Sir George leads for Opposition on Neill Report
10 Jan 2000
Sir George Young (North-West Hampshire): The Second Reading of this Bill marks a further step in the progress towards the statute book of the Neill committee's recommendations. Since the report was published in October 1998, we have had a full day's debate in the House on 9 November that year and the publication of the White Paper and the draft Bill, launched by the Home Secretary's statement, followed by questions and answers on 27 July last year. Just before Christmas, the Bill and the explanatory notes were published, and they are now before the House.
At each stage, the Opposition have made it clear that we accept Lord Neill's recommendations, and we will not obstruct their passage onto the statute book. I join the Home Secretary in paying tribute to Lord Neill and his committee--they have managed to build consensus outof the bricks of political contention. We accept the establishment of the Electoral Commission, the accounting requirements for political parties, the principle of containing national campaign expenditure at a general election, and the reporting of major donations and the restrictions on third parties. I agree with almost everything that the Home Secretary has just said.
My party's criticism of the Bill is that it rejects the Neill committee's recommendations on two points. However, I was delighted to hear the more conciliatory passage about the referendum in the Home Secretary's speech. I shall discuss that shortly. The key objective of putting the Neill recommendations on the statute book is to enhance the status, credibility and integrity of the profession of politics. For that reason alone, it is particularly important for Government to resist the temptation to tweak the Neill committee's recommendations to seek party advantage. If they gave in to that temptation, it would add to public cynicism about the political process instead of defusing it.
Paragraph 2.34 of the Neill committee's report states:
"We wish to emphasise that our recommendations have been conceived as part of an overall integrated scheme for the funding of political parties. There is a direct linkage between all recommendations, which should be viewed as a whole."

The Government should pay attention to that assertion.
I want to make one or two general points.
Mr. Peter Bradley: Further to the Neill principles, can the right hon. Gentleman confirm that the Conservative party conforms both in spirit and to the letter of the recommendations of the Neill report?
Sir George Young: I have said that we accept the Neill recommendations and we will not obstruct their passage onto the statute book. Our disagreement with the Government is about where they have departed from Neill.
I want to make some general points, ask questions about the Bill and then say a word or two about those aspects where we think the Government should follow Neill. First, this is a constitutional Bill and we believe that key sections should be taken on the Floor of the House. I note that there is no resolution to that effect at the moment. I hope that the Home Secretary will agree that discussions should take place between the usual channels because legislation on the holding of referendums, establishing an Electoral Commission, controlling political parties and restricting the franchise deals with clearly constitutional issues that are of interest to all hon. Members and would qualify to be considered in the Chamber.
Secondly, although it is common ground that politics here should be cleaned up--no party is beyond reproach--we should note that this country has been spared the scale of corruption that has plagued other democratic countries. Thanks to a vigilant press, a neutral and professional civil service, Opposition parties and Back Benchers in Parliament, the Public Accounts Committee and the National Audit Office it is more difficult to contaminate the decision-making process and for corruption to flourish in the United Kingdom than elsewhere. Those who have flirted with that have rightly paid a heavy price, and few people in this country choose politics as a means of enriching themselves. As the Neill report states:
"The pursuit of politics is an honourable profession to which many men and women devote their lives. Behind each career politician stands a regiment of dedicated voluntary party workers".

Thirdly, to pick up something that the Home Secretary said, there is nothing wrong in giving money to a political party. If we reject state funding--I believe that most hon. Members do--and agree with the Neill committee that

"political parties are essential to democracy",

giving to a political party promotes and strengthens that democracy. Indeed, Neill went on to assert:

"We have been given no evidence that leads us to doubt that nearly all"--
large givers—

"give generously either because they support the general aims of the party which they finance, or in order to minimise the risk of the opposing party attaining power."

