerful weapon to suppress the expression of minority interests. I believe that that is something that the Committee should think about carefully before proceeding.

Lord Mackay of Ardbrecknish

I was interested in the Minister's reply. I do not believe that he turned his mind to the question which arose in the Scottish referendum where there could have been four umbrella groups to address the four possibilities. Although only two sides of the argument were up and running, an attempt was made to create an organisation to say "yes" to a Scottish parliament but "no" to tax-raising powers, and the other way round; in other words, "no" to a Scottish Parliament but "yes" to tax-raising powers, on the principle that if one had to have such an arrangement it should be a proper one and take responsibility for some of its own decisions vis à vis the taxpayer. Those two organisations did not get off the ground simply because a great deal of support was not forthcoming. Clearly, if the electoral commission had given them funding to get off the ground they would have been up and running. It would not have influenced the final outcome, but there would have been a good deal more split voting than there was in the final analysis.

I do not approve of two-question referendums which complicate the issue; there should be only one question and that should be the end of it. But if the Government insist on two questions, or even more, obviously this Bill should contain provisions to ensure that all the various outcomes can be covered by umbrella organisations. Can the Minister provide any advice as to that? To help the noble Lord in that regard, perhaps one may go back to some of his other answers. Although I appreciate the Minister's point about the electoral commission having to make difficult decisions, this Bill is still in an unsatisfactory position. The Secretary of State still has some power over how a referendum is conducted.

One is supposed to have a generic referendum Bill so that when Parliament wants a referendum the only matter that it must decide, after (one hopes) consultation with the electoral commission, is the question to be put and on what date the referendum should be conducted. The rest of the rules should slot into place, as they do for a general election, without any need for Secretaries of State to take powers to make rules and regulations for one specific referendum.

Perhaps I may suggest to the Minister that no great pressure arises from the part of the Bill on referendums. We could quite easily take out the whole matter which would allow a quicker passage of the Bill and enable us to reach the end of the Session more quickly. It would also allow Her Majesty to come down to this Chamber very much sooner than is likely if we carry on with the whole of the Bill. I suggest to the Minister that he take out the referendum part completely. His right honourable friend the Prime Minister has clearly signalled that this part will not be needed because we will not have a referendum on the euro in the next Parliament. Even if we do, the Prime Minister will vote no, which at least gives me some confidence about the eventual outcome.

But it is a serious point. If this is not a generic referendum Bill, which clearly it is not—otherwise I would not need my first amendment and the Secretary of State would have no involvement—why do not the Government take away this part of the Bill and come back with it in the next Session? After all, that is only two or three weeks away, or two or three months away or perhaps next year—who knows? They could then give us a proper generic referendum Bill which we could discuss separately from the provisions surrounding general elections, which I understand the noble Lord wants to get on the statute book quickly because of the election that the Government want to hold on the first Thursday in May.

3.30 p.m.

Lord Bach

I have learnt a great deal from the noble Lord about both the Prime Minister's views and about the date of the general election. I am very grateful to him for telling me. As always, the noble Lord is very seductive indeed in the proposition he puts forward, which is that the whole of the referendum part of the Bill should be taken out and brought back on another day. However, I am afraid that I shall not fall for that, seductive though it is. It is important for all political parties and all those concerned with these matters that we get the Bill through as quickly as possible. Who said that the only referendum would be on the euro? How does the noble Lord know that there may not be referendums on other items before any referendum on the euro?

Where there are two questions, a particular outcome may he absurd. It would not therefore be appropriate to have a designation in such cases. That then opens the possibility of two organisations being designated on one side and only one on the other. There is a political judgment to be made, which in the end must rest with Parliament. It will rest with Parliament through the affirmative order that will have to go through both Houses of Parliament before it can be implemented.

Lord Elton

Does the noble Lord then accept my point that it is a political judgment and that it may be about a political question? That will then give an advantage to the party in the majority in Parliament at the time which could have the effect of silencing the expression of the views of the minority. If that is the case, this is yet another example of the increase of the powers of the Executive; and it is to be regretted.

Lord Bach

The power to make the final decision would not be taken away from Parliament. That would be another loss of Parliament's power. The noble Lord cannot have it both ways. The Secretary of State will make a recommendation and Parliament can either accept it or refuse it. As I have already said, the commission will have made its views publicly known. One can imagine the outcry there would be if the eventuality happened which the noble Lord fears. I think we can entrust it to Parliament.

Baroness Carnegy of Lour

I do not think that the noble Lord fully understood the implications of what my noble friend Lord Mackay was saying about the possibility of four outcomes, as happened in Scotland. During that campaign it was very difficult indeed for people to work out the implications of the interrelationship between tax-raising powers and the devolved body. Those implications are only now beginning to dawn on people. Had there been a proper discussion during the referendum campaign that would have been understood from the outset. Perhaps I may suggest to the Minister that he should look carefully at what my noble friend said when he spoke to the second amendment and appreciate that the answer he has just given did not address the problem.

Lord Lamont of Lerwick

I support what was said by my noble friend Lord Mackay. Surely the whole purpose of the electoral commission is to take away from the Government, who, by definition, are an interested party, matters that are accurately politically sensitive. As has been demonstrated in this short debate, the Government could easily give themselves an advantage by taking the decision as to whether there should be one umbrella organisation or two umbrella organisations. That might be important in a referendum. It is fairly extraordinary of the Minister to say, "Ah, but the recommendation of the electoral commission will have been published. There will be an outcry if we ignore that". On various points the Government are ignoring the recommendations of the Neill committee. We have not had much of an outcry because everyone knows the Government can normally get their way. This is not an adequate safeguard.

Lord Mackay of Ardbrecknish

My two noble friends are quite right. When, towards the end of his remarks, I heard the Minister say that it was up to the Government to decide and not the electoral commission, I began to wonder why we are to have an electoral commission at all. It was a little like saying we will have a referee—

Lord Bach

I believe I said it was for Parliament to decide, not the Government. Parliament will have the final say.

Noble Lords

Oh!

Lord Bach

I see the difference. Do noble Lords opposite not see it?

Lord Mackay of Ardbrecknish

I have been in Parliament for a long time. I know the distinction. But, when the truth is told, it is more imagined than real. The point is that, whether it is Parliament or whether it is the Government, I thought that the principle behind an electoral commission was that it was to be a kind of referee; especially when it came to referendums, as we are discussing now. You cannot say, "Let us have a referee", and then say "But all his decisions are subject to a decision and a vote by the players after he makes his decision whether they will go along with the referee". That is thoroughly unsatisfactory.

Like my noble friend Lady Carnegy of Lour, I do not think the Minister addressed the question of the four possible outcomes. He seemed to think that some of the outcomes would be so ludicrous as not to be worthy of contemplation. But the truth is that in Scotland the two umbrella outcomes were "yes, yes" and "no, no". In fact the Labour Party in Scotland actually chose the third option: to have a Scottish Parliament and not to have tax-raising powers because it said clearly that it had no intention of using those powers. So it campaigned for a "yes, yes". In fact it should have been campaigning for a "yes, no" because that is how it has turned out. That is what the Government will do. So the "yes, no" position was a perfectly legitimate one to argue and to be one of the umbrella organisations to get some of the money.

I started off this debate as a probe, but like all probes one begins to turn over stones that one did not realise were there. I must say that the Government's attitude to the electoral commission has rather appalled me. I wonder what this body is now worth. Indeed, I would suggest that between now and Report stage the noble Lord reads the Nairne committee's recommendations on the whole issue. Perhaps he will see how far adrift he is from reality. I am so appalled by that answer and by the idea that the electoral commission is just there for a bit of window dressing to allow the Government to get their own way through Parliament—that is what it comes to—that I shall test the opinion of the Committee.

3.39 p.m.

On Question, Whether the said amendment (No. 233) shall be agreed to?

Their Lordships divided: Contents, 98; Not-Con tents, 160.

Division No. 1
CONTENTS
Aberdare, L.	Howe of Aberavon, L.
Ampthill, L.	Jopling, L.
Anelay of St Johns, B.	Kimball, L.
Astor, V.	Laing of Dunphail, L.
Astor of Hever, L.	Laird, L.
Beaumont of Whitley, L.	Lamont of Lerwick, L.
Biffen, L.	Luke, L.
Blackwell, L.	Lyell, L.
Blatch, B.	McColl of Dulwich, L.
Bledisloe, V.	McConnell, L.
Boardman, L.	Mackay of Ardbrecknish, L.
Brabazon of Tara, L.	Mackay of Clashfern, L.
Brightman, L.	Marsh, L.
Byford, B.	Masham of Ilton, B.
Caithness, E.	Mayhew of Twysden, L.
Campbell of Alloway, L.	Miller of Hendon, B.
Campbell of Croy, L.	Monro of Langholm, L.
Carlisle of Bucklow, L.	Mowbray and Stourton, L.
Carnarvon, E.	Murton of Lindisfarne, L.
Carnegy of Lour, B.	Noakes, B.
Colwyn, L.	Northbourne, L.
Cope of Berkeley, L.	Northbrook, L.
Cox, B.	Northesk, E.
Crathorne, L.	Park of Monmouth, B.
Crickhowell, L.	Pearson of Rannoch, L.
Cuckney, L.	Peel, E.
Dean of Harptree, L.	Platt of Writtle, B.
Denham, L.	Plumb, L.
Dixon-Smith, L.	Renfrew of Kaimsthorn, L.
Eccles of Moulton, B.	Renton, L.
Elles, B.	Roberts of Conwy, L.
Elliott of Morpeth, L.	Rogan, L.
Elton, L.	Rotherwick, L.
Ferrers, E.	Ryder of Wensum, L.
Fookes, B.	Seccombe, B. [Teller]
Forsyth of Drumlean, L.	Sharpies, B.
Fraser of Carmyllie, L.	Shaw of Northstead, L.
Freeman, L.	Simon of Glaisdale, L.
Gardner of Parkes, B.	Soulsby of Swaffham Prior, L
Geddes, L.	Strathdyde, L.
Gilmour of Craigmillar, L.	Swinfen, L.
Glentoran, L.	Thomas of Gwydir, L.
Goschen, V.	Trumpington, B.
Gray of Contin, L.	Vinson, L.
Harris of High Cross, L.	Vivian, L.
Hayhoe, L.	Waddington, L.
Henley, L. [Teller]	Wade of Chorlton, L.
Hooper, B.	Wilcox, B.
Howe, E.	Young, B.
NOT-CONTENTS
Acton, L.	Amos, B.
Addington, L.	Andrews, B.
Ahmed, L.	Archer of Sandwell, L.
Allen of Abbeydale, L.	Avebury, L.
Alli, L.	Bach, L.
Alton of Liverpool, L.	Barnett, L.

Bassam of Brighton, L.	McIntosh of Haringey, L. [Teller]
Berkeley, L.
Billingham, B.	MacKenzie of Culkein, L.
Blackstone, B.	Mackenzie of Framwellgate, L
Blease, L.	McNally, L.
Blood, B.	Maddock, B.
Borrie, L.	Mason of Barnsley, L.
Bradshaw, L.	Massey of Darwen, B.
Bragg, L.	Merlyn-Rees, L.
Brennan, L.	Methuen, L.
Brooke of Alverthorpe, L.	Mishcon, L.
Brookman, L.	Morgan, L.
Bruce of Donington, L.	Newby, L.
Burlison, L.	Nicol, B.
Carter, L. [Teller]	Northover, B.
Christopher, L.	Orme, L.
Clarke of Hampstead, L.	Parekh, L.
Clinton-Davis, L.	Patel of Blackburn, L.
Cocks of Hartcliffe, L.	Paul, L.
Craig of Radley, L.	Peston, L.
Dahrendorf, L.	Phillips of Sudbury, L.
David, B.	Plant of Highfield, L.
Davies of Coity, L.	Puttnam, L.
Davies of Oldham, L.	Ramsay of Cartvale, B.
Desai, L.	Randall of St. Budeaux, L.
Donoughue, L.	Rea, L.
Dormand of Easington, L.	Redesdale, L.
Dubs, L.	Rendell of Babergh, B.
Elder, L.	Rennard, L.
Evans of Parkside, L.	Richard, L.
Ezra, L.	Richardson of Calow, B.
Farrington of Ribbleton, B.	Rodgers of Quarry Bank, L.
Faulkner of Worcester, L.	Roll of Ipsden, L.
Filkin, L.	Roper, L.
Fitt, L.	Russell, E.
Fyfe of Fairfield, L.	Sandberg, L.
Gale, B.	Sawyer, L.
Geraint, L.	Scott of Needham Market, B.
Gibson of Market Rasen, B.	Serota, B.
Gladwin of Clee, L.	Sharp of Guildford, B.
Goodhart, L.	Shepherd, L.
Goudie, B.	Shore of Stepney, L.
Gould of Potternewton, B.	Shutt of Greetland, L.
Graham of Edmonton, L.
Greengross, B.	Simon, V.
Gregson, L.	Slim, V.
Grenfell, L.	Smith of Clifton, L.
Hardy of Wath, L.	Smith of Leigh, L.
Harris of Greenwich, L.	Stoddart of Swindon, L.
Harris of Haringey, L.	Stone of Blackheath, L.
Harris of Richmond, B.	Strabolgi, L.
Harrison, L.	Symons of Vernham Dean, B.
Haskel, L.	Taverne, L.
Hayman, B.	Taylor of Blackburn, L.
Hilton of Eggardon, B.	Taylor of Gryfe, L.
Hollis of Heigham, B.	Tenby, V.
Hooson, L.	Thomas of Walliswood, B.
Hoyle, L.	Thomson of Monifieth, L.
Hughes of Woodside, L.	Tomlinson, L.
Hunt of Kings Heath, L.	Tordoff, L.
Irvine of Lairg, L. (Lord Chancellor)	Turnberg, L.
	Turner of Camden, B.
Islwyn, L.	Uddin.B.
Jay of Paddington, B. (Lord Privy Seal)	Varley, L.
	Wallace of Saltaire, L.
Jeger, B.	Walmsley, B.
Jenkins of Putney, L.	Warwick of Undercliffe, B.
Judd, L.	Whitaker, B.
King of West Bromwich, L.	Whitty, L.
Kirkhill, L.	Wigoder, L.
Lea of Crondall, L.	Williams of Crosby, B.
Lincoln, Bp.	Williams of Elvel, L.
Lipsey, L.	Williamson of Horton, L.
Lockwood, B.	Winston, L.
Lofthouse of Pontefract, L.	Woolmer of Leeds, L.
Macdonald of Tradeston, L	Young of Old Scone, B.

3.50 p.m.

Lord Bassam of Brighton moved Amendment No. 233A: Page 66, line 12, leave out subsection (5).

Clause 103, as amended, agreed to.

Clause 104 [Applications fir designation under section 103]:

[Amendment No. 234 not moved.]

Clause 104 agreed to.

Clause 105 agreed to.

Schedule 11 [Assistance available to designated organizations]:

Lord Bach moved Amendment No. 234A: Page 146, line 19, leave out ("Post Office regulations") and insert ("such reasonable terms and conditions as the universal service provider concerned may specify").

The noble Lord said: I hope that this group of government amendments will prove to be slightly less controversial than the last group. All bar the last of these amendments relate to paragraph 1 of Schedule 11 to the Bill. The paragraph sets out the right of designated referendum organisations to send a free mailshot to every elector or household in the area in which the referendum is being held. As it stands, paragraph 1 refers to the Post Office and to Post Office regulations. This reflects the fact that, at present, the Post Office is the only universal postal service provider.

