§ Motion made, and Question proposed, That the sitting be now adjourned.—[Charlotte Atkins.]9.30 am
§ Matthew Taylor (Truro and St. Austell) (LD)
I welcome the opportunity to introduce this subject for debate again. The last time that I raised it here was two and a half years ago, in January 2002. Little has changed in the interim, so I thought that it was time to return to the subject.
There is always a potential self-interest in debates such as this. Those with substantial funding may seek to maintain the status quo, but probably more common is an exchange of criticisms of the parties, as if one party—that of the speaker—is whiter than white and everyone else is tainted in their political fundraising. I assure the Minister at the start that my argument is that we are all tainted by our fundraising system.
Following the European elections, the recent by-elections and the relatively unnoticed but nevertheless significant vote that, for example, the British National party has attracted without significant political donations, I want to pick up on the wider risks to the political system. What might happen if the BNP were to succeed in attracting support from just one of the large number of multi-millionaires in this country, any of whom could choose to donate to such a party?
I will not talk about the questions surrounding Bernie Ecclestone's £1 million donation to the Labour party; the reluctance of Labour in 2001 to disclose the identity of multi-million pound donors such as Christopher Ondaatje and Lord Sainsbury of Turville; the Prime Minister's point-blank refusal to disclose details of meetings with Bernie Ecclestone, Christopher Ondaatje and the Hinduja brothers; the £36,000 donated by Enron, which the Labour party refused to return, even though US politicians donated Enron money to charity; and the circumstances surrounding the Government's decision to award a £32 million smallpox vaccine contract in April 2002 to PowderJect, whose owner, Paul Drayson, had donated £50,000 to Labour the previous summer.
Those matters have been well reported and endlessly debated. The truth is that, whatever their legitimacy or otherwise, they have led to a tainted view of donations that affects all political parties. Indeed, the criticisms that have rightly or wrongly been made of donors have led other donors to reconsider whether they want to make political donations.
I read that political parties that have received major donations in the past—the Labour party and the Conservative party—are struggling. Certainly the Labour party is struggling with the trade unions. The GMB may withhold £744,000 and fund only those Labour MPs whom it believes support its views. That is a rather questionable practice in terms of parliamentary 66WH privilege, let alone anything else. The Transport and General Workers Union will decide this September whether to withhold a similar sum from Labour's general election campaign on the same basis. Derek Simpson, the leader of Amicus, which has made donations, has said:
If Tony Blair's not for turning, then we'll have to turn him out.
The clear implication is that the money comes with political strings attached.
Neither will I dwell on the fact that four out of five of the new Conservative peers are major donors to the Conservative party; the declaration last year by Stuart Wheeler, who gave £5 million to the previous Conservative general election campaign, that he would not make further donations to the party until it chose a new leader; and the fact that, within a month of the party choosing a new leader, a cheque for more than £500,000 from Mr. Wheeler duly arrived at Tory central office.
Some hon. Members may elaborate on those matters, but I shall focus instead on two issues that are important to the House and that I hope might cut through the party political warfare and generate wider agreement. The first, as I have mentioned, is the potential danger that the current system will allow extreme parties to receive multi-million pound donations without anybody being able to do anything about it. One multi-millionaire could make the BNP the best-funded political party in the UK at the next general election.
Secondly, we could ban such large-scale individual donations—we could do so across the board, rather than by singling out a particular political party due to its views, because that would clearly be anti-democratic—and tie political parties back to their grass-roots memberships and to the donations that they can get from members and supporters. To allow political parties to function, such an approach would imply a level of match funding by the state tied to those individual donations, but it would also reinvigorate party politics, political activity, democracy and turnout.
It is not uncommon for electors to be reluctant to vote for politicians. Indeed, the political parties were created as mass organisations on the back of the extension of the franchise precisely to do the on-the-ground campaigning to turn people out to vote. As the membership of the political parties has declined, and due to reduced resources, they have concentrated only on seats where they think they can make a difference. Many people in what are considered safe political seats receive little or no communication during a general election campaign from the political parties other than the paid-for free post delivery. Their door is extremely unlikely to be knocked, and it is in those areas that few people turn out. If we can create a system that encourages political parties to concentrate again on ordinary members and on building participation because they need to do so for funding as well as for political success, we will start to address some of the issues of political participation.
Let me first concentrate on the issue of the crazy millionaire, if I may put it like that. I will not label this particular multi-millionaire as crazy, but it is a fact that Paul Sykes has promised to commit his fortune, worth some £500 million, to the UK Independence party. The 67WH party's leader has boasted in the press that it will be able to spend £13 for every £1 spent on campaigning by all the other political parties put together. Whether that will come through I do not know, but it is clear that Stuart Wheeler is in the position to deliver such levels of funding if he chose to do so, and I suspect that the biggest impact would be felt by the Conservative party. As it has traditionally been the greatest beneficiary of individual donations and the greatest defender of that practice, that scenario may make it pause to reconsider whether it is in its long-term interests to maintain such a position.
I do not want to dwell on UKIP. Much as I disagree with the party, I do not regard it in the same light as the BNP. Imagine if another multi-millionaire took the same view tomorrow of the BNP—a crazy multi-millionaire who believed that race and not Europe was the issue of the day, who wanted to change political policy and who could see that none of the mainstream political parties was prepared to accept his views. Is that impossible? Not at all. One crazy millionaire is all it would take for the BNP to become the best-funded political party in Britain. Provided that that person was prepared to stand up and say, "Yes, I am a BNP supporter", there would be nothing under the existing rules to prevent it.
§ Mr. Jonathan Djanogly (Huntingdon) (Con)
On the basis that the BNP secured the best part of 1 million votes in recent elections, how much money does the hon. Gentleman think the taxpayer should give to it?
§ Matthew Taylor
I shall come on to my proposal, but the short answer is that I would far rather that the only money that the party received was £10 or £20 from each of its handful of members, which would imply tiny amounts of funding. The truth is that the BNP cannot generate large numbers of members giving large numbers of donations; it cannot do so on anything like the scale of the mainstream political parties.
One multi-millionaire, however, could put the BNP in the position that we saw not long ago when UKIP exploded on to the political scene with a £2 million campaign war chest for the European elections, some celebrity endorsements and some media spin and hype, largely around the notion that it could be successful. Imagine the BNP in the same circumstances. It would be all over every newspaper. The attack would be made, but that party would get publicity for what would be an equally simple and straightforward, if horrible, political message.
What if similar millions were at the BNP's disposal? We might say that it would not command great political support. However, the potential impact would not simply be on votes at the ballot box. I doubt whether BNP Members of Parliament would be elected on the basis of a well-funded campaign; I hope not, but there could be no guarantee. However, the party would be in a position to put millions of videos through letterboxes, set up giant poster hoardings and mount aggressive— and I mean aggressive—phone and direct mail campaigns.