None the less, there is a price that has been paid because people do not know who is paying how much for what and standards have been lower than they should be. The Bill can help to rebuild public confidence in the political process.
Mr. MacShane: Before the right hon. Gentleman leaves public funding for political democracy, is he repudiating the £3 million that the official Opposition receive and the very handsome extra salary and the free car that the Leader of the Opposition receives, all of which is paid for by taxpayers' money?
Sir George Young: If the hon. Gentleman had been in the Chamber in June last year when that matter was debated, he would have heard me speak on behalf of the Opposition about the implementation of the Short recommendations on the funding of Opposition parties. He will see on the record exactly what I said on that occasion.
I shall make another general point at this stage. It relates to what I call the school governor syndrome. Many of us have been school governors--the Home Secretary may still be one--but it has become more difficult to recruit school governors, not because people are any less interested in or committed to the fortunes of their school, but because the responsibilities, the bureaucracy and the time required have increased to the extent that it is aless attractive proposition for a volunteer with other commitments. The same sort of risk is involved in putting our essentially voluntary political organisations into a new regulatory framework.
Has the Home Secretary sat down with the treasurer of the Blackburn Labour party and gone through the eight pages of schedule 6, and in particular paragraph 10 which deals with the offence of failing to deliver a donation report? Has the Home Secretary discussed with him the spine-chilling schedule 19? Many local associations on all sides are working hard to balance the books, find candidates for local elections, pay the quota and pay the agent, should they have one. We need to keep an eye on the burdens that we put on voluntary organisations, not least because the problems that have arisen have been at head office rather than in the branches.
I deal now with some of the questions that have been asked. The key one, which the Home Secretary touched on towards the end of his speech, is when will the Bill kick in? Let us assume that there will be a general election in the spring of next year and that this Bill reaches the statute book in late summer. Does the Home Secretary believe that all the Bill's provisions will be up and running in time for the next general election? The commission will need to find headquarters, recruit up to 50 people, set up the procedures for registration, give guidance on accounts and enable third parties to register.
In November 1998, the Home Secretary said:
"We want fair and effective controls in place for the next general election."--[Official Report, 9 November 1998; Vol. 319, c. 58.]

If there is an election in spring 2001, schedule 8 could bite and affect campaign expenditure incurred once the Bill becomes law. All parties preparing to contest that election will need to know whether they will be fighting it under the present regime or the new one. In its leader today, The Times suggested that there may be an election this autumn. I assume that the Bill will not be implemented by then.
The commencement date will also be of interest to those defined as third parties. Voluntary bodies with environmental interests, interests in animal welfare and in a host of other issues that come up at a general election may need to register and set up the necessary accounting arrangements if they are to play a part in the next election and stay the right side of the law. They would appreciate a little more light being shed on commencement dates.
Will the Home Secretary rule out the holding of any referendum until the Bill's provisions are up and running? If he does so, is not that an explicit admission that the Government will go into the next election with a manifesto commitment from the last that has not been honoured--namely, the commitment to hold a referendum on an alternative to first past the post?
On a related point, clause 10 deals with policy development grants, which will benefit everyone in this House apart, I am sorry to say, from the Member for Tatton (Mr. Bell). The Bill says that these grants are
"to assist the party with the development of policies for inclusion in any manifesto".
Does the Home Secretary envisage such grants being paid in time for useful work to be done by all the political parties before the next election, or is this a recommendation of Neill that will have to wait until the next Parliament to take effect?
Clause 11 deals with education about electoral and democratic systems. Will the Electoral Commission get drawn into the debate about the merits of competing electoral systems? I very much hope that it will not. If we are to have a referendum on first past the post versus alternative vote-plus, umpired by the commission which will see fair play, we cannot also have the umpire promoting the virtues of alternative vote-plus under this clause. Those powers will need careful definition.
The same clause gives the Electoral Commission a duty to promote public awareness of the institutions of the European Union. My understanding is that the institutions of the European Union already have a budget to do that, and I wonder whether there is a risk of duplication.
What would be the position if there were a referendum on PR or the euro? Could public money, as dispensed by the commission by way of grants under clause 11, be used to fund partisan campaigning? There are no safeguards in the Bill to prevent that from happening, and we shall certainly want to consider the matter again in Committee.
Clause 22 contains a convenient subsection--subsection (8)--which grants trade unions exemption from being part of the Labour party. Twenty eight trade unions are affiliated to the Labour party, and Neill tells us that 44 per cent. of the expenditure from all political funds went to the Labour party in affiliation fees, and much of the remainder is spent on activities or advertising likely to support the Labour party. Despite the fact that those trade unions are affiliated to the Labour party, this subsection says that they are not. Is it logical to regard those trade unions as totally separate from the Labour party when they are joined at the hip?
We shall need a better definition of a donation and of sponsorship under clause 45. Charities that take stands at party conferences are worried that they may be caught by the definition of a donation. Firms that send delegates to the party conference might find they have inadvertently sponsored the party. What about advertisements in conference publications or in dinner programmes? Are they deemed to be donations that require shareholder approval or declarations by individuals? What about sponsorship of the passes for the Labour party conference? Does such commercial advertising require shareholders' consent?
We need more of an explanation than we have so far had of why clause 130 on overseas voters is in the Bill, given that the Bill implements the Neill report and that that issue was not dealt with by Neill. The Committee considering the Representation of the People Bill will deal with the issue of overseas voters on Wednesday. July's White Paper made no reference to reducing the 20-year period that qualifies overseas voters. The Government have introduced this issue into the Bill, although it was not considered either by the Neill committee or by the working party on electoral procedures. Although the Labour party gave its support to a 20-year limit in 1989, it now plans to change that. I was, however, grateful for the Home Secretary's confirmation that no change would be made until after the next election and the introduction of the rolling register. I believe that some British citizens will have been entirely disfranchised by a piece of legislation for the first time since 1832.
The Government have rejected the Neill recommendations in relation to two issues. I think that it is on the proposals for referendums that they move furthest from the recommendations and are on the thinnest ice. In paragraph 12.21, Neill clearly makes the point that in referendums political parties may be pitted against one another, or most of them may find themselves on the same side, or one or more may be seriously split. The report states:
"Whatever happens in any particular case, it is clear that general rules governing the conduct of referendums cannot be based on predictions about the parties' behaviour or assumptions about their role."