The Committee will remember well the Postal Services Act 2000. That Act will alter the framework for the provision of postal services in this country. Under the provisions of that Act, there may, in due course, be a number of licensed universal postal service providers, any one of which could deliver a free mailshot on behalf of a designated referendum organisation. These amendments take account of this new system of regulation for postal services. The amendments mirror those made by the Postal Services Act to Section 91 of the Representation of the People Act, which provides for a free mailshot for candidates at a parliamentary election.

Amendment No. 234L is concerned with those provisions of Schedule 11 governing referendum campaign broadcasts. Paragraph 4(4) places the licensing body under a duty to have regard to the views expressed by the electoral commission before it makes any rules under Sections 36 or 107 of the Broadcasting Act 1990. The amendment makes it clear that that duty extends only to views expressed by the commission in relation to referendum broadcasts. I beg to move.

Viscount Astor

I should like to ask the Minister two questions. First, he stated that the amendments make provision for universal postal service providers. Can he confirm my assumption that, in any given area, such a universal service provider would carry out exactly the same role as that which would have been provided by the Post Office and thus would be subject to the same regulations? Furthermore, do the regulations which are to apply come from the Postal Services Act 2000? If not, to which regulatory provisions would a universal postal service provider be subject?

Secondly, Amendment No. 234L refers to provisions on broadcasting during referendums. The Minister used a phrase which somewhat surprised me. He referred to the fact that a broadcaster would need to, have regard to the views expressed by the electoral commission". Is that not a slightly weak statement? I presume that any broadcasting body would be subject to the same full regulatory framework which applies to all the current broadcasters: the BBC, ITV and so forth. Can the noble Lord assure me that a new broadcaster, whether it be an Internet service or a cable company, will not only need to "have regard to", but will also be subject in exactly the same manner to the existing rules which pertain to broadcasts made during elections and referendums?

Lord Fraser of Carmyllie

Those of us who were engaged in the "Think Twice" campaign in Scotland preceding the establishment of the Scottish Parliament will recollect how helpful the Post Office was at that time. When we had gathered together sufficient money—the service was by no means free—the Post Office agreed to distribute our literature to every household in Scotland. Most conveniently, it was prepared to do so some five days after the referendum had taken place. Not surprisingly, we did not consider that to be the best use of our limited funds.

Can the Minister give the Committee a reassurance that the revised provisions in Schedule 11 would require the Post Office or a universal postal service provider to undertake such distribution exercises at a time falling within a reasonable period before the referendum takes place; namely, neither too far in advance, nor—as in the circumstances that we encountered—after the event?

Lord McNally

I should like to comment along similar lines. We should recall the experience of the election campaign for the Greater London Assembly. Only after this House insisted on it was a freepost granted. Given the "reasonable terms and conditions" which may be specified by the universal service provider, what would happen if one or other of the competing parties finds those conditions unsatisfactory? What right of appeal has been put in place for a party that wishes to seek redress? Problems may arise if a campaigning organisation wishes to specify that its literature will take a certain form. Alternatively, the universal service provider may attempt to insist on rather irksome conditions.

A decision may seem reasonable from the universal service provider's point of view, but it may be quite unreasonable for one or other of the campaigning organisations. I should appreciate further clarification on the right of appeal.

Lord Bach

I think that I can give noble Lords the reassurances they seek.

The first amendment is consequential on changes to the framework of postal services being made by the recent Act. That Act enshrines in law a universal postal service which must be provided to all UK residents at a uniform tariff for postal packets weighing less than 20 kilograms. Certain postal operators who apply for a licence will be required to provide such services through the imposition of a licence condition. Those operators who are required by their licence to provide all or part of a universal postal service will be regarded as universal service providers. It is anticipated that the new Post Office plc will be such a provider, but in due course there may be others. The way in which they carry out their functions will need to be in accordance with the provisions laid down in the recent Act.

As regards the level of efficiency of such new providers, we cannot give any firm undertakings on that point. However, in response to the question put by the noble and learned Lord, Lord Fraser of Carmyllie, I am happy to give him the reassurance he seeks on that point.

So far as concerns the question about the electoral commission asked by the noble Viscount in relation to Amendment No. 234L, I can confirm that this amendment relates to referendum broadcasts; namely, the equivalent of party political election broadcasts, rather than to the general news coverage of referendums. In that sphere, the normal rules of balance and impartiality will continue to apply.

The noble Lord, Lord McNally, asked about appeals mechanisms. Our view at present is that appeals would be made to the Post Office, but I should like to write to him in more detail. Furthermore, I shall ensure that a copy of that letter is placed in the Library.

4 p.m.

Viscount Astor

The Minister has given a helpful reply. However, I am not sure it has cleared up my question in relation to broadcasting. I shall read what he said and if I have any further questions, I shall write to him before the next stage. It is a technical point.

Perhaps the Minister can clarify this issue for the Committee. The amendment states, such reasonable terms and conditions as the universal service provider concerned may specify". If during a referendum the Post Office covers one area of the country and a universal service provider covers another, can the Minister give an assurance that those "reasonable terms and conditions" will not vary from area to area and that one service provider will not have different terms and conditions from another? It is important that the rules for all those involved in a referendum are the same throughout the country.

Lord Bach

The universal service providers will be under licence from the Post Office, which will specify what services the universal service providers must provide.

Viscount Astor

Does that mean that they will be the same throughout the country?

Lord Bach

They will be consistent. Whether they will be exactly the same, I cannot say.

Viscount Astor

I am sorry to come back on this, but it is rather bizarre that we might find ourselves in a position where different parts of England are subject to different terms and conditions during a referendum campaign. That is not terribly satisfactory. Perhaps between now and the next stage the Minister will consider this matter further and come back and clarify the position.

Lord Bach

Let us see whether I can do that now. Obviously there will be consistent specifications set out under the terms of the licence, but no one can say exactly when each of the universal service providers if they exist at the time—will post the free mailshot through the door. To some extent, that will have to be at the discretion of the service providers. But a specification that it will have to be carried out by a certain time—it is no good doing it after the referendum, for example—will of course apply.

On Question, amendment agreed to.

Lord Bach moved Amendments Nos. 234B to 234L: Page 146, line 20, leave out ("charge for postage") and insert ("any charge for postage which would otherwise be made by a universal service provider"). Page 146, line 23, leave out ("regulations") and insert ("terms and conditions"). Page 146, line 27, leave out ("those regulations") and insert ("any such terms and conditions"). Page 146, line 28, after first ("of") insert ("any such"). Page 146, line 31, leave out ("72 of the Post Office Act 1969 (remuneration of Post Office for") and insert ("200A of the Representation of the People Act 1983 (remuneration of universal service provider for free postal"). Page 146, line 33, leave out ("the Post Office") and insert ("a universal service provider"). Page 146, line 34, leave out ("the Post Office in pursuance of the Representation of the People Act 1983") and insert ("such a provider in pursuance of that Act"). Page 146, line 37, at end insert— (""universal service provider" has the same meaning as in the Postal Services Act 2000."). Page 146, line 37, at end insert— ("() If this paragraph comes into force at a time when the amendments made to section 91 of the Representation of the People Act 1983 by the Postal Services Act 2000 have not come into force, then until such time as those amendments come into force, this paragraph shall have effect subject to such modifications as may be specified in the order under section 151 of this Act which brings this paragraph into force."). Page 148, line 13, at end insert ("for the purposes of this subparagraph").

Schedule 11, as amended, agreed to.

Clause 106 [Referendum expenses]:

Lord Bach moved Amendments Nos. 234M and 234N: Page 67, line 25, leave out ("either"). Page 67, line 27, leave out from ("purposes") to end of line 30.

The noble Lord said: These amendments were spoken to with Amendment No. 191. I beg to move.

On Question, Whether Clause 106, as amended, shall stand part of the Bill?

Lord Mackay of Ardbrecknish

With Clause 106 we enter into the arena of the expenditure which would be allowed in a referendum. Essentially, a number of amendments will be brought forward in the next few groups which look at this question from different angles. Perhaps the best way to start is with a clause stand part debate. I refer to the question that in referendums we do not attempt to impose limits on the expenditure of political parties or umbrella organisations.

There is a good basis for this. The first report on these issues was the Nairne commission report on the conduct of referendums to which reference has been made. The report considered all aspects of referendums. One of its main recommendations was the setting up of an electoral commission. I wish in particular to refer to guideline 14. It follows paragraphs in the report which discuss whether or not we should have limits on spending on referendums. The guideline states: On balance, it is not considered practical to exercise Government control over the total expenditure by those campaigning on either side in a referendum. Umbrella campaigning organisations should be required to undertake to provide accounts of monies received or spent on the campaign if they are to qualify for public money or services in kind". So Nairne quite clearly said that there should not be a limit on spending.

I turn now to the report of the Neill committee. In the debate on the first of today's amendments, the noble Lord, Lord Bach, heavily prayed in aid the Neill committee to counter what I was saying. He quoted from its report and said, "That is it. Neill said such and such and that is what we should do". I just want to remind the Committee of what the Neill committee said on the question of referendum expenditure. It explicitly followed Nairne and rejected the approach taken in the Bill.

The committee pointed out that in referendums political parties may well not be the principal contestants. Indeed, political parties may be split on which side to support— just as the Labour Party, as I mentioned earlier, would be split in a referendum on proportional representation. Who should decide on which side of the argument the £5 million allowed to the Labour Party should be spent?

The Neill committee looked into this issue and recognised the problems. I do not want to read it all out, but quoting from it saves me making the argument. The Neill committee makes a powerful case against the Government's current position and in favour of removing these limits. The report refers to the imbalance which is possible if one does not have limits, and it goes on to state: The case, in principle, for imposing spending limits in referendum campaigns is a strong one". No doubt the Minister will quote that. However, it goes on: We believe, however, that it would be futile and possibly also wrong to attempt to impose such limits in connection with referendums. Ordinary election campaigns bear some resemblance to sporting contests, in the sense that they are fought by competing 'teams' in the form of the political parties. It is known long in advance that such contests will take place (though, in the case of general elections, the precise date may be uncertain). The political parties themselves are, in the great majority of cases, permanent institutions with leaders, members, headquarters, and professional staffs. By contrast, a referendum campaign is more like a free-for-all. Anyone can participate. Many do. The political parties may, or may not, be the principal contestants, It is often not known long in advance whether a referendum will take place, let alone when it will take place. Those on the Yes and 10 sides of the argument may never have worked together before—and may, quite possibly, be unwilling to work together now"— a point I made earlier. This is the important point: It appears to us that under these circumstances it would be impracticable to try to control campaign spending. The number of individuals and organisations involved would often be too large. The time-scale would often be too short. Adequate accounting procedures would often be impossible to put in place. The administrative apparatus required would resemble one of Heath Robinson's most outlandish contraptions—and would almost certainly not work". And yet the Government have gone ahead with spending limits which are indefensible in theory and unworkable in practice.

Amendment No. 237 seeks to ensure that at least an uncoupling is made between the results at the last election and the amount of money to be spent. Why should the amount that a political party can spend on a referendum be dependent on its votes in a previous general election? A referendum is an entirely different issue; it has nothing to do with a general election. In fact, if an issue had been decided at a general election, there would be no need for a referendum. Some might think that certain issues should be decided at general elections and not left to referendums, but that is not the road along which we are going.

As the Committee will hear, in a referendum on the euro, Labour, the Liberal Democrats, Plaid Cymru and the SNP could spend something like £9 million to scrap the pound, but the Conservative Party would be allowed to spend only £5 million to save it.

Earlier, I suggested to the noble Lord, Lord Bach, that there might be more than one umbrella organisation. The noble Lord's best argument—perhaps his only argument— against my proposition was that if there were two umbrella organisations on one side and only one on the other, the two organisations on the one side might have two freeposts. I wrote his words down, it would give one side … an unfair advantage". That is what he said at 3.23 p.m. today. When he rises to reply at 4.23 p.m., he will no doubt be oblivious to the fact that if one side is allowed to spend at least £9 million, because of the political party line-up, and the other side is allowed to spend only £5 million, that gives an unfair advantage to one side in exactly the same way as allowing two umbrella organisations on one side to put out free leaflets would give that side an unfair advantage.

Amendment No. 238 seeks to impose spending limits on each side of the referendum as a whole. That is the attractive alternative. But the reality is, as my right honourable friend Sir George Young acknowledged in another place on 16th February, while it is an attractive solution, it is highly impracticable, because there will be differing organisations which will want to campaign in a referendum and it will be impossible to bring them all under the same total umbrella.

If that is impractical, it seems to me that the only alternative, in order to allow a fair referendum to take place, is not to have any spending limits at all. No spending limits seem better than rigged spending limits. I do not want to be emotive about this matter, but they are rigged. These spending limits would have been rigged in the Scottish referendum where, even if no side had been able to raise the money, it would have been very limited in the amount that it could have spent in comparison with Labour, the Liberal Democrats and the Scottish Nationalists. So there would have been an imbalance. The noble Lord, Lord Bach, may come to regret his phrase, give one side … an unfair advantage", just as his noble friend Lord Bassam has come to regret his phrase at an earlier stage of the Bill, "unworkable and bureaucratic".

Lord Bassam of Brighton

For the record, I used the phrase "cumbersome and bureaucratic". I might perhaps have added a word, and said "necessarily cumbersome and bureaucratic".

Lord Mackay of Ardbrecknish

There we are. If it is cumbersome and bureaucratic but "necessary", it is fine. I do not think that a great deal of the Bill is necessary. Therefore its cumbersome and bureaucratic nature will make it impossible for the political parties—which, as I have told the Minister time without number, are largely voluntary organisations—to remain within the law, do their work and run elections, which are the very basis of our democratic society.

The Neill committee concluded that there were severe problems in relation to spending limits in referendum campaigns and the committee rejected them. We agree with the Neill committee. The committee's conclusion is not "if", "may be", or "possibly"; it is a very definite rejection. The Government should either make an overwhelming case for going against the conclusions of the Neill committee, or they should withdraw those parts of the Bill which place caps on spending and allow referendums to be uncapped. I oppose the Question that the clause shall stand part.

4.15 p.m.

Lord Lamont of Lerwick

I rise to speak to Amendments Nos. 235L and 235M standing in my name. They deal with the same subject of caps on expenditure by reference to political parties during a referendum. I have also given formal notice of my intention to oppose Clauses 112 and 113 and Schedule 13 in order to be able to have a debate on the whole principle of the caps, and to put forward an alternative to the idea of having equal caps on both sides.

The Bill contains a whole series of caps. There is a cap of £5 million on a designated umbrella organisation; there are caps on individual political parties, defined according to their share of the vote at the previous election; there are caps on what are described as "other permitted participants" of £0.5 million—these include individuals, registered companies and unincorporated associations; in addition, there is a limit of £ 10,000 on spending by individuals who are not "permitted participants".

The question raised by my noble friend Lord Mackay is one that I raised at Second Reading and one to which the noble Lord, Lord Goodhart, speaking at that time from the Liberal Front Bench, was quite sympathetic. In addition, the Government said several times in another place that they had an open mind on the matter, they were open to argument and were prepared to consider the position. This is not a party point; it is not merely about the referendum on the euro. It is a fundamental point about equity in framing the rules for a referendum. The Government, in attempting to stop people, as they put it, "buying" the result of a referendum, have created an in-built inequity in what is proposed.