We know that that is possible and that it can come from nowhere. The Conservative party should be only too aware of that, because it happened with the 68WH Referendum party. Sir James Goldsmith put £20 million from his own pocket into what was perhaps a vanity campaign, which gave his party huge advertising hoardings, slick party political broadcasts, millions of free promotional videos in every home and swarms of paid-for activists. That had a major impact on public consciousness. Arguably, it significantly affected the general election result, turning a Conservative defeat into a rout. With such a well-funded campaign, the BNP might well be able to take sufficient votes to affect significantly a tightly fought general election outcome.
The Referendum party campaign highlighted and deepened the schism over Europe. No one should have the power to shape political debate in that way—via the wallet. Even in the US, the rules are more stringent, although they are certainly inadequate. John Kerry, who is married to a billionaire heiress, had to mortgage his own home to fund his primary campaign.
§ Mr. Djanogly
If the BNP got up to 20 per cent. of the vote in a northern inner-city area, which is not unfeasible considering what it has been doing recently, would the hon. Gentleman think that it should get 20 per cent. of the public funding that went to that area?
§ Matthew Taylor
No, I have argued exactly the opposite. The hon. Gentleman is obviously not listening. I have argued that funding should be tied to the ability to recruit ordinary members and supporters, who would donate on a small scale. I shall come on to the detail of that approach. Of course, if the BNP were able to motivate an army of activists and supporters and generate political support in that way, it would command the same support on the democratic principle, and we would fight it democratically. His problem is that he prefers a system that would tie funding not to 20 per cent., 10 per cent., 1 per cent. or 0.5 per cent. support, but, in a country of some 60 million people, to the support of one person who happened to have a large cheque book.
We cannot underestimate the BNP. Were it not for UKIP, the success of the BNP in recent elections would be a serious subject for debate. More than 800,000 people voted for the BNP in the recent European elections, despite UKIP's success in taking what may arguably be some of the same ground. One of UKIP's party political broadcasts featured immigration as a keynote theme, but the BNP was nevertheless able to take almost 5 per cent. of the vote. That party clearly retains the ability to attract some support, despite the fact that politicians of all mainstream parties condemn it. However, I do not so much fear the BNP's political vote; I do not think that it will ever command a huge political vote in this country, and I have great faith in the British electorate in that respect.
A well-funded BNP campaign could influence public policy and public attitudes on the ground. The party might not buy electoral success, but it could buy electoral impact. Just imagine how it would stir up racial conflict in our local communities. How many racist videos delivered door to door in Oldham or Burnley would it take to generate another race riot?
What is the alternative? I touched on it a couple of times in my responses to the hon. Member for Huntingdon (Mr. Djanogly). Incidentally, in the last 69WH couple of years, his political party has gained more than half its funding from the state—although I do not know the latest figures—so let us have no hypocritical condemnation of state funding from the Conservative party. More than £5 million a year, paid en bloc to central office, goes direct from the taxpayer to fund its political activities.
The Government are making favourable noises about change to the system. The Electoral Commission is due to report in September, which is one reason why I thought it opportune to hold this debate now. The PM is believed to be in favour of increased subsidies, but not complete state funding. I believe that there should be a cap on individual donations for all the reasons that I have outlined, but I am not in favour of a system that simply rewards the status quo. The creeping introduction of increased state funding that rewards those who are already here in response to their level of support in the House is not a democratic way of dealing with the issue. Such an approach entrenches the advantages of those who have already been elected and prevents others from entering the political framework
For example, the political research fund, which is meant to help political parties with the development of policy for general, European and local elections, is not paid to any political parties that are not represented in the House, so the Green party gets not a cent, even though the fund is meant to help with research on and development of European and UK policy, and despite the fact that that party is successful and commands a substantive vote in elections. The fund is a Westminster club payout, and that cannot be right in terms of defending democracy. The fund is useful only in defending the status quo. That is why I believe that we need to tie back political parties to their individual members. I have consistently argued that that should happen, and the time is right for doing it.
The £10 and £20 donation, the jumble sale and the raffle ticket should be the drivers of political funding, but the membership of political parties is now down to relatively tiny numbers, not least because parties have concentrated on the multi-millionaires, rather than on other individuals. That is reflected in the fact that the Conservative party has shifted its paid staff from the regions to central office; there has been a huge shift in the 10 years from 1991 to 2001. By the end of that period, practically all staff were concentrated in central office. We all know about the trend, because all the political parties represented in this Chamber do the same. We have units of people dedicated to finding the person who will give a cheque for £10,000, £50,000, £100,000 or, quite frequently in the case of the Labour and Conservative parties, £1 million, £2 million or even £5 million. Because of that trend, the use and value of the small donation has dried up.
The Conservative party ran a £20 million campaign in 1997, only £1.4 million of which was raised through small individual member donations. That is not healthy, not only because of the risks and the tainting of the political process that I talked about, but because it has festered and fostered the decline of individual membership and concentration on it. Why should the Prime Minister worry about the ordinary Labour party member and the decline in membership when Lord Levy is, by all accounts, building him a £20 million war chest, 70WH contributed not by individual members of the Labour party in general, but by a handful of very wealthy party members? It is clear what the driver is.
If we said instead that no political party may raise funds except in small amounts, we would start to see a shift back to the political parties doing what they were originally launched to do, and building up the grassroots membership, activity and support that allows them to function. However, there is an issue. It costs serious money to run a political party. A manifesto cannot appear from nowhere. Policy advice is needed, as are research and support. Above all, in a democracy, a campaign is necessary. There is no use in having the most glossy and best-written political manifesto in the country if individuals do not hear what it has to say.
The best way to provide information is for each political party competitively to deliver its points door to door, argue its case and put it against those of the other parties. By taking such action, each party would create a vibrant local democracy. People knocking at our doors and offering us a lift to the voting station would help to increase turnout, as would worried candidates saying that they will not win if we do not vote for them.
It is no coincidence that the seats that are most closely fought have the highest turnouts. The seats that are written off as safe for one party or another have the lowest turnouts, because of a lack of activity on the ground. Year by year, a lack of activity dries up membership further and local fundraising becomes less important. However, the present process has gone so far that, to put it bluntly, local parties would not be able to survive on the basis of individual donations, and that gives rise to the issue of state match funding. Some £10 million of taxpayers' money is already spent on political party support through the state. That money is tied not to local activity or membership, but to small donations to the political party of £10, £15, £20 or £25. The situation would be helped by increasing the incentive to campaign locally while ensuring that political parties, provided that they can recruit activists and supporters, can fight the scale of campaign that that level of activity and support in the country would merit.