It also states:

"The parties should certainly not be assumed to be central to all referendum campaigns".

The Neill committee rejected the Labour party's assertion in its evidence--quoted in paragraph 12.25--that

"the focus of any regulation should be on the political parties."

Neill concluded:
"We do not accept that the focus of any regulation should be on the political parties. 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. We believe that arrangements should indeed be put in place that are specific to referendums but that they should not be based on the idea that parties are the main players in the process."
The Bill simply reinstates the arguments that the Labour party put to Neill and which Neill rejected. Indeed, anyone reading the White Paper quickly might be misled into believing that Labour had accepted Neill. Paragraph 8.2 of the White Paper states:

"The Committee's report contains a set of recommendations on these matters which the Government accepts."

In fact, the Government have accepted an entirely different set of recommendations.
The position adopted in the Bill is difficult to defend. In the event of a referendum on proportional representation, the Bill allows the Labour party to spend £5 million. How might that money be spent? It might be spent by the Home Secretary in favour of first past the post, or by the Foreign Secretary in favour of AV-plus. That Labour contribution, which might come down on either side, would dwarf the £600,000 or so received by the umbrella bodies from the taxpayer. That showsthe difficulty of predicating expenditure limits for referendums on issues such as PR on reference to political parties. Similarly, there is no logic in relating such limits to the share of the vote at the last election. The issue of the referendum may not have been on the radar screen at the time of the last election, or the parties may have been split.
As the Home Secretary knows, the Neill committee expressed concerns about the Government's proposals in its letter of 15 October. The letter says:
"We recognise that some of your recommendations in relation to the conduct of referendums differ from our proposals quite materially, the most significant being your decision to put a cap on referendum expenditure by political parties and other organisations . . . however, we are concerned that the detail of your proposals could give rise to some difficulties. You have proposed that, for a United Kingdom-wide referendum, there should be a limit of £5 million for each political party with two or more Members of the House of Commons, with a similar restriction on umbrella groups. If in a particular referendum most political parties were on the same side of the argument, there would be a risk that such an arrangement could work unfairly. We are also concerned that the proposed arrangement provides a disincentive to the formation of umbrella groups, and we question whether it is right that political parties, irrespective of the number of Members . . . should be subject to the same £5 million cap."

I recognise that the Government have changed the figures, but the principle enunciated by Neill is still valid--namely, that the arrangements could work unfairly. If there are to be limits, they should surely apply to each side of the argument rather than to individual political parties, whose members may well be on both sides of the argument. I am glad that the Home Secretary is prepared to look at the matter again.
Mr. Brazier: I thank my right hon. Friend for allowing me to intervene on his customarily thoughtful speech. I refer to a comment that he made earlier. Regardless of whether the Home Secretary has consulted Blackburn's Labour party treasurer, is there not something faintly ridiculous in the idea that Labour might impose a £5 million spending limit on the basis of one side of the argument, given that a recently leaked opinion poll revealed that three quarters of Labour activists were on the other side?
Sir George Young: There would be a lively debate in the Labour party if it decided to spend £5 million in defiance of the view of many Labour party members.
Dr. Julian Lewis: I was intrigued by the Home Secretary's comment that there would be individual spending limits on individual pressure groups. As someone who used to run advocacy pressure groups, I know that, under that regime, I would immediately split my group into two, three or four groups to get around the restriction. Does not that mean that his provisions are completely naive and meaningless?
Sir George Young: The limits apply to each individual third party, so we could have a proliferation of third parties all spending up to the desired cap but spending in total more than anyone could under an overall cap. We will no doubt want to return to that matter in Committee.
The Government have made a further change that did not appear in Neill. At paragraph 12.41, the Neill committee asserted that
"we believe that . . . neither taxpayers' money nor the permanent Government machine . . . should be used to promote the Government side of the argument."