As my noble friend on the Front Bench said, the basic problem is that the Government's attempt to control the expenditure of political parties in a referendum does so based on their share of the vote at the previous election. Two questions arise. First: is it right to concentrate on political parties at all? Secondly, if the concentration is on political parties, is it right to do so by relating the spending limit to their percentage of the vote at the previous election? The Government's proposition is questionable in a number of respects, and in other respects positively wrong. It is certainly against the recommendations of the Neill committee.

It is not necessarily the case that political parties will always be the key players in every referendum. The whole reason that we have referendums is to deal with issues that cut across party lines. As Professor Pulzer said in evidence to the Neill committee, the whole point about the referendum is to get opinions from people who are organised not along the lines of the established political parties, and very frequently people do not vote in accordance with the advice that is given to them by the parties that they normally support". In many of the issues put forward in referendums, parties are split. So the concentration on parties is arguable. Perhaps there is an argument for saying that political parties should stand back from referendums and leave them to the umbrella organisations. In 1998, the Neill committee touched on this point, and put the matter bluntly (at paragraph 12.30): To represent referendum campaigns as merely another manifestation of the usual party political battle seems to us both misconceived in principle and false to the history of referendums since 1975". In the same paragraph, the committee states: We believe that experience shows that referendum campaigns may well feature people from all parties, and also people with no party allegiance at all, on both sides of the argument". So I question the targeting of political parties in this way.

Even if it is right to apply caps to political parties, it surely cannot be right to do so in relation to their share of the vote at the previous election. That proposition is fatally flawed. The whole point of referendums is to deal with issues that cut across and do not conform with party divisions.

My noble friend referred to proportional representation. There are Conservatives in favour of proportional representational. It has been said that there are very few. There may be rather more among people who vote Conservative but who are not Conservative activists. But if the Conservative Party is opposing PR in a referendum, why should it be permitted to spend money that is based on its share of the vote, including Conservatives who are in favour of proportional representation?

Obviously, the point could be made more dramatically with the case of a referendum on the euro. There are many Labour Party voters, not party members, who are against the euro; indeed, for all I know, perhaps as many as half of Labour voters. If the Labour Party supports the euro in a referendum campaign, why should it be allowed to spend a permitted amount of money that is calculated by a percentage that includes millions of people who do not share its view?

It seems to me that the proposition put forward by the Government ignores the fact that, in a referendum, people are voting on one issue. However, in a general election, people are voting on many issues. People who vote for a party in a general election may have a different view from their party in a referendum. The main point is that the outcome is extremely inequitable. As I believe the noble Lord, Lord Goodhart, acknowledged on Second Reading, this is not a party point. The unfairness would certainly arise in the case of a euro referendum where, if the caps were applied on the basis of votes cast at the last general election—that is to say, in 1997—it would result in caps on funding that were massively in favour of the "yes" side in a euro campaign. My noble friend Lord Mackay illustrated that fact, although he left out of his calculation the £5 million for the umbrella body.

However, on the "no" side, there would be £5 million for the umbrella body, £5 million for the Conservative Party, being a party that achieved more than 30 per cent of the vote at the previous election, making around £10 million in all. Conversely, on the other side, you would have £5 million for the umbrella organisation, £5 million for the Labour Party, which got over 30 per cent of the vote, and £3 million for the Liberal Democrats, which got between 10 and 20 per cent. I read in the Hansard report of the debate in another place that there were seven other parties, which could attract ceilings of £500,000. If that is correct, that would make a total of £16.5 million, compared with £10 million. However, if that is incorrect—I have not checked the figures myself—one merely adds to the Liberal Democrat and Labour Parties the Scottish and Welsh Nationalists, which would give £14 million against £10 million for the "no" campaign.

What is the argument that is put forward in favour of this rather extraordinary proposition? The Government say that they want, to prevent people buying the referendum". That is why they want the caps. However, they are going a long way towards allowing one side possibly to buy the result. It seems to me that there is no point in having these ceilings on the various participants in a referendum—political parties, individuals, associations, companies and umbrella groups—if there is no overall expenditure limit. What is the point of having sub-limits if there is no overall limit? I should be willing to give way to the Minister if he could answer that question. I do not see the point of having sub-limits in the absence of an overall limit. I do not know whether the Minister can explain that point to me. As I said, I should be most willing to give way to the noble Lord if he wishes to intervene in my speech at this point. I simply do not follow the logic of it. I see that the Minister does not seem to want to intervene.

It seems to me that the Government have thrown equity out of the window in their enthusiasm simply to have caps that have no purpose. The only purpose of having caps on political parties would be where the vote in a referendum corresponded to party lines. That is very unlikely to be the situation in most referendums. Incidentally, as I said earlier, the Government have also rejected the findings of the Neill committee. As my noble friend Lord Mackay said, it was not opposed in principle but in paragraph 12.46, the committee said that, it would be futile and possibly also wrong … to impose such limits in connection with referendums". It seems to me that there are two ways to deal with the problem: either you have a cap for both sides—an umbrella cap—or, as my noble friend from our Front Bench said, you have no caps. The first option of equal spending on both sides for the two umbrella organisations is the subject of both my amendments, Amendments Nos. 235L and 235M. Amendment No. 235L would cap the spending on either side in a referendum at £12 million. But I understand that many people may object to that; indeed, that may not be appropriate for referenda on certain subjects. We must not let our thoughts be dominated by one particular subject. Amendment No. 235M states that the spending on both sides should be equal, but that the precise sum should be determined by the electoral commission.

As my noble friend Lord Mackay hinted, I know that there are objections to that suggested course of action. I am sure that it must have been considered by the Neill committee. We look forward to hearing what the noble Lord, Lord Goodhart, has to say on the matter. The objections to my two amendments would be as follows: first, not everyone would necessarily want to be corralled into one umbrella organisation. Indeed, there are often people on one side of an issue in a referendum who are hardly on speaking terms with each other. In the last referendum in Northern Ireland, the parties did not want to campaign together in favour of the Belfast agreement. I understand that objection to what I propose, but the fact that people do not want to campaign together in an umbrella organisation does not mean that it is wholly impossible for them to agree, in discussion with the commission, some way in which the cap could be shared out among them. So that is not entirely impossible.

A second objection to what I propose might be our increasingly familiar friend the Human Rights Act, and Section 10 of the ECHR. In Quebec, provisions similar to those that I propose were struck down in advance of a referendum on the legal grounds that they were a violation of the rights of those who did not want to be ushered in and forced into the umbrella organisation. I realise that there are arguments against caps. However, I put it to anyone who approaches this in an unbiased way that what is proposed by the Government is manifestly unfair and not in accord with the reality of referenda.

It is not just the caps on political parties; it seems to me that it will be very easy to get round all the proposed caps. Indeed, they may be very ineffective. With respect to the Neill report, I know that one witness was quoted as saying, "Show me a cap and I'll show you how to get round it". As regards the amoeba phenomenon—that is, the idea that you can limit an organisation to £500,000—it will be very difficult for an organisation that is not a political party to enforce such a limit. I say that because an organisation can divide itself into two, three or four separate organisations. The impracticality applies also to the £10,000 limit on individuals who are not registered participants. As I see it, there is nothing to stop different people getting together with their individual £10,000 limits and making very large contributions to the campaign.

I entirely understand why the Neill committee came to the conclusion that caps are impractical. There were, of course, no caps in the 1975 European referendum and none in the 1979 Scottish referendum. Faced with this real problem, one might wonder whether caps have any purpose. If a rich individual whom one is trying to control can buy a newspaper, he is already well round the caps. Indeed, there will be a great deal of expenditure which is not controlled.

In my amendments and in my remarks about Clauses 112 and 113 and Schedule 13, I have endeavoured to state the problem. I have also tried to state some of the arguments that I believe could be deployed by the Minister against the idea of having caps on the umbrella organisations. It seems to me that we have a choice: either we have a cap on the umbrella organisations, or we have no caps. I believe that what the Government propose is manifestly unfair and has very little merit, as was clearly demonstrated by the Neill report.

4.30 p.m.

Lord Shore of Stepney

We are dealing with basic questions about the referendums and how they should be controlled in future; whether there should be control of who can spend and how much. The problem that the Neill committee faced was quite fairly stated by the noble Lord, Lord Mackay, when he said that that committee liked the idea of controlling expenditure in terms of avoiding an arms race— and achieving a certain fairness—but reluctantly came to the conclusion that it was impractical to do that with a referendum which brings into the arena so many different and disparate interests. Therefore, it recommended that there should be no attempt to cap the expenditure on a referendum.

The Government rejected that particular proposal. I do not believe that I am misrepresenting the views of the Neill committee, of which I am a member, in saying that we were not particularly upset because we hoped and expected that the Government would produce a workable scheme which would in fact limit the amount that was spent and do that fairly and effectively. The Bill and its provisions give us the answer but for a number of reasons, it does not provide adequate regulation of campaign expenditure in relation to referendums.

As regards how much, that is fairly easy for individuals, according to the Bill. One must not spend more than £10,000 advocating "yes" or "no" during a particular referendum campaign. I shrug my shoulders as to how that is to be policed and monitored. I assume that it is just possible.

The big question is in relation to the permitted participants and those who can spend large sums of money. The first in the list are the campaign organisations for the "yes" and the "no" campaigns. Clearly, they must have a substantial sum of money. They are awarded £5 million each in the Bill. Then there are the political parties. I believe the point has been fairly made that the strength of the political parties in the House of Commons has little to do with the strength of their support for a "yes" or "no" vote in a referendum campaign. Nevertheless, some allowance must be made for the political parties. Whether the actual sums of money they are allowed to spend and the relationship between them are fair are matters that can be debated and vigorously questioned, as, indeed, they should be.

I am even more concerned about the next category. The third category is neither the political parties nor the "yes" or "no" campaigns, but those referred to in the Bill as individual companies or an unincorporated association. They are permitted participants provided they have registered as such. They can spend £500,000 each. When one considers the vested interests that could be involved in a particular referendum campaign, that again is a coach and horses through the control of the money. I can well imagine a situation in which more than 10 companies take part on one side of a campaign and easily equal the £5 million allotted to a major political party or to the headquarters of the "no" or "yes" campaign.

Then we reach the point very properly made and brought out very clearly by the noble Lord, Lord Lamont, in his amendment: is there an overall cap? We have individuals caps and I have just been through them. Is there no limit on what can be spent? As regards the euro, let us imagine the vested interests on one side or the other: is there to be no cap? Are we really saying that money can be poured out without any constraint? The Minister must answer that. Is there to be a cap? We can argue about whether the cap proposed by the noble Lord, Lord Lamont, is the right one can but in principle, is there to be a cap on the aggregate total expenditure in a referendum campaign?

That brings me back to the other fundamental question of who may take part. Clearly, companies can spend a great deal of money. The Minister and his friends have driven an even bigger coach and horses through the control mechanism because they have allowed, as permitted participants, not only British companies, but any company registered in the European Union. Can one imagine a referendum on the euro in which companies in the European Union are allowed to spend up to £500,000 each in the British campaign? Even the thought of that is outrageous. Yet the Government have feebly accepted that, because of some arcane ruling by the European Court of Justice, it would somehow be discriminatory for us to regulate the practice of our own democracy. That is ruled out by a single judgment of the European Court of Justice in a case which has nothing to do with the issues before us.

I say to this House—and I hope that others are listening outside—that that this is one of the greatest outrages and the abnegation of sovereignty and self-respect in the history of our nation. We are allowing a foreign body to decide how we should practise democracy and the control and management of democratic procedures in our own country. This wicked provision must be ruled out.

Lord Blackwell

I am taken by the point made by my noble friend Lord Mackay that it is likely to be difficult to find caps which are both practical and equitable and that it may make more sense to remove caps altogether.

I particularly want to take up a point raised by the noble Lord, Lord Lamont, and his amendments. If there are to be caps, I question the relevance of expenditure as regards political parties and referendum campaigns. It seems to me that by definition referendums concern single issues which cut across party political lines. It is difficult, but not inconceivable, to imagine a situation where one could have the leadership of all the main political parties aligned on one side of a referendum and the opposition to that point of view drawn from members of all political parties. In that situation, if one were to allocate expenditure based on political parties concerning an issue that cuts across them, it may arise that expenditure would be heavily weighted on one side of the issue simply because of the arithmetic concerning the political parties supporting an election campaign. If we are to have referendums about issues as opposed to those concerning support for parties at a general election, then expenditure based around political parties is both irrelevant and potentially damaging.

Lord Goodhart

This is a very complex issue. I am not sure that I agree either with the Government or with the noble Lord, Lord Mackay of Ardbrecknish, on it. This group of amendments raises three different questions. The first is whether there should be a total limit on the spending of either side in a referendum campaign. The second is, if there should be no total limit, should there nevertheless be a limit on the spending by any particular player in that campaign? Finally, if there should be a limit of that kind, what should it be?

I believe that the noble Lord, Lord Mackay of Ardbrecknish, slightly misrepresented the position of the Neill committee. We said that there should not be an overall total limit on expenditure. We did not consider whether there should be a limit on individual players. I think that the noble Lord, Lord Mackay, rather implied that we had said no to both questions whereas we said no to the first question and did not answer the second question.

On the question of whether there should be a limit on total spending, it seems to me pretty clear that we were right in coming to the conclusion that there should not be. It is fair to say that the Government have not attempted to impose a total limit on the spending of either side. There are certainly a number of objections to imposing a total limit. One is the great difficulty of enforcing and controlling that limit. It can possibly be done with an umbrella organisation if all the players on one side are willing to belong to that organisation. However, there are many referendums in which no umbrella organisation can be formed. The most obvious example—one which was mentioned in the Neill committee report—was the Good Friday referendum in Northern Ireland with on one side the Ulster Unionist Party, the SDLP and Sinn Fein, and, on the other side, the DUP and some republican splinter groups. It is perfectly obvious that neither side would have been willing to come together for the purpose of fighting a joint campaign. It would have been out of the question, for example, to have told the Ulster Unionists, "Sorry, you cannot spend any more money on this campaign because your allowance has all been spent by Sinn Fein".

Therefore we felt that it was plainly impracticable to impose an overall limit and, indeed, possibly wrong on grounds of freedom of speech in view of the Bowman decision in the European Court of Human Rights which concerned money spent in a particular constituency election campaign. By analogy that would also apply to a referendum and to the Canadian case which the noble Lord, Lord Lamont, mentioned in which it was held to be a breach of the right of freedom of speech under the Canadian charter of rights to require someone to join an umbrella group if they wished to participate in a campaign. In that case an umbrella group existed but someone said, "I do not want to join that umbrella group because I support the same argument as them but for different reasons and I wish to have my own say on the matter". It was held that that applicant was entitled to do that.

The question of whether there should be a limit on the spending of particular players in a campaign is, I think, much more arguable. The Neill committee did not consider that matter. In retrospect I think that we should have but I am not clear what conclusion we would have reached had we done so. The noble Lord, Lord Shore of Stepney, takes a strong view on that matter. I take a somewhat different view, although it is not so strongly held as that of the noble Lord. I believe that there are arguments for saying that one ought not to allow a particular political party, or rather a particular individual with extremely strong views on a subject, for example, Mr Brian Souter or Mr Paul Sykes, to fund an expensive campaign. I accept that there are difficulties. A number of those difficulties were justifiably pointed out by the noble Lord, Lord Lamont. However, I believe that there is an arguable case for saying that you can do that. If it is to be done, I am not happy with the way the Government propose to do it. Certainly the view of the Neill committee was that the emphasis on political parties in referendums was too great. We felt that in the case of referendum campaigns there were strong advantages in giving incentives to like-minded people to join in a single umbrella campaign. That would simplify the procedure in many ways. For example, it makes the question of broadcasting much easier.