I do not believe that the BNP could raise more than tiny sums. In fact, we know that it cannot do so. We know its fundraising record, because it now has to publish it. We accept that fundraising advantages the biggest parties, but only because they are the main parties and can recruit and retain large numbers of activists. A new political party or a party such as the Green party that can motivate and recruit could enter the political process on an equal footing if it could bring in the same support as the biggest parties and command the same number of activists.
In such circumstances, finance would no longer be dependent on the whim of one, two or three multi-millionaires; it would be dependent instead on the ability of the political parties to motivate and command individual support, with no individual having the clout to command party policy, to make leaders jump or even to get rid of a Conservative party leader. Through their contributions, individuals should be able to make a difference to the effectiveness of their party.
I say to those who oppose state funding that it is already in place, but it is not operated democratically or in a way that encourages the activity to which I have 71WH referred. Above all, the taxpayer does not receive in return for that state funding the biggest single thing that they would want—an end to the sleaziness of the multi-millionaire being able to donate and thereby command the attention of the political parties. Evidence shows that the public do not like the process of state funding, but want parties to fund themselves. However, they do not support the idea of multi-millionaires making donations. They want parties to go down the traditional route of using local activists, and we must be realistic about how that can be achieved.
The cross-party acceptance of policy development funds suggests that political parties are not as adverse to such an approach as they make out, especially the Conservative party. However, that seems to be a notably self-interested development that is not tied to genuine democracy. It is certainly unfair to political parties that are not represented here, but which campaign legitimately and have support outside this place.
I suspect that there is a mixture of views in the Chamber about the success of UKIP, but I doubt whether that is so when it comes to that party's claim that it can outspend us £13 to £1. If that is true, it cannot be right than one individual can make such a difference. Tomorrow, it could be the BNP, the Greens or even the Liberal Democrats that get that big donation. It may be the Conservative party or, as it has been recently, the Labour party. Whoever it is, it is not right for anybody to donate on that scale and to be able to influence the political outcome by a single cheque. Every day, that situation threatens us with the crisis of the BNP commanding the kind of money that each of our political parties would wish for and stirring up division in our communities, even if it does not win our support. That is its objective, and under the present political system, there is nothing whatever that we could do to stop it.
§ Dame Marion Roe (in the Chair)
Before I call the next speaker, I remind hon. Members that I am hoping to start the winding-up speeches at 10.30.
§ Dr. Alan Whitehead (Southampton, Test) (Lab)
It will not surprise hon. Members that what I have to say will in many ways echo what the hon. Member for Truro and St. Austell (Matthew Taylor) said. This is an important issue that does not receive much airing; we somehow assume that if political parties carry on with business as usual, everything will be all right. The hon. Gentleman set out several important reasons why things will not be all right. I congratulate him on securing this Adjournment debate. I only wish that rather more of our mutual colleagues were here, because this issue affects them to a substantial degree.
This Government have placed on to the statute book unprecedented legislation to make transparent who gets what money from whom. That change in the way in which we register who gives money to political parties should not go unnoticed or unrecorded. It is a substantial change for the better, but it does not in itself change the nature of how political parties receive their 72WH money, although it has been argued recently that the publication of who gives money to political parties has meant that people are less likely to give money to them in the first place.
The net effect might be the opposite of what the hon. Gentleman suggests: political parties might simply wither and die because no one will give them money. However, the opposite may be the case in the short term. As he mentioned, some well-off people could give large sums of money to political parties that no one in this Chamber considers should be represented here. One could reflect that, to date, people with large sums of money have, by and large, spent their vanity millions on buying footballers rather than on funding political parties. The large amounts that have so far been donated to political parties are dwarfed by such funding activities. We see in the newspaper this morning that one particular footballer is being purchased at four times the cost of total political donations to political parties in the past few years. Perhaps we should reflect on what might happen if certain people suddenly shifted their allegiances from Chelsea, Tottenham, Blackburn or wherever to funding political parties instead.
The figures detailing how political parties raise their money are sobering. In 2002, only 15 per cent. of the Labour party's funding came from raising money from its own members. That was a stunningly successful performance compared with that of the Conservative party, which received only 7 per cent. of its money by the same route. As the hon. Gentleman said, because of the way in which the system now operates, political parties increasingly have to rely on fundraising departments and sometimes on large donations to make an expensive business fundable.
As far as the Labour party is concerned, money from the trade unions is negotiated in a different way from donations by private individuals to the Conservative party. Recent episodes have shown that trade unions can, by balloting their members, turn on or off the money that comes to the Labour party. The same is not quite true of the Conservative party, where individuals simply write cheques out; I am not saying that the Labour party has not received money by the same route, but we need to distinguish slightly between those funding sources.
Nevertheless, the membership figures are stark. The Conservatives' 2001 election campaign was, effectively, funded by two individuals—J.P. Getty and Stuart Wheeler. The majority of that campaign was funded by two individuals, but conversely, there has been what the hon. Gentleman calls the creeping rise of public funding. This is perhaps the most curious phenomenon in the entire debate, inasmuch as there is not a great deal of complaint nationally about free election post, free hire of halls, free security at party conferences and free party political broadcasts, which together benefit political parties by some £80 million a year, about Short money, which enables the Conservative Opposition party to get about £3 million a year from public funds, or about the Political Parties, Elections and Referendums Act 2000 policy development fund money of £2 million a year, which is split between all the parties and is for political research.
73WH It is interesting that between elections—I distinguish between money between elections and money for elections—the Conservative party, up to 2003, received a majority of its funding from the taxpayer. The amount was £4 million in that year, which compares with £3.5 million from private donations.
What might one do about that state of affairs? State funding looms ever larger on the horizon. In a moment, I want to think about what the future alternatives will be for political parties if we do not give that option serious consideration. A number of proposals have been floated. If political party funding comes out of the closet and is up front, recorded and clear, and if it is not provided in the rather back door way in which it is, to some extent, currently provided, a clear explanation of what that money does and where it comes from must be also up front in any discussion. There could be a system of matched money for fundraising at an individual level. It has been suggested that people might be able to specify in their tax returns that some of their tax money should go to a political party of their choice. Again, the principle that the political party has to persuade people to support it in order to receive the money rather than simply receive a lump sum seems important.