Mr. Straw: We can discuss the matter in more detail, but what is the right hon. Gentleman saying on the issue of spending limits? He has criticised the Government, despite the fact that we have moved. Is he saying that there should be an absolute limit on spending by either side in a referendum, as in Quebec?
Sir George Young: Neill recommended no cap at all; if one were to accept Neill's recommendation, there would be no cap. If we are to have a cap, it should be done not by reference to political parties but according to the side of the debate. I note what the Secretary of State said about Quebec. It is worth looking at. It did not sound like a killer argument. I hope that he was genuine when he said that he would look at the matter again and will do so with a view to moving the cap away from political parties and to getting a balance between both sides of the argument in a referendum.
Mr. Field: Is it in the spirit of Neill to say that our aim should be to balance the budgets of either side of the argument? Neill puts great emphasis on the fact that a referendum campaign is different from a general election campaign. In a referendum campaign, it is important for a range of reasons to support one side of the argument to be put forward, not limited by a cap.
The absurdity of the current Government stance is that if Paul Sykes, who has already been mentioned, had bought the Daily Mirror when it was up for sale, there would have been no expenditure limits at all and every day the Daily Mirror could have published a particular view for or against the single currency. My hon. Friend the Member for Rotherham (Mr. MacShane), despite the photograph that has been circulated, is worried about such a campaign spending money to circulate leaflets. Is it not bizarre to say that the press should have no restrictions at all, but old-fashioned campaigning groups should?
Sir George Young: The right hon. Gentleman makes a valid point. Neill argued against caps because he thought that they were ineffective. Even under the Bill, it will still be possible for the press to spend as much as they want until the campaigning period begins. The Home Secretary indicated that there is some unease about what is in the Bill and that he has an open mind on the matter.
I go back to the point that I was making. Neill asserted that
"neither taxpayers' money nor the permanent Government machine . . . should be used to promote the Government side of the argument."

On that recommendation on page 66 of the White Paper, the Government have written "Agreed", but that is not the case. Under the Bill, the Government would be able to publish material on the case for a particular result until a period of 28 days leading up to the poll. That could potentially be very influential. Those two changes run the risk of creating an uneven playing field, something that Neill was keen to avoid. We will want to return to those subjects in Committee and hope that the Government will have second thoughts.
The second area where Neill was rejected was on tax relief at the basic rate for small donations of up to £500. I notice that the Home Secretary said that he remained unpersuaded. I do not know whether that means that there is a chink of light and we may be able to persuade him. He did not seem to be so dogmatic as to reject it totally. Neill weighed up the pros and cons and came down in favour.
Other recommendations in Neill had resource implications, but the Government have taken them in their stride. They have increased the Short money; they are helping the parties with the changes necessary for registration; they are paying £2.6 million, which is the running cost of the Electoral Commission; and they are paying £2 million, which will be allocated yearly, as policy development grants. The Government are spending a comparable sum on their own special advisers. It is difficult to argue that the £4 million in that particular recommendation will break the bank, and rejecting it exposes the Government--unnecessarily, I think--to the argument about cherry-picking and seeking advantage.
In particular, it is perverse to criticise parties for overdependence on large donors, but then to reject the very recommendation that would reduce that over- dependence.
In the Committees's view, the principal advantage of such a scheme was that it would encourage a different pattern to political donations, so that parties would not rely for their funding needs on a relatively small number of donors each making large donations. The Committee said:
"We have found very widespread support for the view that it is more democratic, and therefore in the public interest, that political parties should be funded by a large number of small donations rather than by a small number of large donations. A system of tax relief which increases the value to political parties of smaller donations is likely to encourage the parties to make greater efforts to obtain them."

As the Home Secretary knows, the Committee wrote a letter in which it said how disappointed it was with the Government's recommendations, and invited the Government to make an estimate of the costs. The Committee stated:

"we strongly urge you to reconsider our proposals on tax relief on political donations in the light of your conclusions as to the administrative cost of their implementation."

On those two issues, we hope that the Government will think again. The Bill will enact many of the recommendations of the Neill committee that the Opposition support. On referendum spending and on small donations, the Government have decided, so far, not to implement Neill.
The Opposition will not divide the House on Second Reading, but we invite the Government to think again on those key issues during proceedings in Committee.

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