If a political party on its own is entitled to spend as much as a whole umbrella group would be entitled to spend, I certainly feel that that places far too much emphasis on the role of the party. If more than one party is involved, together they may well be in a position to spend far more than the umbrella campaign. I regard the figures for party spending as far too high. I also take the view—I believe that both the noble Lords, Lord Mackay and Lord Lamont, mentioned this—that it is wholly wrong in principle in these cases to determine the amount of money that any political party is entitled to spend on the basis of its share of the vote. That seems to me to be wholly wrong. It is inconsistent with the rule in the case of general elections where although parties such as mine are likely to be unable to get close to the limit, nevertheless if we could do that we would be entitled to do it. I believe that the same principle should apply to party spending on referendums.

I am also somewhat concerned at the level of spending by permitted participants. I believe that the noble Lord, Lord Shore, got it somewhat wrong when he said that no individual could spend more than £10,000. If an individual becomes a permitted participant, the limit is not £10,000 but £500,000.

4.45 p.m.

Lord Shore of Stepney

I should make it quite clear that I was referring not to individual but to companies' expenditure which is specifically under the limit of £500,000.

Lord Goodhart

In a sense the division between individual and company spending is somewhat irrelevant because I think that the very large sums of money are not, frankly, likely to come from big commercial companies with large shareholdings but are much more likely to come from the private companies of wealthy individuals who might decide to put their companies' money into a campaign rather than their own. But be that as it may, it is certainly my view that a spending limit of £500,000 is too high. Even if one applies the 5 per cent test which was applied to third party spending for constituency and national campaigns in general elections, the figure would be reduced to £250,000. I believe that £250,000 is a more realistic figure than £500,000.

In principle I am quite happy with the idea of some control on spending by particular players. However, I am not happy with the way in which the Government have set about that. It is a matter which the Government should reconsider.

Lord Stoddart of Swindon

This subject is clearly fraught with enormous difficulties. The more I have listened to the argument, the more problems seem to arise, in particular with the route that the Government have chosen.

I agree very much with my noble friend Lord Shore of Stepney when he says that it is completely intolerable that the European Court of Justice should be able to decide to what extent our political parties might be financed; and that the electoral law that we all want—and the Government want—restricting the amount that companies can provide for political parties is to be decided by the European Court of Justice and not our own Parliament. I should have thought that every parliamentarian would want to agree with my noble friend. I am sorry that my noble friend on the Front Bench, and the Government, did not say to the European Court of Justice and the Commission, "This goes too far and we shall not go along with it, whether or not it is against supposed European law".

The question of expenditure in a referendum is fraught with difficulties. In this country, we do not have long-term experience of running referendums. Therefore we do not have too much experience to call upon. But it is absolutely certain that to base the amount which can be spent on the basis of political parties cannot be right; nor can the number of votes cast at the last election be the right basis because trends in opinions change within a period of six months, 12 months, three years or five years. So that is not a good basis on which to decide what each political party should spend.

An alternative basis might be to use current opinion polls. Let us consider the current opinion poll on the euro. The last one was taken on 2nd October by MORI. That indicated that 72 per cent of the electorate were against ditching the pound and going into the euro. It would be as fair a system as any for allocating funds to say that the campaign in favour of retaining the pound should have 72 per cent and the other side only 38 per cent of the expenditure. That is clearly nonsensical but no more so than the proposition put forward by the Government in the Bill.

The Government have to consider the issue again. If they do not, I shall vote for the amendment in the name of the noble Lord, Lord Lamont, because we must have an alternative. However, I hope that the Government will reconsider the matter. How they can do so has already been suggested. One can have a limit on the total expenditure. But I do not know how one could impose that limit. I am the chairman of the anti-Maastricht alliance. We have 21 organisations in the alliance and many more outside it. How one will be able to control the expenditure of all those individual organisations plus the contributions of individuals themselves I do not know. We face a very difficult situation.

Let us think back to 1975. I remember 1975 because I represented Swindon in the House of Commons. I took an active part on the "no" side throughout Wiltshire and the South West in that referendum. The Labour Party was in a difficult position. The Labour Party was in favour of withdrawal from what was then the common market. On the other hand, the Labour government took the view that we should remain in. So there was a difference of opinion between the Labour Party on the one hand and the Labour government on the other. How would we sort out that situation?

The position then was even more difficult. To resolve its internal difficulties—those who were in the Labour Party at that time know this perfectly well—the Labour Party said that all party members could opt for whichever side they liked. How does one distribute the amounts of money available to the party under those circumstances? The whole subject is fraught with enormous difficulties. Those of us who fought in the 1975 referendum believe that one of the reasons that we lost the vote was because of the enormous amount of money that was on one side of the argument. That is why we believe that some control is necessary.

I have also to take into account the referendum which took place in Denmark on 28th September 2000. Despite the assistance that some of us sought to give it, I understand that the "no" campaign on the euro was outgunned by about 20 kroner to one. Virtually all the press were in favour of the "yes" campaign as were all the political parties. Big business and the trade unions were in favour of the "yes" campaign. And the Danish people voted 53 to 47 per cent against getting rid of the kroner. What do we do under those circumstances? It seems that money does not always count. Nevertheless it counts in people's minds. People must see fairness in a referendum campaign. This Bill does not give us fairness. It does not make clear to ordinary people that the referendum will be fought fairly. That is why I believe that the Government need to have further consultations, perhaps with the Neill committee and all-party consultation, to try to reach a situation where all people can have confidence—in particular, the voters.

5 p.m.

Lord Pearson of Rannoch

I wonder if I could support the remarks of my noble friend Lord Lamont and those of the noble Lords, Lord Shore of Stepney and Lord Stoddart of Swindon, by bringing to your Lordships' attention the position of the United Kingdom Independence Party, which I do not think is represented in your Lordships' House and therefore has no one to speak about its situation.

I am myself a loyal Conservative Back-Bencher, perhaps on the Euro-realist wing of the party. My lack of knowledge of the UK Independence Party is no doubt confirmed by the fact that I cannot remember whether or not it existed at the last general election—I am told that it did, just, but did not win many votes. We did have Sir James Goldsmith's Referendum Party, which has now metamorphosed into the all-party Democracy Movement, and at the time that party won quite a few votes.

The point I wish to put to the Government is that if there were to be a referendum on the euro before the next general election, under the provisions of this Bill the UK Independence Party would get no money a t all. It is a political party and would not qualify for funding under Schedule 13, as I read it, and therefore would get absolutely nothing. That surely cannot make sense when we consider that the last test of public opinion on matters European was last year's elections for the European Parliament. The party then actually won 7 per cent of the vote and three seats in the European Parliament; yet the Bill as drafted would give it only up to half a million pounds. That amount would not be in line with what it achieved at that election, the last test of public opinion.

Also, it would not be in line with the latest test of public opinion so far as UKIP is concerned. That occurred on 2nd October, when 46 per cent of those consulted in a MORI poll on whether, if there were to be a referendum tomorrow, they would wish to stay in the European Union or get out of it, said they would want to get out. As there is no one else here to speak on behalf of UKIP, I feel that I might as well do it, from the point of view of showing the Government that the Bill as drafted is completely inequitable, at least to that party.

Lord Bassam of Brighton

This has been a long and very thoughtful debate; it has been a curate's egg of a debate, and I have enjoyed it greatly. My job as a Government Minister is to look at all the points that have been made and see whether we can find some light at the end of this inverted telescope—because that seems to be how the debate has gone. It seems to have been largely overshadowed by one issue: that of a possible referendum over the future participation of this country in the euro.

I welcome the fact that we have had the debate, even though it has been contentious and perhaps even a touch controversial. At one point when the noble Lord, Lord Shore of Stepney, referred to "foreign bodies", I began to feel a little queasy; on the other hand, the passion with which the argument was put was quite right.

The Opposition have argued that the arrangements set out in the Bill are unfair because they do not guarantee a level playing field. The charge is that it would be possible for one side in a referendum campaign grossly to outspend the other side, and Amendments Nos. 238, 235L and 235M seek to rectify this perceived unfairness by providing for the commission to specify an overall limit on the aggregate expenditure that may be incurred by all of those campaigning for a particular outcome. The Government freely concede that their proposals would not ensure that each side in a referendum was subject to the same overall limit on expenditure, and there is no pretence that our proposals are intended to create a level playing field in that sense.

The Neill committee concluded, rightly, that any attempt to do so would be, as has already been said, futile and quite possibly wrong. That was stated in paragraph 12.46. To operate such overall expenditure limits would require that all those campaigning for a particular outcome co-ordinate their expenditure and collectively account for that expenditure. Of course, as the noble Lord, Lord Mackay, and others have said, they may not wish to work together and would have to be compelled to do so. The committee concluded that such arrangements, again to quote an expression which the noble Lord, Lord Mackay, borrowed from the report, would resemble one of Heath Robinson's most outlandish contraptions". I have to report here that the noble Lords, Lord Lamont and Lord Mackay, have not attempted to draw up the sort of amendments that would be inevitably consequential on their Amendments Nos. 238, 235L and 235M.

It is worth exploring just a little further what would be needed to make those amendments effective. The first requirement would be to prohibit anyone from spending money in a campaign, except as part of an umbrella group or other such combination. You would have to have an absolute bar on anyone else spending any money. Having prevented anyone campaigning outside an umbrella group, the next step would be to regulate the affairs of that group, perhaps in the form that we have regulations in the Bill for political parties. Some form of constitution would be needed for deciding, among other things, which organisations to admit to membership; how the views of the group were to be presented; how the overall spending limit was to be apportioned to the various constituent organisations and, finally—this is the important part—how to enforce expenditure limits.

In addressing these points the Bill would need to determine whether all the constituent organisations were to be jointly and severally liable for any overspend or whether the treasurer should be answerable for matters over which he or she may have no practical control. To resolve such issues would be difficult in the extreme, if not impossible. As the Neill committee pointed out, we would not be dealing with an established organisation with its own internal rules on which statutory provisions could be grafted. Referendum campaign groups will be formed on an ad hoc basis, sometimes at short notice, for each referendum. Sometimes the composition will vary from case to case, but we would need a set of statutory rules to cover all eventualities. In some cases, this simply would not work. Clearly, there are cases when two organisations will never join the same group or share a platform with each other, even if they hold the same view on a referendum question. I can well remember that from the 1975 referendum campaign on our continued membership of the Common Market. There were members of the Labour Party who would not share a platform with Enoch Powell under any circumstances, even though he was a member of the same "No" campaign and deployed almost identical arguments. During the 1998 referendum in Northern Ireland, the Ulster Unionists and Sinn Fein were not prepared to campaign together.

In the event of a referendum on Britain's membership of the euro, the amendments would require the Conservative Party to form an umbrella group that included not only the Ulster Unionists, but Business for Sterling, the "No" campaign of the noble Lord, Lord Owen, Paul Sykes' Democracy Movement, the UK Independence Party, whatever the Referendum Party is now called, the Communist Party and perhaps even the National Front. I am sure that there are one or two organisations in that list with which the Conservative Party would not want to be associated, but if they were left out of the umbrella group, they would be denied the ability to campaign in a referendum. The question of who is in and who is out cannot easily be answered by the law.

The Bill recognises and encourages the formation of umbrella groups and sets separate expenditure limits for them. The key difference is that there is no obligation on a party or other organisation to join an umbrella group or to campaign as part of it. That would be overly prescriptive. A party or other organisation can stay away from the group and do its own thing.

The case against an overall expenditure limit for each side in a referendum is overwhelming. However, the Government have not drawn the conclusion that it would be both impossible and wrong in principle to operate any expenditure limits whatsoever. Placing a limit on what any particular individual or organisation may spend will at least make it possible to prevent a wealthy individual or organisation exercising a disproportionate influence over the outcome of a referendum. Several of those arguing against the Government's position have claimed that that is their perspective. Furthermore, the Neill committee had already recommended that referendum campaign organisations should register with the electoral commission.

Lord Mackay of Ardbrecknish

The Minister is now arguing that it would be unfair if a particular organisation or a rich individual could unbalance the playing field by pouring money into one side. Surely that is an argument against the playing field starting off unbalanced, which will be the result of the Bill. If the political parties are lined up, one group will have £9 million and the other group will have £5 million. What is the difference between that imbalance and the imbalance created in what might be described as a free-for-all, when one wealthy individual might fund one side heavily? Such a wealthy individual might spend his money in favour of the euro.

Lord Bassam of Brighton

We are trying to prevent an outrageous arms race. This is the one mechanism that we can design with some certainty behind it that will begin to achieve that. The requirement to register with I he electoral commission provides a large part of the control machinery needed for the imposition of expenditure limits.

The Opposition's position is not persuasive. They object to the Government's proposals on the grounds that one side may spend more than another. However, when challenged to put forward an alternative, they are not able to come up with workable proposals.

Lord Mackay of Ardbrecknish

The Minister cannot get away with that. Removing the clauses from the Bill is an alternative. That would remove any attempt to impose spending limits, because they are impossible whatever way we look at the issue. The Minister must address that argument as well.

5.15 p.m.

Lord Bassam of Brighton

That is interesting, because some of the noble Lord's amendments propose spending limits in some form. He cannot have it both ways either. That is the problem in the arguments that we have heard from the Opposition and from others. When challenged to put forward an alternative, they are not able to come up with workable proposals. The noble Lord has challenged me, but he has not addressed the bureaucratic construction that might be necessary to give effect to another part of his solution—whichever solution it happens to be. The Opposition fall back on the argument that if there can be no overall expenditure limits, there should be none at all. That would guarantee the unfairness that they see as inherent in the Government's proposals.

Amendments Nos. 236 and 237 would reduce the expenditure limit for a designated campaign organisation from £5 million to £3 million and would subject all political parties with the support of more than 5 per cent of the electorate to the same expenditure limit of £3 million. In the original draft Bill, we proposed a £5 million expenditure limit for any registered political party, irrespective of its electoral support. However, in its comments on the draft Bill, the Neill committee questioned whether it was right that all political parties, irrespective of the number of their Members in the House of Commons, should be subject to the same £5 million limit. In response, the Government revised their proposals and introduced a sliding scale whereby the level of the expenditure cap was related to the level of electoral support enjoyed by that party. Amendment No. 237 would return us to an arrangement closer to that which the Neill committee found unsatisfactory.

I am not sure whether the proposal for a £3 million upper limit on spending by a designated campaign or by a political party is consequential on Amendment No. 238 or whether it reflects a conversion to the view that the proposed limits on referendum expenditure are generally too high. Conservative Central Office originally observed that the £5 million limits for umbrella organisations and political parties set out in the draft Bill seemed "on the low side".

In the absence of any recommendation on that point, it is simply a matter of judgment as to whether £5 million is preferable to £3 million. On balance, perhaps £5 million is a more realistic figure in the context of a nationwide referendum. In the 1975 referendum, Britain in Europe spent around £1.5 million, which equates to around £7.5 million in today's money. Against that background, a £3 million limit seems unnecessarily low.

The four government amendments address minor drafting points. The first two ensure consistency between the offences in Clause 113 and those in Clause 89. The third removes paragraph (1) from Schedule 13 on the ground that the definition contained there is already supplied by Clause 100(1). The fourth amendment provides that that clause applies to a minor party.