We have introduced a curriculum agenda of civic education in schools. I imagine that all colleagues in this Chamber have at some stage during the past year been invited into local schools to discuss that agenda. That curriculum is beginning to be assisted by a number of political parties—not overtly, but in a way that does not admit the existence of politics. Perhaps there could be funding for civic activities and activities that increase public awareness of the political process, but not for overt campaigning at elections. Foundations might be developed to build that sort of civic awareness and political activity, which is partisan to political parties but not in the front line of campaigning, as in Germany. All those are possible ways forward for state funding. Such a system would not simply be about a large sum of money being plonked on the table with no accountability. As the hon. Gentleman said, that is what happens now, in effect, both to large-scale donations from individuals and to state funding.
This matter is important now because there has been a precipitate decline in party membership over the past few years. If party members were hedge sparrows, we would have a major inquiry into why they had disappeared, a large amount of concern would be expressed about the imminent extinction of the species and measures would be put in place to reverse it. However, the reality of party membership in our polity is a decline of some 80 or 90 per cent. over the past two decades. In the 1950s, the combined membership of all political parties stood at some 4 million; by 1964 it was 3.3 million; and it is now 0.7 million and dropping. Far more people join single issue groups, however, and on the subject of hedge sparrows, membership of the Royal Society for the Protection of Birds is greater than that of all political parties put together.
It is not that people are not interested in issues or in joining groups, but that membership of a political party has increasingly been cut out of our polity. We have all been complicit in that to some extent. If a person's CV shows any hint that they are, were or are likely to be a member of a political party, they are in effect excluded from appointment to a variety of Government or local 74WH bodies. CVs are scrutinised carefully to ensure that people are "non-political", as if such a thing existed in practice.
§ Mr. Djanogly
The hon. Gentleman makes an interesting point, which I should like him to develop. If people are heading more towards single interest groups, would he suggest that caps on donations be applied to those groups, or are we heading down the American route, where people divert their funds away from political parties and put them into related single interest groups?
§ Dr. Whitehead
The hon. Gentleman makes an interesting point about the Americanisation of politics, which I want to address shortly.
The rise of money going to single issue groups, coupled with the steep decline of party membership and support for political parties, means that politics is increasingly carried out through single issue groups, influencing an ever-decreasing pool of party members trying to make changes to the political process; it is as if party members came from Mars and the single issue pressure groups lived on earth. In future, political parties could be seen as shells to capture when an election is due or when electoral nominations are required for public or council bodies.
A few years ago, in a number of council areas, every party had a panel. People got on to a panel, fought a not very winnable council seat and then fought their way through a nomination for a winnable council seat and got on to the council. There were perhaps 60 or 70 people on the panel, with 20 seats. Frankly, the experience of every political party— if anyone stands up in this Chamber to say that this is not the case, I shall suggest that they are misleading hon. Members—is that anybody who turns up and is reasonably okay as far as that party is concerned will get a nomination for a council seat.
The system whereby the polity is supplied with competing choices for elections is beginning to break down. I would not want us to end up in the situation that we see in America, where parties have no existence between elections and are captured by money at elections. The nominations flow from the capturing of that money at an election period, regardless of the continuing life of the party.
Historically, the Labour party was formed as the Labour Representation Committee to secure representation for working people in Parliament, and the Conservative and Unionist Association was formed as a supporters group for people who were already in Parliament. In a sense, the two things eventually coincided, because, for a while in the 20th century, both political parties—this was also the case for the Liberals at various stages—had a substantial community presence. They became real actors in the community, organising such things as Conservative and constitutional clubs, Clarion cycling clubs and Labour clubs.
I suggest that it would be good for the health of our polity if that sense of parties being part of the community rather than separate from it were restored. I do not see why there could not be Conservative lunch clubs for older people, Labour mothers and toddlers 75WH groups or Liberal Democrat playgroups. I am not intending to show any political bias in suggesting those various activities. The main reason why such activities would not be possible at present is the combination of the precipitate decline of party membership and the marginalisation or almost ghettoisation of the political process in the democratic life of the UK.
If we go down the route of believing that there are people who know what is good for us, but are non-political, and if those of us who are political simply stand on the sidelines and look on, we will have reached the foothills of the beginning of totalitarianism. The whole point about politics is that it is a clash of ideas and different ways of doing things, and the great and the good have an idea of how to do things just as much as any political party. The idea of state funding that breathes life back into the real political process and sends political parties back into a life in the community could be an important way forward, and we should give it weighty consideration.
§ Mr. Alan Hurst (Braintree) (Lab)
I am pleased to be able to speak in this debate. I support much of what the hon. Member for Truro and St. Austell (Matthew Taylor) said, except perhaps what he said in the first five minutes of his speech, when he told us what he was not going to speak about, but gave us some clues along the way.
Money in politics is not a new factor; it has probably always been there. My knowledge of Roman history is not as great as it might be, but I believe that, in certain stages of the republic, money was involved in seeking high positions. In our own history, from the 18th century onwards, money was also a factor in such matters; the rotten borough was proof of that. One of the reasons why those elected from counties were thought to be slightly purer was that counties were more expensive to corrupt, because they were larger. One might also give the example of the sale of kisses by the Duchess of Westminster on behalf of Charles James Fox. The whole atmosphere was one of money, privilege and access to power.
The Liberal party has not been entirely immune. It would be trite for me to mention Lloyd George and the sale of peerages, because he did not establish that process; he merely put it on a businesslike basis. The source of funds for political parties before Labour's time came from particular groups: the brewers would always support the Conservative party and other groups would always support the Liberal party.
The factor that changed everything was not so much the organisation of the vote, but the need to register it, which created the political organisations. That made politics something that was not the plaything of the wealthy or the powerful, but involved ordinary people in the process. That was the most important stage, and it is only about 130 years away from where we are today.
We speak glowingly of vast party membership after the second world war, and up to a point that is right, but in the Labour party in the 1960s, it took me a while to realise that my divisional party was paying on the basis of 1,000 members, although we knew jolly well that we 76WH had only 150. The reason was that it could not affiliate with fewer than 1,000 members. The Labour party figures for that period bore no relationship to the actual position, and the same may even be so now.
In the past two or three years, if the Conservative party enrols the husband, it automatically enrols the wife. Indeed, I know of a wife who is an active campaigner for the Labour party, notwithstanding that she is, on the face of it, a member of the Conservative party, because of the connection with her husband. There is always a certain artificiality in the numbers of people involved.
I was impressed to read in a biography of Enoch Powell that when he became the prospective Conservative candidate in Wolverhampton, South-West, the local party had about 6,000 members, which was more than 10 per cent. of the electorate of that area. An old minute book of one of the branches in my parliamentary division—a relatively small village—had 150 members in 1958, which was a quarter of the electorate. However, even allowing for exaggeration— the word was not "spin" in those days—in the number of members, a lot of people were involved, and they had to be involved so that we could take part in elections.
In some ways, the activist has been made superfluous. The first step in that process was putting the party name on the ballot paper. I am not against that—it is a perfectly sensible thing to do—but when the party name did not feature on the ballot paper, one had to ensure that people knew who the Labour, Liberal or Conservative candidate was, and the only way of doing so was to put out information, talk to people and put the party's position across. The moment that the ballot paper included the party name, a lot of parties would put up a candidate, but that was the limit of what they did, because people would be able to vote Conservative, Labour or Liberal as the party name would appear. That took away some activism.
When I came into politics, parties did not contest every seat in local elections; they contested only those in which they thought they had some sort of chance. When the party name was included on the ballot paper, however, most seats were contested most of the time by the main parties. Polling cards were issued only in general elections; in local elections, parties issued their own polling card to electors—another task that involved a lot of people, who had to deliver them. I do not suggest that we should return to making life difficult for the electors, but those are some of the reasons why parties do not need so many active people on the ground. When there are fewer active people on the ground, it becomes more difficult to raise money.
As both previous speakers have said, much of the emphasis in the past was on constituencies, whereas now it is London-centred, so money is being drawn into London rather than raised in the constituencies. In my early days in politics, most Labour and all Conservative parties in East Anglia had full-time agents, and the Liberal party had the ambition to have full-time agents. My constituency party has had a full-time agent since 1923, but it may be the only one in the county of Essex that has, and there may be only three or four throughout East Anglia. I do not know the Conservative party's position, but it has nothing like as many agents as it once had. Again, the focus is moving to the centre all the time.
77WH How can we return to a situation in which the activist, the ordinary participant, is the purveyor of money, rather than big corporations, rich individuals or others? I think that we have probably come to the point at which there needs to be a linkage between local donations and state assistance. As my hon. Friend the Member for Southampton, Test (Dr. Whitehead) said, state assistance has been creeping in, so that the state is now probably the largest donor to all political parties. Whether that money is wisely spent, I do not know.
The other question that we should ask ourselves is: do parties need to spend as much money as they do on the political process? I am sure that we have all been embarrassed by the stuff that comes down from our head offices. At a recent election, we were supplied with large cut-out cardboard feet that were placed at the entrance to our committee rooms. Quite what the purpose was, I have no idea. The traditional colours of my party in our area are red and yellow, but on one occasion, central office suddenly started operating in royal purple. My agent had a certain destination for that material. It was put at the back of the committee room to be taken away on Thursdays.
Again, money is being spent on a scale that makes one wonder whether it is spent to any purpose. In the last election, the Conservative party had what some might consider extremely effective advertising on hoardings, although it did not do very well in the election. We had the most appalling advertising. My constituency office received a huge poster that appeared to be advertising a film at the Odeon in Colchester. It turned out to be about our party's merits and benefits. Unless one was an expert on the political process, one had no idea what it was about. Lots of money is being spent on things that are, frankly, an absolute waste of time. If we concentrated on the things that are more important— the policies and their conveyance to the people in the electoral process through hundreds of thousands of people who are engaged in it—the health of our democracy would greatly improve.
One way forward must be to limit the amount that one individual or group can donate to a political party within a certain period. That would clearly reduce the amount of money coming into the system. Careful thought also needs to be given to linking the amount of money raised by constituency parties with matching funds from the state. That is the other way forward. We need to be aware not only that we are making politics and public debates so trite with much of the advertising that is put out, but of the fear raised by the hon. Member for Truro and St. Austell and my hon. Friend the Member for Southampton, Test, that those who are wealthy or both wealthy and vain can intervene in politics on a scale that can distort the process for a short time at least. History teaches us that, in the end, the rich and the vain do not normally survive for long periods, but they can upset the process and put people off being involved in the whole electoral scheme.
Overridingly, we need to raise the reputation of public affairs. As has been pointed out, it seems that involvement in public affairs is sometimes held to carry some sort of stain. For example, members of health authorities and possibly magistrates might be regarded cagily; there is a whole range of such activities, even though one should naturally be proud of having carried them out. Whatever honours system we have, the 78WH greatest disadvantage is that people spend a long period of their lives serving the public on elected bodies for no financial reward. That is wrong. My party has perhaps been rather sillier than the Conservatives were about that issue. Those who have spent a long time serving their communities in local affairs should be rewarded and honoured in the same way as others, and they should not have to be nominated for an award for some other activity that they did as well.
We need to restore the repute of what we do. I am sure that other hon. Members find that, when we bring people to this House, they are invariably impressed by what happens here. It is what they read about and see on television that gives them a different point of view. We need controls on the payment to political parties, and we need schemes to encourage and reinvigorate activism in constituencies.
§ Mr. Paul Tyler (North Cornwall) (LD)
I agree with so much of what the hon. Member for Braintree (Mr. Hurst) has just said that I hope he will forgive me if I cavil with one of his comments. He said that he thought that activists might become superfluous. Those of us who tramped the great cities of Birmingham and Leicester in recent weeks would argue that activists are still very important to our political process.
I warmly congratulate my hon. Friend the Member for Truro and St. Austell (Matthew Taylor). This is a timely debate. It has also been extremely thoughtful—I hope that it will continue to be so—and there has been a very considerable degree of consensus. What we lack in the quantity of contributions, I hope that we will make up for in quality.
One of the reasons why the debate is timely is the forthcoming Electoral Commission recommendations, which I am given to understand we can expect in September. They will be timely for reasons that I shall address. I hope that all parties will take this issue seriously at their party conferences. We cannot wait until after the next general election to address it. I also hope that the Government will speedily respond to the commission's September recommendations.
Comment has been made about the degree of public support that there is for a measure of state funding of the democratic process. I hope that everybody has now read about the state of British democracy as it has been set out in the state of the nation poll commissioned by the Joseph Rowntree Reform Trust. It is one of the most comprehensive assessments of what the public think, and it has the great advantage of not having been mediated through the media. It comes to us direct; it is not given the headline treatment of the The Daily Telegraph or the Evening Standard. It states:
Three quarters (73 per cent.) find the current system for funding political parties 'unfair' because of the risk that wealthy individuals, businesses and trade unions 'can buy influence' over the parties with their donations. As Table 3 shows, a majority would be in favour of public support for the parties through state funding to reduce their dependence on large donations. Three quarters (74 per cent.) believe there should be limits on how much people can donate to political parties. This is consistent with the high levels of public concern about sleaze under both Conservative and Labour governments found in earlier State of the Nation polls.
I hope that the Government have taken note of that.