The Opposition should make up their mind on the merits of referendum limits. They have made the case for limiting what each side in a referendum may spend. On the face of it, the case has some merits, but it falls down on the practicalities. If we have to reject that option, as I believe that we do, the controls on expenditure set out in the Bill are the next best thing. I urge your Lordships to support them.

The worst possible course would be to do without limits, which would guarantee gross inequality between the two sides. That being the case, I am afraid that I must invite your Lordships to oppose the amendments in the names of the noble Lords, Lord Mackay and Lord Lamont, and to support the clauses.

Lord Norton of Louth

A central part of the Minister's argument seems to be that at least there will be a limit on spending by individuals under Schedule 13. What is to stop a very wealthy individual giving several colleagues £500,000 each and encouraging them to register under Clause 100(1)(b)? That would disperse all that money on one side in a referendum campaign.

Lord Mackay of Ardbrecknish

Would it be possible for a citizen of the European Union to spend £10 million on UK adverts to favour one outcome? They would clearly be breaching the £500,000 limit, but how could they be prosecuted if they lived in another member state?

Lord Bassam of Brighton

The issue goes back to some of the arguments made by the noble Lord, Lord Goodhart. In an interesting contribution, he wrestled with all the vexed questions that we had gone through. He wrestled with total limits, limits on a particular party and what those limits should be. He dealt with the impracticality of the umbrella controls, and he said that limits on the parties were arguable. He said that in the end he was not happy with the Government's position. However, he did not offer a practical alternative, just as Members of the party opposite have not offered practical alternatives. I do not believe that a construct which does exactly that has been offered in the debate today. Finally, we need to accept that there must be a degree of good will in any referendum campaign. We have tried to provide a workable limit to, so to speak, the arms race of expenditure in a referendum campaign where there are clearly strong and entrenched views.

Baroness Park of Monmouth

Will the noble Lord give way? Does he agree that somehow either the solution preferred by my noble friend Lord Lamont or that of my noble friend Lord Mackay of Ardbrecknish must be considered, and, more so, that suggested by the noble Lord, Lord Shore? I do not believe that referendums are any good if people do not trust the result. There is a serious danger that if people who compete in a referendum are able to say, "Ah, well, he has £10 million under the counter from such and such a firm; he has this, and he has that", we are making it possible for the whole process to be discredited. We rarely have referendums, and they are usually held on rather important subjects. Therefore, I believe that it is quite essential that that problem should be solved.

Lord Goodhart

Perhaps I may assist the Minister in response to the question raised by the noble Lord, Lord Norton of Louth. I believe that it is fairly obvious that rich men do not give away £500,000 to a dozen different friends who, all by coincidence, choose to spend that money on a particular referendum campaign. I do not believe that the courts would have much difficulty in coming to the conclusion that the various so-called beneficiaries of the gifts were in fact acting merely as agents for the original donor in the spending of the money and that therefore the donor was in breach of the rules.

Lord Lamont of Lerwick

I am very disappointed in the Minister's reply. I also believe that he is dealing with this matter in a rather puzzling way. He said that we have given him two options—either this or that—but that we have not put forward a proposition. However, we gave him a choice—

Lord Bassam of Brighton

Does the noble Lord accept that his two propositions act in contradistinction to each other?

Lord Lamont of Lerwick

Completely. I put them forward in that very spirit.

Lord Bassam of Brighton

In that case, which proposition does the noble Lord support?

Lord Lamont of Lerwick

My first choice would be no limit. However, if the noble Lord is not prepared to accept that, I would go for a cap on both sides. I am prepared to go either way. There are three propositions: the Government's approach, no caps, or a cap or umbrella. I believe that it is unfair and unacceptable to have an approach that guarantees, to use his words, inequality between the two sides. He said that, if there were no caps, that guaranteed that there would be inequality. I suppose that that is the case in the sense that one side would spend more than the other, but I do not believe that one can be certain which side that would be. However, under the noble Lord's proposition the political party that will spend more is guaranteed because it is enshrined in the legislation.

I am extremely disappointed in the Minister's reply because it completely flies against what the Home Secretary said at Second Reading: We remain open to argument … I have asked the Opposition to come forward with [proposals]".—[Official Report, Commons, 10/1/99; col. 39.] He said that he was open to argument, and that is why I put forward two absolutely separate and completely contrasting propositions. However, the Minister simply makes a cheap point about how they conflict with each other. The propositions were designed to provide alternatives. As is so often the case in politics, we are choosing the least unsatisfactory solution. However, I suggest that what the Minister has put forward is completely indefensible. He says that it is designed to stop an arms race, but one does not normally stop an arms race by saying that one side can have two-thirds more armaments than the other. That is a very odd way to tackle an armaments race.

I am disappointed in what the Minister said. I do not believe that it made sense. He did not explain why it makes sense to have sub-limits if there are no overall limits. The purpose of that was not at all clear. At this stage I do not intend to press my amendments to a Division. However, I certainly hope to return to the issue on Report because I believe that the Minister's reply was most unsatisfactory.

Lord Mackay of Ardbrecknish

This has been an interesting debate. It has certainly been interesting to discover from the Minister that he does not understand that choice can sometimes involve two quite opposing matters. He does not understand that. However, we have given him a choice and—

Lord Bassam of Brighton

Perhaps the noble Lord will give way. Simply, the point that I made was that achieving one of those options would create a bureaucratic nightmare of the kind that the noble Lord, Lord Mackay, would probably not envisage in his most wild and outrageous dreams. He and I agree that it is bureaucratic and of course it is cumbersome, hut, I argue, necessarily so. As I explained, it is politically impractical to create a construct to control umbrella expenditure and it is impractical to orchestrate. I believe that the alternative of the more severe cap is overly restrictive. In this exercise we have tried to plough a sensible middle course and I believe that that exactly describes our position.

Lord Mackay of Ardbrecknish

The only wild and outrageous dream that I have is when occasionally I believe that I am asleep on the Front Bench listening to the Minister. However, we shall leave that aside.

The real point is that this is a difficult issue, but I believe that the noble Lord, Lord Goodhart, gave a very fair appreciation of it. He reinforced the point made by the Neill committee in relation to umbrella organisations. I believe that probably the argument in that regard is correct: the difficulty of deciding how the organisations would work inside one umbrella and how the money would be divided is probably impossible to resolve.

I was interested to hear the noble Lord, Lord Goodhart, say that it was not clear what answer the Neill committee would have given if it had considered the alternative now put forward by the Government. I find it odd that the Government, or the Labour Party, did not consider putting forward that proposition to the Neill committee for consideration. Perhaps that is a pity. I have no evidence of that other than reading the Neill report and trying to discover how the committee reached that conclusion. However, I suspect that it may have concluded that the Government's alternative was equally as fraught with difficulty. After all, I notice that the Minister did not answer his noble friend Lord Stoddart of Swindon when he referred to the 1975 referendum about which the Labour Party was severely divided.

Let us assume that we hold a referendum on a subject that divides one of our great parties (let us forget the euro for a moment). In the past, one reason for having a referendum was that it provided the easiest way out when a party was divided. Let us assume that we hold a referendum and one of our great parties is severely divided. Who receives the £5 million to spend? It is a very good question but the Minister simply did not answer it. He did not answer my question about the rich individual in Paris or London spending £10 million, way in excess of the £0.5 million which would be allowed if he lived in the UK. Who would prosecute him? How would he be prosecuted? Is there any answer to that question?

However, perhaps above all, the Minister said simply that the Bill is not fair; it introduces an inequality, but it is an inequality from the word go. The Minister said that we should guard against the possibility that fund-raising might end up as an inequality. Two wrongs do not make a right and two inequalities do not make an equality. I believe that my proposal would be better. The noble Lord has not really addressed that.

However, to return to the suggestion of the Neill committee, we cannot cap referendum expenditures because they are so different from general election expenditures. The Government's Bill deals with that on the basis of the results of the last general election. However, since then we have had a European election. One could say that that election was more relevant to the question of Europe than was the general election. Therefore, why not fund on the basis of the last available election? Why return to the general election? So many questions arise here, but I believe—

5.30 p.m.

Lord Bassam of Brighton

I thank the noble Lord for giving way. I am beginning to become confused by his argument. The noble Lord raised the example of a rich individual. He probably knows more about rich individuals than I do. However, in raising this argument about inequality, it seems to me that he is losing sight of the fact that if we move back to a position where there are no limits at all, the rich individuals genuinely can come in and attempt to buy a referendum. The noble Lord has not answered that point.

Lord Mackay of Ardbrecknish

This is a slightly wider argument. I think that it would be hard to prove that all the money on one side necessarily buys the result of a referendum. The noble Lord, Lord Stoddart of Swindon, referred to the Danish referendum where all the cash was on one side, all the powerful players were on one side—and they lost. I know what the Minister will say, that one could say the same about my opposition to his Bill.

Lord Bassam of Brighton

The noble Lord is right. That is the point. Through the Bill, we seek to establish a position of transparency. I thought that the argument put forward by the noble Lord, Lord Stoddart of Swindon, was helpful to us. It made the point that the people will not be defeated when they clearly see things in a certain way, regardless of the amount of money stacked up on one side of the argument by one group of supporters.

Lord Mackay of Ardbrecknish

I do not want to go on too long on this point. However, there is a difference between one individual stacking the odds and the political parties being allowed legitimately to stack the odds. I believe that the public would make a judgment about whether they thought that that individual should or should not stack the odds on one side. However, when it comes to political parties, which are legitimate organisations, the imbalance laid out in the Bill is much more difficult for the public to see through. They may well accept that imbalance. Clearly, the noble Lord will not be persuaded. He wants inequality. It is a new concept of a level playing field: we must start off with the playing field being uneven in case, during the match, it turns out to be uneven. That is a ludicrous argument. We would be far better standing where we are. The Minister does not seem to like the choices. The choice I would come down on is not to have any limits. However, that is probably for another day.

Lord Pearson of Rannoch

Before my noble friend sits down, I wonder whether the Minister could answer a point which my noble friend put to him and which I also attempted to put to him on behalf of the United Kingdom Independence Party. Does he agree that at the last general election no fewer than 177 commitments were given by the Labour Party? Therefore, people who voted for the Labour Party at the last election were voting en masse for 177 commitments. At the European elections, there was only one issue; that is, sending people to the European Parliament.

Does the Minister not agree that the test of opinion which should apply is the vote at the European elections, far more than the vote at the last general election. He has not addressed that point. It will need to be addressed before we finally decide this matter.

Clause 106, as amended, agreed to.

Schedule 12 [Referendum expenses: qualifying expenses]:

Lord Bach moved Amendments Nos. 234P to 234YC: Page 149, line 16, leave out ("120(1)") and insert ("120"). Page 149, line 24, leave out sub-paragraphs (7) to (10). Page 149, line 35, leave out sub-paragraph (11) and insert— ("(11) Transport (by any means) of persons to any place or places with a view to obtaining publicity in connection with a referendum 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 campaign is being conducted."). Page 149, line 42, leave out ("attract national publicity") and insert ("obtain publicity in connection with a referendum campaign"). Page 149, line 45, leave out ("prominent"). Page 149, line 45, after ("events") insert (", the hire of premises for the purposes of such events"). Page 149, line 47, leave out sub-paragraphs (13) and (14). Page 150, line 8, leave out ("permanent staff") and insert ("staff (whether permanent or otherwise)"). Page 150, line 9, leave out ("reasonable"). Page 150, line 11, at end insert ("to the extent that the expenses are paid by the individual from his own resources and are not reimbursed to him"). Page 150, line 12, leave out from beginning to end of line 12 on page 151. Page 151, leave out lines 18 to 23 and insert ("as to the kinds of expenses which do, or do not, fall within Part I of this Schedule"). Page 152, line 11, leave out ("or II").

The noble Lord said: These amendments were all previously spoken to with Amendment No. 191. I beg to move.

Schedule 12, as amended, agreed to.

Clause 107 [Notional referendum expenses]:

Lord Bach moved Amendments Nos. 234YD to 234YG: Page 67, line 41, leave out subsections (1) and (2) and insert—

1. ("(1) This section applies where, in the case of any individual or body—
1. (a) either—
1. (i) property is transferred to the individual or body free of charge or at a discount of more than 10 per cent. of its market value, or
2. (ii) property, services or facilities is or are provided for the use or benefit of the individual or body 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
2. (b) the property, services or facilities is or are made use of by or on behalf of the individual or body in circumstances such that, if any expenses were to be (or are) actually incurred by or on behalf of the individual or body in respect of that use, they would be (or are) referendum expenses incurred by or on behalf of the individual or body.
2. (1A) Where this section applies, an amount of referendum expenses determined in accordance with this section ("the appropriate amount") shall be treated, for the purposes of this Part, as incurred by the individual or body 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).

1. (1B) Where subsection (1)(a)(i) applies, the appropriate amount is such proportion of either—
   1. (a) the market value of the property (where the property is transferred free of charge), or
   2. (b) the difference between the market value of the property and the amount of expenses actually incurred by or on behalf of the individual or body 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).
2. (1C) Where subsection (l)(a)(ii) applies, the appropriate amount is such proportion of either—
   1. (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
   2. (b) the difference between that commercial rate and the amount of expenses actually incurred by or on behalf of the individual or body 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 68, line 26, leave out ("and") and insert ("or"). Page 68, line 33, leave out subsection (4) and insert—

1. ("(4) Where an amount of referendum expenses is treated, by virtue of subsection (1A), as incurred by or on behalf of an individual or body during any period the whole or part of which falls within the period which is, in relation to the referendum to which the expenses relate, the referendum period then—
   1. (a) the amount mentioned in subsection (4A) shall be treated as incurred by or on behalf of the individual or body during the referendum period, and
   2. (b) if a return falls to be prepared under section 115 in respect of referendum expenses incurred by or on behalf of the individual or body during that period, the responsible person shall make a declaration of that amount,
   unless that amount is less than £200.
2. (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 referendum period.").

Page 69. line 2, at end insert— ("() Paragraph 2(3) and (4)(a) of Schedule 14 shall apply with any necessary modifications for the purpose of determining, for the purposes of subsection (1), whether property is transferred to an individual or body.").

The noble Lord said: Amendments Nos. 234YD to 234YG have all previously been spoken to with Amendment No. 195. I beg to move.

Clause 107, as amended, agreed to.

Clause 108 [Restriction on incurring referendum expenses]:

Lord Bach moved Amendment No. 234YH: Page 69, line 10, at end insert— ("() Where, in the case of a permitted participant that is a registered party, any expenses are incurred in contravention of subsection (1), the expenses shall not count for the purposes of sections 112 to 118 or Schedule 13 as referendum expenses incurred by or on behalf of the permitted participant.").

The noble Lord said: Amendment No. 234YH was spoken to on 8th October. I beg to move.

Clause 108, as amended, agreed to.

Clause 109 [Restriction on payments in respect of referendum expenses]:

Lord Mackay of Ardbrecknish moved Amendment No. 234YHA: Page 69, line 15, at end insert— ("() No donation received by a registered party which is a permitted participant from a permissible donor of the type specified in section 49(2)(c) shall be used to make any payment in respect of referendum expenses.").

The noble Lord said: I rise to move Amendment No. 234YHA. This is beginning to sound more like a game of Scrabble than a Committee stage!

The amendment addresses the question of what the registered parties can spend. I shall not go over the previous argument. This relates to the main parties: the Conservative Party, the Labour Party and the Liberal Democrat Party, and the Nationalist parties in Scotland and Wales.