79WH In introducing this important debate, my hon. Friend might have implied that there was not great enthusiasm for what he was saying. That is not true; there is huge public enthusiasm for the sort of constraints that all Members who have spoken feel are now necessary. One of the principal reasons for that is the argument that the hon. Members for Braintree and for Southampton, Test (Dr. Whitehead) eloquently advocated. We must reverse the trend of centralisation in British politics. I have some figures—they are slightly out of date—for the extent to which the Conservative party has had to centralise its staffing resources. In 1997, it employed 59 regional staff and 147 central staff; by 2002, there had been a drop to 18 regional staff, while the number of central staff had increased to 172. The hon. Member for Huntingdon (Mr. Djanogly) may be able to tell us whether that trend has continued. I am not, saying that it has happened only in the Conservative party; there has been a trend towards centralisation in all parties, because of the way in which the funding has come to the centre, notably from millionaires.
I echo the commitment that previous speakers have given to the concept of trying to match funding at local level. If our parties simply become huge machines dominated in London by those who are able to pay for such machines there, we will be in great difficulty and our whole body politic will suffer. My hon. Friend the Member for Truro and St. Austell has offered suggestions, and reference has been made to the concept of a concession on income tax. That might now be more equally spread between the parties than it might have been in previous years. Some form of match funding seems essential.
I do not think that any Member believes that they have got the answer. I am confident that the Electoral Commission will address this issue. I do not think that it will just take a prescriptive view about controlling large-scale funding of the political parties. I think that it will be interested in trying to reverse the trend away from local membership and local activists. When it looks into this matter, I hope that we will all be prepared to listen to its expertise, which comes from outside the partisan political parties, as it has considerable and increasing experience about the way in which our political system works.
I want to emphasise the suggestion made by my hon. Friend. There is a very urgent question that we have to look at. We have to address the urgent question of the dominance of the maverick, manipulative millionaires. It is a question not just for the next general election. For example, at least one of the millionaires, Mr. Paul Sykes, apparently thinks that the referendums on regional assemblies this autumn—that is when we expect them—are some dreadful Brussels plot. It appears that he is intending to invest large sums in the campaigns.
Whatever side one takes on the issue, one must agree that the problem is urgent. I am afraid that I must report to the House that the Electoral Commission restrictions on large donations do not apply as effectively to referendum campaigns as to general elections. If Mr. Paul Sykes, for example, chooses to spend a few million pounds on those referendums as a run-up to the general 80WH election, and even more so as a dress rehearsal for the referendum on the European constitution, he could buy their results. The problem is extremely urgent.
We must also consider the general election. If legislation is required, it will be important that it is put through the House as soon as possible after the Queen's Speech so that we can ensure that the general election is fought on a fair, open and transparent basis. My hon. Friend has already referred to that problem. It also appears from the Electoral Commission's current rules that it would be possible for a millionaire to escape the restrictions on donations by spending his money through several front organisations. That would be easy. Such organisations could appear to be single issue organisations, but they could in effect be campaigning for one, two or three political parties, although it is most likely that they would plump for one party. That is a real danger; our democracy could be undermined. Those front organisations could disappear after polling day, and it would be difficult to account for the money that they had spent.
§ Mr. Djanogly
I am afraid that the hon. Gentleman is blowing a hole in his own argument. Mr. Sykes does not have to give his money to a political party or to a pressure group. He could set up his own pressure group or organisation if, as the hon. Member for Truro and St. Austell suggested, he wants devote his significant fortune to doing so. Is the hon. Gentleman saying that individuals should be prevented from spending money on what they want? That is what his argument is heading towards.
§ Mr. Tyler
I do not think that the hon. Gentleman has had the benefit of the conversation with the Electoral Commission that I have had. The commission was set up by Parliament precisely to consider the issues, and I can assure him that he should have that conversation, because there are real problems and loopholes, in relation not just to the referendums this autumn or the anticipated referendum next year on the European constitution, but to the general election itself. It is currently perfectly possible to circumnavigate the rules on individual donations. A millionaire could buy the outcome of a referendum and possibly make a major difference, in the way that my hon. Friend described, to the pattern and outcome of a general election.
I want to refer to the unfortunate hypocrisy surrounding the debate on state funding. As has already been mentioned, the principal beneficiary of the taxpayers' contribution to the political process is the Conservative party. It has received just short of £30 million since it lost power in 1997—a considerable sum. Reference was made earlier to the annual figures, and I have them from the Library. In the current year, general Short money is £3,017,307, travel expenses are £86,130, the leader of the Opposition's office costs £563,449, Cranborne money in the Lords is £413,131 and there was a policy development grant of £439,005. That makes a grand total of £4,519,022. On top of that, uniquely—this does not apply to any of the other parties in this House—several Conservative office holders have additional salaries over and above their salaries from the Commons. The same applies in the House of Lords, with a total of £282,682. That makes a total of just short of £5 million—it is £4.8-odd million.
81WH I am sure that the hon. Member for Huntingdon, who is certainly honourable, will acknowledge that it would be hypocritical in those circumstances to have any principled objections, given that his party is the main beneficiary of state funding, unless the money is sent back, of course. The principal issue is that he who pays the piper calls the tune. If we can reverse the process of centralisation, which was so effectively described by the hon. Members for Southampton, Test and for Braintree, we can do something really valuable for the British parliamentary democratic system. If we do nothing, the dangers to which my hon. Friend refers are considerable indeed.
Time is short. The process has already gone a long way in the American direction, which I regret. Even in the referendums, or referenda, as I prefer to call them, this autumn, we may start to see an ugly twist in this tale. I hope that we will not, and that the Government are prepared to take speedy action when they get the Electoral Commission report in September.
§ Mr. Jonathan Djanogly (Huntingdon) (Con)
I welcome the fact that the hon. Member for Truro and St. Austell (Matthew Taylor) has secured this debate, which, as he said, is in anticipation of the Electoral Commission presenting its conclusions to the Government on the funding of political parties later this year.
Various hon. Members referred to the wealth of the individual calling the shots, weighing in and dictating how policy in this country works, but those references are, from my perspective, a red herring and, as others have said, transient issues at best. I gave my reasons for that view in my interventions. On the issue of wealthy individuals leading to the centralisation of politics, I see no correlation between the two. Most wealthy individuals would not have much of an idea of what an agent was—at the centre or locally—or about the mechanics of political parties. If anything, recent press reports have shown that certain individuals who wanted to give money to the Conservative party insisted that their money went to the regions rather than the centre.