One of the arguments used by the Home Secretary in the other place in defending the imbalance between the three parties that would be on one side of the euro referendum and the Conservative Party on the other was that the Liberal Democrats would never be able to spend up to their limits. The Home Secretary stated: the Liberal Democrats are offered generous spending limits in the Bill, but it is a racing certainty that the party will not be able to raise money to the level of the spending limit". Perhaps I may say to the Liberal Democrats that that shows the contempt in which they are held by the Home Secretary. He does not think that they are up to raising the money. He continued, So to argue that spending by the Labour and Liberal Democrats parties will be nearly equal because both parties will be able to spend up to a maximum amount fails to take into account the capacity of parties to raise money up to the maximum".—[Official Report, Commons, 10/1/00; co1.38.] The Liberal Democrats have a £3 million spending limit. They may well be unable to raise the £3 million. However, if they do not, the Labour Party can give them the money they need to reach that limit. If they can raise only, say, £1.5 million, the Labour Party can give them £1.5 million. We raised this in Committee two weeks ago. I pointed out that allowing political parties to donate to other political parties under Clause 49(2)(c) would allow the Labour Party to top up the Liberal Democrats, thus proving that the Home Secretary's argument last January in the other place was bogus. The Minister responded by stating: It is possible that where particular parties share the same objective on an issue, one of those parties may see fit to provide some financial support to the other".—[Official Report, 12/10/00; co1.565.]

Exactly. What the Minister said last week confirms the argument I made about the Labour Party topping up the Liberal Democrats in a referendum on the single currency, or any other topping up. It might be the Labour Party topping up the Scottish Nationalists or Plaid Cymru; it does not really matter.

The Minister had other concerns about my amendment to stop all political parties donating to other parties. He said that it would adversely affect parties in a coalition or the relationship between the Labour Party and the Co-operative Party. I have drafted this amendment to meet both my concerns and those of the Minister. I hope that we may have a consensus on it.

My Amendment No. 234YHA—the Scrabble amendment—would allow the Labour Party and the Co-operative Party to donate as much money to each other as they liked. Indeed, it would allow the Labour Party to give as much money to the Liberal Democrats as it liked. We hear from Mr Ashdown's diaries that the Prime Minister has great plans for a Lib-Lab pact. However, I suspect that some members of the Labour Party would not be so keen. I shall not mention the Deputy Leader—but I have.

My amendment would stop donations from the Labour Party being used to top up the Liberal Democrats in a referendum campaign. Where parties were acting in concert and one had a low limit but lots of money to spend, the other being in the reverse position, they could easily transfer money in order to maximise advantage. I thought that the whole point of basing spending limits on individual parties and their electoral success—I believe that is the phrase in fashion—at the last election was that those parties were considered distinct and were not being considered the same.

The Bill as drafted clearly allows for the situation I envisaged. If it does not, I hope that the noble Lord will tell me that I am wrong and that no money can transfer from the Labour Party to the Liberal Democrats to help that party reach the £3 million limit. If he cannot say that I am wrong, I suggest that he accepts my amendment or, if his draftsmen do not like my amendment, that he comes forward with a suitable amendment at the next stage. I beg to move.

Lord Bassam of Brighton

As the noble Lord said, this takes us back to last week's question when he took exception to the fact that one registered political party would, theoretically, be able to donate to another political party. Perhaps because he has a conspiracy theory he used the Labour Party and the Liberal Democrat Party as examples in this debate. As he said, Amendment No. 234YHA seeks to close off that option, at least in respect of referendums.

The noble Lord clearly has in his sights the possibility that in a referendum on the euro the Labour Party, having set aside £5 million for its own campaign, might contribute to the campaign of the Liberal Democrats. I entirely accept that that is a theoretical possibility; but it is no more than that. Theory is fine; practice is different. As I explained to the Committee earlier, we fully accept that the limits on referendums expenses provided for in the Bill would not produce a wholly level playing field as between the two sides in a campaign. We do not pretend therefore that the expenditure controls represent the complete solution. However, as I argued before, the limits will ensure a more balanced campaign than would be the case if there were no limits at all.

We expect permitted participants in a referendum to campaign either under their own name, as part of an umbrella group, or as a combination of the two. If any political party or, for that matter, any individual or company sought in addition to contribute to the campaigns of other permitted participants, that would be exposed and the electorate would form a judgment on such tactics. It goes back to the issue partly rehearsed in the earlier debate.

Such a move would not necessarily be contrary to the letter of the provisions in Part VII, but it would be strongly against the spirit of the spending controls. We have not sought to close off such a tactic because any attempt to do so would come back to the Neill committee's observation on Heath Robinson's contraptions. Those comments were apposite in that context and are apposite in this.

I see no merit in singling out registered parties as Amendment No. 234YHA seeks to do. In any event, it is worth remembering that Part VII is not simply concerned with referendums held throughout the United Kingdom. What if there were to be a further referendum in Northern Ireland? If this amendment were accepted, the Conservative Party registered in the Great Britain register could not contribute to any campaign mounted by the Northern Ireland Conservative Party. Likewise, the Labour Party could not contribute towards the SDLP's campaign and the Liberal Democrats would be prevented contributing to the Alliance Party's campaign.

Why should the Co-operative Party be prevented making a donation to a referendum campaign conducted by the Labour Party, or for that matter an umbrella organisation which might involve the Labour Party and other like-minded souls? There are long-standing constitutional links between the Labour Party and the Co-operative Party and if one wishes to make a donation to the other, it should be allowed to do so.

I hope that, on reflection, the noble Lord, Lord Mackay, does not see too many conspiracy theories in operation. He is not usually a conspiracy theoretician, but I know he can be drawn dangerously in that direction. However, on this occasion I hope that he feels able to withdraw his amendment.

Lord Mackay of Ardbrecknish

Clearly the noble Lord has been too busy briefing himself for this Bill to read the extracts from The Ashdown Diaries in The Times over the past two days or he would see that one does not have to get up early in the morning to devise a conspiracy theory. It was clearly going on behind his and his colleague's back, both before and after the last general election.

So I am afraid that all the Minister has convinced me of is that the scenario I set out is even more likely to happen; that in fact money will be moved. If one of the parties in the coalition of parties on one side of a referendum cannot find enough money to reach its ceiling, it can be given that money by the other parties.

We have exposed a serious defect in the Bill. The noble Lord has an easy solution; that is, do not set limits. The Labour Party would not have to siphon off its extra money to the Liberal Democrats round the back door. It could spend its £5 million; the Liberal Democrats could spend as much as they could raise and the Tories could spend as much as they could raise. That is a simple solution.

The Bill has a serious loophole. We shall need to study carefully what the Minister said and find ways to address it, without damaging the close relationship between the Labour Party and the Co-operative Party. Frankly, why they have to sail under different flags nowadays beats me. They should decide to amalgamate fully and not pretend that they are two different parties.

I was not impressed by the Minister's argument in relation to a Northern Ireland referendum. I would be quite happy to close off money going that way across the Irish Sea just as he, in the Bill, wants to close off money coming the other way in terms of general elections. I would have no problem with that, and his explanation did not convince me that my amendment was wrong. We shall study what he said. We may come back to this major loophole in the Bill at another stage. But I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.45 p.m.

Lord Mackay of Ardbrecknish moved Amendment No. 234YHB: Page 69, line 15, at end insert— ("() No donation received by a registered party which is registered in the Northern Ireland register from a donor who is a permissible donor by virtue of an order made under section 65 shall be used to make any payment in respect of referendum expenses incurred in relation to Great Britain.").

The noble Lord said: In moving Amendment No. 234YHB, I shall speak also to Amendment No. 234YHC. This leads directly on from my closing remarks on the last amendment and concerns Northern Ireland.

These two amendments would prohibit the foreign funding of referendum campaigns. I cannot help but notice that the Minister did not answer my question, posed twice, about the rich man in Belgium or France who decides to fund the "Yes" campaign for the euro to the tune of £10 million; he funds it in Britain, well in excess of the £500,000 he would be allowed as a participating party. Who would prosecute him? How could he be stopped? The Minister did not answer that. He may answer now.

I want to explore the foreign funding which will be allowed to go into Northern Ireland. We all know that, to allow Sinn Fein/IRA to continue to receive money from America, the Bill is going to elaborate lengths to allow foreign donations in Northern Ireland, basically to one political party, when all other political parties in the UK will not be able to receive any foreign money at all.

I tabled these amendments at the end of last week. I am sorry they are late. They arose out of detailed point s in the debate instigated by my noble friend Lord Astor. Last week he asked the Minister, in relation to Amendments Nos. 177A and 178: 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?". My noble friend also highlighted a further loophole. He said: It seems possible for a political party to be set up in Northern Ireland, to receive foreign funding … 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?".—[0fficial Report, 18/10/00; col. 1035.] Eventually, after being further pressed by my noble friend, the Minister said: 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"—[Officia Report, 18/10/00; col. 1038.] That is an understatement.

So considerable difficulties arise, especially for the Minister, who went on to say in a later debate—I suspect his brief had not been adjusted in the Dinner Hour— The Government are … committed to banning the foreign funding of political parties in the United Kingdom".—[Official Report, 18/10/00; col. 1183.] That is stretching it. Perhaps he actually said "in Great Britain", because they are not going to ban the foreign funding of political parties in the United Kingdom; only in Great Britain. It was an interesting slip of the tongue, if that is what it was.

He went on to say 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".—[Official Report, 18/10/00; col. 1183.] However, the Minister neglected to remind the Committee that the Government will not implement that policy when it comes to Northern Ireland.

I do not believe that people who give money to the notorious fund raiser, Martin Galvin, who was mentioned by the noble Lord, Lord Molyneaux, last week, live, work or carry on business in any part of the United Kingdom. However, as a result of the failure to ban all foreign funding, the loophole which my noble friend highlighted last week has arisen. The Minister admitted that it existed.

Under the Bill as presently drafted, in any UK referendum supporters on both sides of the argument could register a Northern Ireland political party on the Northern Ireland register. The party would have to make a declaration that it intended to stand candidates in elections in Northern Ireland. That is easy. Even if the party never did any campaigning in Northern Ireland, it would still benefit from the exemptions in the Bill in the NORAID clause, Clause 65. It could obtain money from foreign sources anywhere in the world—America, Europe, Japan or wherever—and that foreign money could then be used to fund referendum campaigning anywhere in the United Kingdom. There is nothing in the Bill to prevent that.

If the Minister agrees with that argument—if he cannot counter it—and if he chooses not to close the previous loophole, he must close this one. In order to close the loopholes, my amendments would prohibit the Northern Ireland parties from spending foreign money on any referendum campaigning in Great Britain. That would address my point about the front parties. Amendment No. 234YHC would prohibit Northern Ireland parties from using foreign money to fund any referendum campaign, including a referendum campaign in Northern Ireland. I make no bones about the fact that I prefer Amendment No. 234YHC because it would prohibit all foreign funding of referendums throughout the United Kingdom. And I still believe that it is a united kingdom—I do not believe that we should be making a distinction between Great Britain and Northern Ireland.

The two approaches raise another question for the Minister: do the Government intend to allow foreign funding of referendum campaigning in Northern Ireland in the same way as they are to allow the foreign funding of election campaigns, or do they want to prohibit the foreign funding of referendums throughout the United Kingdom, including Northern Ireland?

I believe that the Minister should respond to those points, especially in the light of the remarks he made last Wednesday, which I quoted. It is really important that, if there ever is a referendum on the status of Northern Ireland as an integral part of the United Kingdom, the result should not be influenced by a vast inflow of money, largely from across the Atlantic. If the Minister says that foreign money cannot fund political parties in Great Britain—for instance, the Scottish National Party which has a legitimate desire that Scotland should be independent and pursues it in a perfectly wholly democratic manner—by Jove, the same rule should apply in Northern Ireland, especially to parties which have not pursued their aims in a wholly democratic manner.

I do not want any nit-picking about the amendments. I want the Minister to address my main question: have I identified a loophole? Will my amendment plug it? If not, will the Minister come forward at the Report stage and plug it? I do not believe that the Government really intend foreign money to come into Northern Ireland and by that route fund referendums in the United Kingdom or in Northern Ireland. I hope that the Government agree with me on that in principle. If they do not like what I have proposed, I hope that they will come forward with their own amendment. I beg to move.

Lord Rogan

It is with pleasure that I rise to support Amendment No. 234YHC, moved by the noble Lord, Lord Mackay.

I, too, share the concerns with regard to referendum campaigns in Northern Ireland. Referendums have previously occurred in Northern Ireland, solely on Northern Ireland issues, notably Heath's "border poll" of 1973. Indeed, the principle of consent in the Belfast agreement allows for the possibility of another "border poll" in the future, although, with respect to a referendum under the Belfast agreement, I consider the point academic; that is to say, it is academic in the sense that I do not believe that nationalism in Northern Ireland will ever be sufficiently well supported to bring about a change in the constitutional position of Northern Ireland. Even if I were to be proved wrong, I do not believe that the unionist people in Northern Ireland could have their votes bought by dollars from North America, just as they were never bullied by weapons bought by dollars from North America during the 30 years of terrorism.

Returning to the amendment moved by the noble Lord, Lord Mackay, I have grave concerns about the potential for front parties, not even contesting elections in Northern Ireland, being used by larger parties on the mainland as a means of processing foreign financial support for a UK-wide referendum. Clearly, that is a nonsense situation. If the provision is to remain as it is, it might as well not he present in the Bill at all.

Our nationalist friends in Scotland and Wales could potentially be in a strong position to exploit a so-called "well meaning" non-UK citizen by use of front parties in Northern Ireland, just as Sinn Fein already is, not to mention the political wings of the republican dissidents.

By way of conclusion to my brief remarks, I want to reiterate my strong support for Amendment No. 234YHC. This lacuna in election law must be bridged. However, I shall leave your Lordships in no doubt as to the best solution to this flaw in referendum law. This flaw is a problem but it is the symptom of a greater problem. I strongly urge the Government to stick to its manifesto pledge, treat all UK citizens equally and ban all foreign funding for all UK political parties.

Lord Bassam of Brighton

Before replying to the issues raised by the noble Lord, Lord Mackay, perhaps I may clarify two points which have some bearing on the matter. First, schedule 14 imposes restrictions on the acceptance by a permitted participant of donations from abroad. The referendum campaigning organisations therefore could not accept money from, for example, a wealthy Frenchman.

Secondly, Amendment No. 239 prevents a permitted participant, other than a designated organisation, from accepting a donation from any registered party. Therefore, a Northern Ireland party cannot transfer a foreign donation it receives to a referendum organisation in Great Britain. I believe that that deals with two issues which were raised by Members opposite.

Viscount Astor

I am grateful to the Minister for giving way. The Minister told us that a Northern Ireland party could not use foreign donations to give to a UK party. However, what happens if in a referendum Sinn Fein or any other Northern Ireland party campaigns in the United Kingdom? We know that there is ring-fencing for general elections, but last week the Minister told us that no such rule related to referendums. Therefore, could Sinn Fein, the SDLP or the Ulster Unionists for that matter use foreign donations to campaign in this country during a referendum?

6 p.m.

Lord Bassam of Brighton

The noble Viscount asks the question again, and I shall provide him with a precise answer.

I should like to return to a matter raised by the noble Viscount last week in Committee in the context of Clause 65, which in a sense is the subject of this debate. That clause provides for the categories of permissible donor to be extended, or alternatively for the controls set out in Part IV to be wholly disapplied, in respect of Northern Ireland parties. It has been suggested that the Bill does not appear to prevent Northern Ireland parties passing on funds received from a foreign source to referendum campaigns elsewhere in the United Kingdom. The amendment seeks to address that by placing restrictions on the purpose to which any particular donation to a Northern Ireland party is put. As I understand it, the intention is to prevent any foreign funding received by a Northern Ireland party being used to meet referendum expenses either in Northern Ireland or Great Britain.

As the Committee is aware, in the case of political parties the Bill places restrictions on the acceptance of donations rather than the use to which they are put. It would in practice be very difficult to establish that a certain item of political expenditure was financed by any particular donation. Moreover, if an order is in force under Clause 65 which exempts Northern Ireland parties from the controls in Part IV, it is not clear to me why such a party should be able to use any foreign donations on its headquarters or to fight a general election campaign but not to fight a referendum campaign. That is equally true whether the referendum is confined to Northern Ireland or is being held throughout the United Kingdom.

Although I am not persuaded of the case for preventing a Northern Ireland party using the proceeds of a foreign donation to meet its own referendum expenses, I see the need to ensure that other referendum organisations do not use a Northern Ireland party purely as a front to receive foreign funding. But the Bill already contains safeguards in Part II and Schedule 14 which would prevent a Northern Ireland party simply acting as an agent in passing on a donation from a foreign source intended for a referendum campaign group in the first place.

I accept that this is complex, and I ask the Committee to study carefully what I have said. I also accept the integrity and ferocity of the argument and the concern that has been expressed. We must try to live in the real political world. Although it is very difficult to accept some of these positions, we believe that the overall scheme of things works well. Clearly, in the case of Northern Ireland there are certain difficulties. That fact needs to inform all of our debates on this particular issue.

Lord Mackay of Ardbrecknish

We need to study carefully the response of the Minister. On 18th October, the Minister appeared to say that foreign funding of a referendum campaign would not be allowed. Towards the end of his remarks I believe that he moved away from that when he said that Northern Ireland was different. It is odd that in a referendum held in the United Kingdom, of which Northern Ireland is a part, some funding can come from foreign sources. The Minister said: It is right that the ban should extend to the foreign funding of participants in a referendum campaign here".—[Official Report, 18/10/00; col. 1183.] I agree entirely with the noble Lord. However, I understood "here" to mean the United Kingdom. That was also the noble Lord's understanding, because a little earlier the Minister said: The Government are … committed to banning the foreign funding of political parties in the United Kingdom". Is the Minister now saying that that does not include Northern Ireland and that he should not have referred to the United Kingdom but only to Great Britain? Do I correctly interpret the Minister as suggesting that in a United Kingdom referendum held in Northern Ireland as well as in Great Britain the funding of that part of it conducted in Northern Ireland could come from a foreign source?

Lord Bassam of Brighton

Amendment No. 180 to Clause 65, which has already been debated, prevents a Great Britain party accepting any donation from a Northern Ireland party as long as an order under that clause is in force. That prevents a Great Britain party in the case of a referendum using foreign funding received via a Northern Ireland party. I hope that that answers the point. I shall study carefully what the noble Lord has said. I do not want there to be any confusion over this matter, and I shall use my best endeavours to try to clarify the position.

Lord Mackay of Ardbrecknish

The Minister answers a question that I have not asked. I had understood from his remarks that money which came into Northern Ireland could not cross the Irish Sea for a referendum campaign, any more than it could for a general election campaign. My question is whether in a referendum in the United Kingdom foreign money will be able to pay for that part of the referendum campaign that takes place in Northern Ireland.

Lord Bassam of Brighton

I believe that the answer is "yes". However, I shall check the matter and write to the noble Lord. I see from the indications from the Box that that is the case.

Lord Mackay of Ardbrecknish

I am not surprised, because I did not ask the question without knowing the answer. The answer is "yes", and that is a disgrace. We shall return to this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 234 Y HC not moved.]

Clause 109 agreed to.

Clause 110 [Restriction on making claims in respect of referendum expenses]:

Lord Bassam of Brighton moved Amendments Nos. 234YJ to 234YN: Page 69, line 31, after ("participant") insert ("during a referendum period"). Page 69, leave out lines 35 and 36 and insert ("not later than 21 days after the end of the referendum period"). Page 69, line 37, leave out from ("paid") to end of line 38 and insert ("not later than 42 days after the end of the referendum period"). Page 70, line 11, at end insert— ("() Subsection (2) is without prejudice to any rights of a creditor of a permitted participant to obtain payment before the end of the period allowed under that subsection."). Page 70, line 17, 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 permitted participant.").

Clause 110, as amended, agreed to.

Clause 111 [Disputed claims]:

Lord Bassam of Brighton moved Amendments Nos. 234YP to 234YV: Page 70, line 20, after ("participant") insert ("as mentioned in section 110(1)"). Page 70, line 24, leave out ("section 110(1)") and insert ("that provision"). Page 70, line 33, leave out subsection (3). Page 70, line 37, leave out ("Subsections (4) to (7) of section 72") and insert ("for the purposes of this section— (a) subsections (4) and (5) of section 110"). Page 70, line 40, after ("claim") insert ("(whether it is disputed or otherwise) which is"). Page 70, line 40, leave out (" 72(1)") and insert (" 110(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 110(4) as applied by paragraph (a) above.").

Clause 111, as amended, agreed to.

Clause 112 [General restriction on referendum expenses]:

Lord Lamont of Lerwick moved Amendment No. 234YV: Page 70, line 42, at beginning insert ("Subject to subsection (1A),").

The noble Lord said: I am aware that the Committee is anxious to make progress and I shall speak briefly to the amendments in this group. These are probing amendments which are designed to elicit a response from the Government about how the controls on the financing of propaganda in a referendum on the euro would apply to the institutions of the EU. These two amendments were part of a wider group, the main part of which was debated a couple of weeks ago. I missed that debate. I apologise to the Minister for any discourtesy in not being here on that occasion. None the less, I should be grateful to the noble Lord for some kind of statement about how far the EU, through its institutions and public relations operations, will be subject to the various caps that the Committee has debated.

A large number of the amendments debated this afternoon have been about foreign funding in relation to companies, political parties and referendums in Northern Ireland. Much of the same concern ought also to apply to any referendum on the single currency which is held in this country. It should be for the people and institutions of this country to participate in that. Mr Prodi was very wise to say that the European Union intended to keep out of the Danish referendum, notwithstanding that the result did not go the way that he wanted. I believe that any attempt by the EU to intervene would be counter-productive, but it would be helpful to have a statement from the Minister on this matter.

A great deal of money is being spent at the moment by institutions of the EU. For example, organisations like the European Movement were specifically set up to receive funds from the Commission. In the UK there are 24 European information centres funded by the EU which put out views on the single currency. How will this be affected by the various caps during the period of the referendums?

The other day I came across a Commission publication called A Glossary of Euro-Sceptic Beliefs which had a large number of rather contentious pro-European statements. The most amusing of them was a denial that Brussels financed any propaganda in Britain. It did not seem to see the irony of having a publication that denied that there were any publications.

Amendments Nos. 234YV and 234YW deal with Clause 112. That clause makes it an offence for a person to incur expenditure in excess of £10,000 unless those people are permitted participants. The purpose of the amendment is to ensure that no expense can be incurred by or on behalf of any institution of the EU.

Amendment No. 242M deals with Clause 120 which prohibits the Government of the day or any local authority or any other publicly-funded body displaying promotional or distributing promotional material 28 days prior to the poll. I wish to have an assurance that that will apply to the institutions of the EU in this country. These are modest amendments. They were part of a wider group in which larger points were made. I should appreciate the Minister's response to them.

6.15 p.m.

Lord Bassam of Brighton

I have no doubt that the noble Lord tabled the amendments with an eye to a future referendum on joining a single currency. But it is worth reminding the noble Lord that we are talking here of a Bill outlining a scheme for the holding of a referendum on perhaps a multitude of things. The purpose of this part is to put in place generic arrangements for the conduct of any national or regional referendums. These arrangements may be used for a referendum on British membership of the single currency. But equally they could be used for a referendum on proportional representation, on the introduction of elected regional government in England or on any other important issues of the day.

Given that the purpose of the Bill is to establish general rules for all referendums, we do not want to add extraneous provisions which are designed with one referendum, and one referendum only, in mind. If a referendum on a particular issue warrants special rules, they can be provided for in separate legislation. That will be necessary in any event to ensure that that referendum takes place.

I am not persuaded that the noble Lord's amendments add anything to the existing provisions of the Bill. As drafted, Clause 112 provides that an individual or organisation cannot incur referendum expenses in excess of £10,000 unless they are a permitted participant. Amendments Nos. 234YV and 234YW are intended additionally to prohibit the incurring of any referendum expenses by institutions of the EU during the referendum period. I say "intended" because as drafted the apparent effect of the amendment would be to prohibit any expenditure whatever by an institution of the EU during a referendum period. No doubt the noble Lord has ambitions for his amendments, but I am not quite sure that that was the real extent of his ambition. I know the noble Lord has a reputation for singing in the bathroom and perhaps generating a lot of atmosphere, but I am not sure whether he was trying to achieve that in the amendments. Perhaps the noble Lord can disabuse me of that.

If the noble Lord looks at the definition of a "permitted participant" in Clause 100, he will see that a permitted participant must be either a registered party, an individual, a company, or an unincorporated association. The European Commission or Parliament is none of those things. The amendment would therefore have no practical effect other than to prevent an institution of the EU spending up to the lower limit of £10,000. I am not persuaded that there is a case for singling out the institutions of the EU for such a marginal tightening of the scheme. As drafted, that is what its effect would be.

Amendment No. 242M would apply the restrictions on the publication of promotional material set out in Clause 120 of the Bill to European Union institutions. The effect would be to prevent the European Commission from publishing promotional material about the euro in the 28 days before the date of the poll. I assume this amendment is an alternative to Amendments Nos. 234YV and 234YW since a restriction of that kind would be unnecessary if the institutions of the EU were unable to incur referendum expenses. Again the amendment seems to miss the target. If, as the noble Lord has made clear, his objective is to prevent any involvement by the European Commission in a referendum on the euro, why place restrictions in its way that apply only in the 28 days prior to the date of the poll?

I am well aware that this debate is driven by acute sensitivities about the involvement of the institutions of the EU in the making of any decision to join the euro. The reality is that the decision to join the euro is a matter for the British people and the British people alone. My view and the Government's view is that it would be entirely counter-productive for the commission to become embroiled in a referendum campaign on this issue. That is probably something on which we could all agree. This simple truth will be far more powerful than any single provision that could be made in the Bill which would, in any event, as I see these amendments today, be of doubtful legal value. If the noble Lord, Lord Lamont, remains to be persuaded of that fact he has only to look at the example of the recent Danish referendum to see that his fears of a "Yes" campaign being funded from Brussels are entirely misplaced.

There is a need for some realism about the intentions of the Commission. That needs to go hand in hand with some realism about what such a prohibition could achieve. An explicit ban on referendum expenditure or the publication of referendum material by the institutions of the EU would beg the question how such a ban could be enforced. The territorial application of the Bill is confined to the United Kingdom. It could not bite upon expenditure or the publication of material on the Continent. Given the immunities for which the protocol on the privileges and immunities of the European Communities provide, the jurisdiction of our courts in relation to a breach of the provisions of this part by an institution of the Community would be extremely doubtful.

We believe that these amendments are unnecessary. They are not drafted precisely enough. I think—no doubt Members of the Committee will share this view—that any intervention in a UK referendum on an issue as sensitive as the euro would be wholly insensitive and extremely unwise. I hope that the noble Lord will withdraw his amendment.

Viscount Astor

The Minister has given an interesting answer about the European Union. If I heard him rightly, he said that the institutions of the Commission probably would not go up to £10,000. They would be unwise if they did; but however they could if they wanted to. The problem with all these institutions is that, for one reason or another and whichever side they are on, they always feel the case is not being adequately explained. Therefore, they feel that they should intervene, not because they are on one side, but because the facts are not exposed. They always find a reason for intervening. So the answer is that there are many small institutions in Europe that between them could spend quite a lot of money.

The Minister rightly said that there would be a limit unless someone was a permitted participant. Under Clause 100(1)(b) we find the definition of permitted participant. It refers to, any company falling within section 49(2)(b)". One finds that that can be a company registered under the Companies Act 1985 or a company incorporated within the European Union. If there was a referendum on the euro, the European Central Bank or any other bank in Europe might decide that it was in its interests to persuade the voters of this country that it should intervene. It might be the French central bank feeling that it would be of benefit to the euro if we joined it or it might be the German central bank. Under the European Union, the European Central Bank is incorporated. Am I right in thinking that it could then use the money and become a permitted participant to help fund one or other aspect of a referendum campaign?

Lord Shore of Stepney

There really are difficulties with this issue and they arise not wholly because of the Bill itself. As matters stand, the European institutions are free to intervene in our referendum campaigns, particularly in the sensitive one, as it is bound to be, on the euro itself. Only a few hundreds yards away from your Lordships' House there are the diplomatic headquarters in London of the European Union, appropriately named Jean Monnet House, in case my noble friend may have difficulty in physically identifying it. Jean Monnet was the great founder of European federalism. Jean Monnet House serves two purposes. It represents the European Union as a quasi-state, having proper diplomatic relations with us. Those relations must clearly continue when we have a referendum campaign. But it also has another and much more expensive function. It is there to propagandise; it is there to proselytise on behalf of the European Union. My noble friend cannot ignore that.

Before the founding 11 joined the single currency less than two years ago, the European Commission spent millions. A Commissioner was given the special task of proselytising in the different countries of the European Union the case for membership. Are we really to sit back and allow this to happen in our own country? The answers I have had previously from my noble friend, in so far as I can sum them up, have been embarrassed avoidance of the difficulties of answering the questions. After all, it is rather humiliating to have to say that we have no power; that the European Court of Justice has ruled; that we are the helpless dependent state in relation to the management of our own affairs, the conduct of referendums and the finance of political parties in the UK. It is shaming.

This is one of the worst Parliaments I have ever heard of or been in. We are inflicting an act of humiliation on ourselves, for which I shall never forgive the Government and for which I believe the country will never forgive them either. That is incidental to the major case against European intervention, but there is ongoing propaganda on these very matters. The immediate question is whether we can order the European Commission to stop its ongoing propaganda in our schools and universities and through all these business schools and Jean Monnet professorships up and down the land. Are we not entitled to say "Stop!" even for a mere few weeks while we have our referendum? My noble friend must find some answers. Otherwise, frankly, it is not much use speaking from the Front Bench on these issues.

Lord Norton of Louth

Perhaps I may follow that intervention but in a slightly more specific way in relation to Clause 120 and the Minister's response to my noble friend Lord Lamont on Amendment No. 242M. I am not concerned with the possibility of a referendum on any specific issue. I want to follow the Minister's point, which is that the measure sets down rules that will apply to all referendums. As he said, they are meant to be generic rules.

Clause 120 sets down rules that will apply in any context. They will apply a prohibition in terms of publication on both national and local government, whatever the topic of the referendum. But I cannot see that, in logic, one can then say that one should not also add a prohibition on supranational governmental institutions. That is quite logical; it is all-encompassing. The logic is completely on my noble friend's side. The Minister said in response that the Government are precluded from doing that because the institutions of the EU have a right to pursue that course. That creates problems and will evoke the kind of response that we have heard if the position is allowed to pertain that in a referendum campaign institutions of the EU will be able to publish documents but national and local government will not be able to do so. That will cause tremendous problems.