Of course, the public need confidence in the way in which political parties are funded. Most importantly, there should be no question of corruption. Nevertheless, we do not accept that the Government can justify spending even more public money on politicians, when political parties already receive significant public money, as hon. Members have made clear. The Electoral Commission's estimate is that in a general election year, the figure can come to £100 million, which is on top of the wide variety of direct and indirect public support already given to political parties, such as free mail shots, free use of civic premises, free broadcasts during elections and financial support for Opposition and Front-Bench services in the form of Short and Cranborne moneys. I suggest that increasing the dependence and reliance of political parties on the state could further distance politicians from the electorate because of the ending of the need to contact people to seek non-state funding.
There is no great public demand for an increase in state funding for political parties or for restricting the amount of private donations. In fact, the opposite is 82WH true. I am confident that the taxpayer's view is that public money would be put to better use by investing it in our public services rather than our politicians. The Conservative party stands by the stance that we took in our 1998 submission to the Neill committee, in which we asserted that
state funding would undermine the voluntary activity of political parties … we believe there is a difference in principle between providing assistance to opposition parties to help them with their Parliamentary duties and providing taxpayer support for the day-to-day campaigning activities of political parties".
The crux of the matter is that the Government should not restrict what political parties can and cannot do, rather than addressing their own lack of ethics with regard to political donations. Membership of the Labour party is collapsing. The base of new Labour entrepreneurs who funded it is vanishing, and it is increasingly becoming almost entirely dependent on trade union funding. I would find it distasteful if the Government wanted to use the Electoral Commission as cover for providing political parties with millions more pounds of state funding in a bid to dilute the power of the trade unions over their own party.
§ Mr. Tyler
I am finding it difficult to follow the hon. Gentleman's train of thought. Is he saying that he wants to return the large sum of taxpayers' money that has been allocated to the Conservative party—for its policy development fund, for example—which has nothing to do with what happens in this building?
§ Mr. Djanogly
I specifically said that I do not think that the state should give any more than it already does. Furthermore, what the state gives should be for parliamentary duties, rather than day-to-day campaigning.
§ Mr. Tyler
I was involved in negotiations with representatives of the hon. Gentleman's party. He should recognise that the policy development fund has nothing to do with parliamentary activity; it is designed to help the parties develop their policy outwith this place. His argument therefore collapses.
§ Mr. Djanogly
I shall come on to the fund later. The hon. Gentleman makes a fair point in that regard—I give him that—but we need to address other issues relating to the fund.
Only a few weeks ago, I opposed a proposed change in the law governing trade unions and political funding. In brief, my position was that as companies are now required annually to have member approval for political donations, why should not unions also have to receive such annual consent from their members? We are firmly of the opinion that people in a democracy should be generally free to donate their money as they see fit. There are many checks and balances on political donations in this country, including controls on campaign expenditure, prohibition of foreign donations and transparency of donors. With such transparency, the electorate can make up their own minds whether to vote for a particular party.
We stand by the proposals in the paper entitled "An end to Cronyism: Conservative charter for civil service impartiality", which was published on 4 March 2002. The proposals include, first, a statutory prohibition on 83WH abuse of power by political appointees. That problem was evidenced by the Mittal controversy and Jonathan Powell's dual role of being the Prime Minister's chief of staff and being involved in Labour fundraising.
Secondly, we proposed statutory provision for the ministerial code and its enforcement. That would mean that the code was given statutory force and monitored by a body separate from the Government. The need for that was evidenced by the National Union of Rail, Maritime and Transport Workers' donation in kind of a flat to the Deputy Prime Minister while he was serving as the Secretary of State responsible for transport.
Thirdly, a proper paper trail should be kept. If all official meetings and conversations between Ministers and senior civil servants were recorded, we would know the full truth behind scandals such as those involving Formula 1 and the Hinduja brothers.
§ Matthew Taylor
Let me be absolutely clear. Is the hon. Gentleman saying that if, this autumn, the Electoral Commission recommends funding to help campaigning in the country, the Conservative party will refuse it and return it to the state health service or state education? He seems to believe that his party would be entirely wrong to accept any such money.
§ Mr. Djanogly
No, I said that the hon. Member for North Cornwall (Mr. Tyler) made an interesting point; I did not say that I necessarily agreed with it. We will consider the issue when the commission makes its findings available.
Fourthly, there should be checks on party and Government papers. If there were a body or commissioner that could check such papers and independently assess whether political donations had influenced Whitehall policy decisions, there would be far more public confidence in the legitimacy and independence of policy decisions.
The Liberal Democrats want to cap the amount that is privately donated to political parties and would rather spend £20 million of taxpayers' money, not on improving public services, but on funding politicians. The Liberal Democrats' policy for the state funding of political parties, which would apparently include the funding of political parties' campaigning activities, is to give every political party with more than 5 per cent. of the vote £2 million a year, and to allocate an additional £10 million a year between the parties in proportion to their share of the vote.
Under that system, the 2001 general election would have resulted in a yearly allocation of £6 million to Labour, £5 million to the Conservatives and £4 million to the Liberal Democrats. Essentially, the Liberal Democrats plan to fiddle state funding to get a substantial amount of money that is totally disproportionate to their number of MPs.
I turn to the policy development grant. We strongly believe that the Electoral Commission's allocation of funds is wrong. We do not understand why the Labour, Conservative and Liberal Democrat parties receive the same amounts. It is questionable that the party in power should receive such funding, as it already has a variety of policy support units—not least the whole civil 84WH service—at its disposal. We are also strongly of the opinion that a minority party should not receive the same funding as the official Opposition.
We oppose the proposals, being considered by the European Commission, to introduce state funding of European political parties. We believe that in a democracy funding should not be withheld from countries that are not deemed pan-European enough or that refuse to adhere to a given manifesto. That should be up to the electorate, as they decide whom and what they support.
We also feel strongly about the anomaly in the law that means that political parties from Northern Ireland do not have to register the source of their donations. Such parties can receive donations from anywhere in the world, as long as they do not receive funds from a specified list of donors set out in the relevant Act. That is wrong.
However, I agree with the hon. Member for Truro and St. Austell on one point: his desire to see more small donations. How do we get more people involved in giving money to political parties? The Inheritance Tax Act 1984 provides that donations to political parties are exempt from inheritance tax. We strongly advocate that that should be extended to include an income tax exemption. That would encourage members of the public to get involved in party politics, while increasing funding and the membership base for parties. Ultimately, if more people give to political parties, more people will feel that they are engaging in the political process. That, not increasing state funding, should be the aim.
§ The Parliamentary Under-Secretary of State for Constitutional Affairs (Mr. Christopher Leslie)
The hon. Member for Huntingdon (Mr. Djanogly) concluded on a note that I would like to investigate on another occasion.