If one cannot add the EU in the way suggested by my noble friend Lord Lamont, the logic would be to remove the prohibition on national and local government. One has either to allow all levels of government to publish or one must put a prohibition on them all. One cannot allow the present situation to be maintained because the problems that will be created, not only practically but politically, are extraordinarily severe.

Lord Pearson of Rannoch

I support my noble friend's amendment, which the Minister seemed to find acceptable in general but unnecessary. The Minister said that EU institutions will be allowed to spend a mere £10,000 each on the eventual exercise—we are concentrating at the moment on the question of EMU—but can he say how many institutions he has in mind? Is he just thinking of the Parliament, Commission, Council and Court? Is he aware of the colossal number of bodies under the European umbrella that could be classified as institutions? That throw away line needs some quantification from the Minister.

Can he also explain what he went on to say in a little more detail? He seemed to think that European Union interference in any referendum on our joining EMU was not very acceptable but was not much of a problem. But he then went on, rightly of course, to point out that the Bill covers other kinds of referenda that we might have—on proportional representation, elected regional government, and goodness knows what else. How does he justify that? If he is unhappy with the European Union interfering in a referendum on the single currency, surely he must be more worried about it interfering in more extraneous matters; or is he not? The noble Lord looks puzzled. But it is a perfectly sensible question and Hansard will bear me out. I shall be very interested in his reply. How many institutions are we talking about? If he is worried about EMU, why does he think it all right for the provisions of the Bill as drafted to apply to matters which concern the European Union even less than the single currency?

Lord Prior

Before the Minister replies, I wonder whether he would like to consider this further point. I really feel quite sorry for him because I know what happens on these occasions. The Minister goes through the list of amendments with civil servants, with an occasional input from the Home Secretary or the Minister of State, and then against all amendments, with very few exceptions, is put the word "resist". The pure chap is then left to resist what appear to be the very reasonable cases put to him.

This is a small amendment. In itself, it is not of overriding importance. However, it has served to demonstrate once more the inadequacy of our parliamentary system and how, day after day, it is being brought into disrepute. I have not been able to attend all the debates in Committee on this Bill, but I have listened to many of them. I believe that we have given the Minister an impossible task to perform. I cannot see how he has been able fully to take on board the vast number of amendments which he has needed to argue against and resist, bearing in mind the equally vast number of amendments tabled by his own Government.

This kind of atmosphere is now beginning to make people despair of Parliament. The Minister needs to think carefully about that when he is asked to reply on behalf of the Government and to resist what would appear to be perfectly reasonable suggestions and amendments. The amendment before us, which deals with what level of funding the Commission or its agents should be able to subscribe to a referendum held in the United Kingdom, covers perhaps only a minor point. However, if in this House we are not able to take a decision even on such a small matter, how on earth are we to be allowed to take decisions on matters of much greater importance which may come before us over the next few years? This exchange has provided a classic example of a Parliament that is beginning already to lose any sovereignty and any say over its own affairs.

Throughout my political career I have been a staunch supporter of the European Union. I do not support monetary union, but I remain a firm supporter of the European Union itself and the fact that Great Britain should be a part of that Union. However, I wonder whether this is not the kind of issue that is beginning to damage the whole concept of the European Union, thus bringing it into disrepute and turning the British public against it. If the Government are sincere in their wish to promote European unity, they would be well advised to think far more deeply about these affairs and not allow civil servants simply to write against an amendment the word, "Resist".

6.30 p.m.

Lord Bassam of Brighton

I thank the noble Lord, Lord Prior, for his interesting intervention. Perhaps it went rather wider than the issue we are debating here, but it did appear to bring a little sanity to the argument, which I felt was beginning to run away with itself. On occasion, I have the impression that any matter connected with the European Union attracts a degree of paranoia that it does not deserve. While I understand entirely the sincerity and integrity which lies behind some of the Euro-sceptic arguments, I believe that it is possible to overstate the case.

The noble Lord, Lord Pearson, said that he thought that the Government should be worried that the institutions of the European Commission might wish to interfere in some fashion with other referendums conducted within the United Kingdom; namely, referendums on issues other than whether we should adopt the euro. I think that it would he extremely unwise for the European Commission to embroil itself in the domestic politics of the United Kingdom.

I rather despair of the arguments that have been lobbed against the Government's position on this. I have tried to point out to the noble Lord, Lord Lamont, as helpfully as possible, that I have had very little difficulty in resisting his amendments because they are defective. They would not achieve their objective. Furthermore—I believe that some noble Lords will not want to hear this—so far as concerns the institutions of the European Commission, territorial constraints are in place on the application of the Bill. We cannot attempt to influence affairs outwith the United Kingdom in the way in which my noble friend Lord Shore of Stepney—I say this with the greatest respect—attempted to encourage us.

That is the position as regards these amendments. This is, finally, a question of the difference between the theoretical and the practical. The Government seek to deal with these matters in the most practical way possible. To that end, I do not believe that the European Commission wishes in any way, shape or form to become involved in any attempt to slant the debate in this country.

It is perhaps worth adding a final reflection in support of my argument. During the entire course of the campaign leading up to the Danish referendum, Mr Prodi made only one visit to Denmark. I doubt whether that visit made any difference at all. Indeed, if it swayed opinion even marginally, it probably helped the "No" campaign. The Commission is intelligent enough to understand that point. What we need to do is to ensure that the sensible provisions contained in the Bill, which are generic in their effect on referendums held in the United Kingdom, make their way on to the statute book. Extraneous matters that may arise as a by-product of a referendum campaign on the euro at some point in the future can of course be dealt with in the detail of the legislation which will relate to that particular referendum. That is the correct and failsafe procedure which we should all welcome.

Lord Lamont of Lerwick

I am most grateful to my noble friends Lord Prior, Lord Norton and Lord Pearson, as well as to the noble Lord, Lord Shore. Through their interventions they have demonstrated that, although the amendments in themselves may be modest, a serious and substantial point lies behind them.

The Minister was right to point out that, taken by themselves, the amendments are only "tail-ends" of amendments. What is the point of restricting Commission expenditure in areas where it is limited to £10,000? I can see the force of that argument. However, as I have explained to the Minister, these proposals formed part of a wider group of amendments which attempted to place the same restrictions on the Commission in areas where it could have spent much larger sums of money; namely, areas where donations of up to £500,000 could be given to each association or institution. For that reason, I think that the point is a serious one, even if the amendments are narrowly drafted and given that perhaps the drafting is not perfectly correct.

The Minister's comments on jurisdictional limits were startling. He has brought it home to us that even if we put as many caps as possible on different institutions in relation to the referendum—and even if he states categorically that it could not happen—in theory it would be possible for institutions of the European Union completely to bypass laws being put into effect through the Bill. That is something on which we all should reflect.

The Minister went on to say that we should not be paranoid about these matters. He assured the Committee that people would behave with restraint. Although I agree with the Minister that we need to be sensible, no doubt he will be aware that in Germany an investigation is currently under way into state funding from France being used in an alleged infringement of an election being held in Germany. That matter is presently being investigated and litigation may ensue. On occasion, evidence may be brought forward to suggest that such things can and do happen.

The Minister has certainly brought it home to the Committee that the powers vested in this House ultimately can exert very little control over what is done by the Commission and its institutions. As the noble Lord, Lord Shore, pointed out, a tremendous propaganda effort is being made. Indeed, recently I have read a striking book which was written by the noble Lord's son. It gives a great deal of detail on this matter.

This is an extremely important subject, but I certainly do not intend to press the amendment to a Division at this point. However, I may well return to it when we debate the Bill on Report. On that understanding, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 234 YW and 235 not moved.]

Lord Bassam of Brighton moved Amendment No. 235A: Page 71, line 17, at end insert—

1. ("(5) Where—
   1. (a) at any time before the beginning of any referendum period, any expenses within section 106(2)(a) are incurred by or on behalf of an individual or body in respect of any property, services or facilities, but
   2. (b) the property, services or facilities is or are made use of by or on behalf of the individual or body during the referendum period in circumstances such that, had any expenses been incurred in respect of that use during that period, they would by virtue of section 106(2)(a) have constituted referendum expenses incurred by or on behalf of the individual or body during that period,
   the appropriate proportion of the expenses mentioned in paragraph (a) shall be treated for the purposes of this section as referendum expenses incurred by or on behalf of the individual or body during that period.
202
2. (6) For the purposes of subsection (5) 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).").

Clause 112, as amended, agreed to.

Clause 113 [Special restrictions on referendum expenses by permitted participants]:

Lord Bach moved Amendments Nos. 235B to 235J:

• Page 71, line 27, leave out first ("treasurer") and insert ("responsible person").
• Page 71, line 28, leave out ("any") and insert ("the").
• Page 71, line 37, leave out ("company") and insert ("body").
• Page 71, line 39, leave out ("any") and insert ("the").
• Page 71, line 40, leave out ("company") and insert ("body").
• Page 71, line 42, leave out ("company") and insert ("body").
• Page 71, line 43, leave out from beginning to end of line 3 on page 72.

Page 72, line 11, at end insert— ("() Section 112(5) and (6) shall apply, for the purposes of this section, sections 115 to 118 and Schedule 13, in relation to an individual or body that has become a permitted participant as they apply for the purposes of section 112 in relation to an individual or body that is not a permitted participant. () For the purposes of this section and sections 115 to 118 and Schedule 13, any reference to referendum expenses incurred by or on behalf of a permitted participant during the referendum period includes any referendum expenses so incurred at any time before the individual or body became a permitted participant.").

Clause 113, as amended, agreed to.

Schedule 13 [Limits on referendum expenses by permitted participants]:

Lord Bach moved Amendment No. 235K: Page 152, line 18, leave out paragraph 1.

[Amendments Nos. 235L and 237 not moved.]

Lord Bach moved Amendment No. 237A: Page 152, line 39, leave out ("for an individual, company or unincorporated association") and insert ("in the case of a person or body").

[Amendment No. 238 not moved.]

Schedule 13, as amended, agreed to.

Clause 114 [Control of donations to permitted participants]:

Lord Bach moved Amendment No. 238A: Page 72, line 14, leave out ("other than registered parties") and insert ("that either are not registered parties or are minor parties").

Clause 114, as amended, agreed to.

Schedule 14 [Control of donations to permitted participants]:

Lord Bach moved Amendments Nos. 238B to 239N: Page 153, line 33, leave out ("other than registered parties") and insert ("that either are not registered parties or are minor parties"). Page 153, line 36, at end insert ("other than a minor party"). Page 153, line 38, leave out from ("donation") to end of line 39 and insert ("to the permitted participant for the purpose of meeting referendum expenses incurred by or on behalf of the permitted participant."). Page 153, line 40, after ("2") insert (", 2A"). Page 153, line 40, at end insert— ("() In relation to donations received by a permitted participant other than a designated organisation, references to a permissible donor falling within section 49(2) do not include a registered party. In this sub-paragraph "designated organisation" has the meaning given by section 105(5)."). Page 153, line 44, at end insert— ("(aa) any sponsorship provided in relation to the permitted participant (as defined by paragraph 2A);"). Page 154, line 1, leave out from ("by") to ("expenses") in line 2 and insert ("or on behalf of the permitted participant) in paying any referendum"). Page 154, line 3, leave out ("directly or indirectly by") and insert ("by or on behalf of"). Page 154, leave out line 9. Page 154, line 13, leave out sub-paragraph (2) and insert—

1. ("(2) Where—
   1. (a) any money or other property is transferred to a permitted participant pursuant to any transaction or arrangement involving the provision by or on behalf of the permitted participant of any property, services or facilities or other consideration of monetary value, and
   2. (b) the total value in monetary terms of the consideration so provided by or on behalf of the permitted participant 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 permitted participant for the purposes of sub-paragraph (1)(a).
2. (2A) In determining—
   1. (a) for the purposes of sub-paragraph (2)(c), whether any money lent to a permitted participant is so lent otherwise than on commercial terms, or
   2. (b) for the purposes of sub-paragraph (2)(d), whether any property, services or facilities provided for the use or benefit of a permitted participant 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 permitted participant in respect of the loan or the provision of the property, services or facilities.
3. (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 154, line 17, after ("member") insert (", trustee"). Page 154, line 26, at end insert—

cc203-12
1. Sponsorship 3,587 words
cc211-2
1. DETAILS TO APPEAR ON REFERENDUM MATERIAL 802 words
cc212-6
2. Control of donations to candidates. 2,103 words
cc216-8
3. Sponsorship 648 words
cc218-24
4. Transfer of donations received by candidate to election agent 860 words
cc219-24
1. ELECTION EXPENSES INCURRED OTHERWISE THAN BY CANDIDATE 2,312 words
c224
2. POWER TO VARY PROVISIONS ABOUT ELECTION EXPENSES 16 words
cc224-6
5. Power to vary provisions about election expenses. 934 words
cc226-7
6. Property, goods, services etc. provided free of charge or at a discount. 585 words
c227
7. Modification of sections 90A to 90C in relation to election of London members of the London Assembly. 308 words
cc227-30
8. Meaning of candidate. 1,068 words
c230
9. Incapacity to hold public or judicial office in Scotland. 193 words
cc230-1
10. Petition at issue. 557 words
cc231-2
11. Payment of election expenses 380 words
cc232-3
12. Expenses incurred otherwise than for election purposes. 680 words
cc234-6
13. Details to appear on election publications. 1,180 words
cc236-54
14. References to documents used in legal proceedings 3,629 words
cc243-54
1. REGISTRATION OF OVERSEAS ELECTORS 5,680 words
15. Pre-consolidation amendments
cc254-5
1. PRE-CONSOLIDATION AMENDMENTS 272 words
16. Election material
cc255-6
1. DETAILS TO APPEAR ON ELECTION MATERIAL 723 words
c256
2. BROADCASTING OF LOCAL ITEMS DURING ELECTION PERIOD 17 words
cc256-65
17. Broadcasting of local items during election period. 2,860 words
cc263-5
1. INTERPRETATION: DONATIONS 1,248 words
cc265-7
18. Representation of the People Regulations 1986 (S.I. 1986/1081) and Representation of the People (Scotland) Regulations 1986 (S.I. 1986/1111) 753 words
1. SCHEDULE TRANSITIONAL PROVISIONS PART I TRANSFER OF REGISTRATION OF EXISTING REGISTERED PARTIES
c267
19. Interpretation of Part I 99 words
cc267-8
20. Declaration for purposes of section 25 443 words
cc268-9
21. Draft scheme for purposes of section 23 348 words
cc269-70
22. Registration under Part II of this Act as from appointed day 476 words
c270
23. Failure to comply with paragraph 2 or 3 453 words
c270
24. Exercise of functions by person appointed as Commission's chief executive 83 words
c271
25. Termination of registration functions of registrar of companies 320 words
1. PART II OTHER TRANSITIONAL PROVISIONS
c271
26. Appointment of Electoral Commissioners 96 words
c271
27. Orders specifying organisations which are not to count as accounting units 52 words
c271
28. Orders prohibiting use of certain words in parties' registered names 51 words
c272
29. Confirmation of registered particulars 366 words
c272
30. Control of political donations by companies 116 words
cc272-3
31. Disclosure of political donations and expenditure in directors' report 198 words