I congratulate the hon. Member for Truro and St. Austell (Matthew Taylor) on securing the debate. The issue of party political funding can lead to the bandying around of insults between parties. Far be it from me to say that I am not capable or willing to engage in such banter; I could talk for hours about my views of the funding of the Conservative or Liberal Democrat parties. Unlike my hon. Friend the Member for Braintree (Mr. Hurst), I will not mention Lloyd George; that would not take us far.
I am glad that the hon. Member for North Cornwall (Mr. Tyler) mentioned the work of the Joseph Rowntree Reform Trust, which recently published a report on the state of British democracy and attitudes to political parties, which gives us a flavour of public opinion on some of the issues. Unfortunately, public awareness of party political funding issues tends to fall into the usual tramlines of cash for questions, sleaze-ridden donations and allegations. We could get into a discussion about those, but that would not be helpful.
My personal view is that that is largely inaccurate and unfair with regard to political parties. My hon. Friend the Member for Southampton, Test (Dr. Whitehead) made the point that political parties are not, by and large, evil or nasty institutions—far from it. They tend to be pretty essential components of a healthy 85WH democracy. If we are to have a successfully functioning democracy, we need political parties to be strong and to operate. They are of great importance, and it follows that how parties are funded is also of great importance not only to those who are elected, but to the public at large. That is why it is useful to have this debate.
The fifth report of the Committee on Standards in Public Life—now known as the Neill committee—entitled "The Funding of Political Parties in the United Kingdom", was published in 1998. That was the last large consideration of public policy on the subject. The terms of reference that the Prime Minister gave the committee were deliberately broad, so it looked into all aspects of party funding. It was a well-researched report, taking evidence from all around the world. There were 400 written submissions. It raised ethical questions about the standards of conduct in public life and also addressed specific public policy matters, including questions about the undue influence of political parties by large donors and, perhaps as importantly, public perceptions of undue influence.
The preface to the report stated that
ignorance about the sources of funding has created suspicion".
To allay that suspicion, the committee recommended a series of measures underpinned by the seven principles of public life set out in its first report. The three most relevant were declared by the committee to be integrity, accountability and openness. I believe that Britain has a system that follows those principles very well.
The Government responded to that report with a White Paper, published in 1999, which was followed by the Political Parties, Elections and Referendums Act 2000, known catchily as PPERA, which was extensively considered in both Houses. In line with the Neill committee's recommendations, the Act translated those principles of transparency and openness into practice.
§ Sir George Young (North-West Hampshire) (Con)
The Minister said that the 2000 Act was in line with the committee's recommendations. He will recall that there was one recommendation that the Government did not accept—tax relief up to a certain limit on donations to political parties. If the Electoral Commission comes up with a similar recommendation, will the Government consider it with an open mind?
§ Mr. Leslie
Obviously, the Government always have an open mind on Electoral Commission recommendations, as the right hon. Gentleman should know. I will come to that point later, but it is important to recap the changes we have made in recent years, which I think have contributed to a healthier state of affairs for all parties.
The new regulatory system tightly defines those eligible to give donations to political parties, and it excludes, for example, donations from abroad. All donations of more than £200 have to be from permissible donors. Donations of more than £5,000 to parties or organisations and of more than £1,000 to branches of parties and individuals have to be declared and publicly recorded. It is a matter of record that the Labour party has, since 1995, published in its annual report to the national executive committee the identity of donors who have given more than £5,000. That may seem a basic step, but it actually represents a radical change in recent years in how parties operate.
86WH PPERA also established the Electoral Commission with much fanfare. It was given, among other responsibilities, the duty of maintaining the register of donations and ensuring compliance with the system. The outcome of the introduction of that system has been a much longed-for openness and transparency.
The hon. Member for North Cornwall and others mentioned the existence of a certain degree of state funding through the funds created by PPERA, including the policy development grant, which was recommended by the Neill committee. There are also start-up grants to enable parties to adjust to the regulatory system introduced. It is also worth mentioning the Short and Cranborne moneys that are available to Opposition parties in the Commons and the Lords respectively, as has already been put on record. That money has introduced a realistic support for those parties, given the tasks that they have to undertake in Parliament and in developing policy.
It is important to recap some of the arguments that have been aired in this useful debate. No doubt, the Electoral Commission will be listening to it, as it is due to compile a report. It is possible to argue with great strength and conviction in favour of state funding. For example, it is argued that state funding could have a purifying effect because larger donations would no longer be necessary. State funding on a substantial scale could mean that parties were no longer reliant on large donations, which could remove any allegations of improper conduct. Another argument is that state funding could allow parties to perform their essential tasks more effectively, because they could focus on the key issues rather than spend their time chasing money or looking for funding.
There is also the argument raised by the hon. Member for Truro and St. Austell and mentioned in an intervention by the right hon. Member for North-West Hampshire (Sir George Young) about the fact that, in some countries, there is a match funding arrangement under which donations from individuals are match funded either through tax relief or something similar. Paradoxically, the tax relief system encourages private individuals to donate small sums. The official Opposition referred to that matter, although I am not clear about their policy on it.
There are also significant arguments against state funding, which should not be dismissed lightly. For example, there is the argument that taxpayers should not be compelled to support parties with whose policies they may strongly disagree. We must address whether it is wrong in principle to compel taxpayers to donate to objectionable parties. Similarly, there is the argument voiced by the hon. Member for Truro and St. Austell that public funds are needed for higher expenditure priorities elsewhere. There is also the point that any public funding system will simply ossify existing party arrangements, favour the establishment and be biased against new entrants to the political realm.
I know that the hon. Gentleman is concerned about capping donations, and there is the question of whether an individual's freedom to donate should be constrained in that way, as well as that of how to balance the freedom to contribute with fairness between the political parties. I believe that the vast majority of donors to 87WH political parties are not giving money in exchange for something, but giving resources for the good of their party without any expectation of personal gain.
Most importantly, the issue that we must consider, which was raised by my hon. Friends the Members for Braintree and for Southampton, Test, is the risk that reliance on state funding may remove an incentive for a party to cultivate its grass roots membership in order to raise money. We must be careful about adopting policies that could weaken local activism and participation. Any system that is developed should encourage local activism and grass roots involvement in parties. I would be reluctant to see a system that would make political parties lazy, London or Westminster-centric and not forced by regulations to reach out to the wider country.
There is a huge range of views on this matter. We know that the Electoral Commission is doing its work and we expect its report later this year. I am looking forward to seeing that report. It is going to review previous reports, consider systems in other countries and look at the case for public funding. We need to wait and see what the commission's views are. This is clearly an important issue, which we must continue to debate in—I hope—a calm and rational atmosphere, as we have today. I commend the hon. Gentleman for finding the time and opportunity for us to debate the matter today.