Sir George attacks Government on Referendum Plans
16 Feb 2000
Sir George Young: This debate complements the debate that we have just had, which was introduced by my hon. Friend the Member for North Dorset (Mr. Walter) and focused on the lower expenditure limit of £10,000. This debate will examine the much higher expenditure limits that are provided for, particularly in schedule 13, and address one of the major contentious issues in the Bill.
In the earlier debate, the Parliamentary Secretary, Privy Council Office said that it was a sign of strength each time he made a concession to the Opposition. We seek a display of yet more strength in this debate, although it may test his virility to the extreme as we consider clause 111 stand part.
In a nutshell, we believe that the Government have got the matter wrong. We believe that they have it wrong in principle and in practice. We therefore propose to delete the spending limits provided for in the Bill and revert to the position adopted by the Neill committee. If I can use a computer analogy, the Government have turned the parliamentary screen blue. We now need to press a number of buttons, including delete, to try to get back to a workable position.
There were no spending limits in the 1975 referendum, when the Labour Government of the day concluded that such measures would be impractical. The Welsh and Scottish devolution referendums in 1979 had no limits. The Referendums (Scotland and Wales) Act 1997, the Greater London Authority (Referendum) Act 1998, the Northern Ireland Negotiations (Referendum) Order 1998 and the Education (Grammar School Ballots) Regulations 1998 contained no limits. The Local Government Bill, which provides for local referendums on mayoral appointments and other issues, also contains no spending limits.
The Neill committee looked at the issue in depth and reported in October 1998. In paragraph 12.45, it conceded:
"The case, in principle, for imposing spending limits in referendum campaigns is a strong one."

However, the next paragraph concludes:

"We believe, however, that it would be futile and possibly also wrong to attempt to impose such limits in connection with referendums."

The report goes on to describe the circumstances of a referendum, which include strange bedfellows, participants not confined to the political parties and unknown timing. Explaining its conclusion, the committee says:

"It appears to us that under these circumstances it would be impracticable to try to control campaign spending. The number of individuals and organisations involved would often be too large. The time-scale would often be too short. Adequate accounting procedures would often be impossible to put in place. The administrative apparatus required would resemble one of Heath Robinson's most outlandish contraptions--and would almost certainly not work."

The commission on the conduct of referendums reached the same conclusion in 1996, saying:

"On balance, it is not considered practical to exercise Government control over the total expenditure by those campaigning on either side in a referendum."

Notwithstanding those conclusions, the Government rejected the Neill committee's advice, although anyone reading the White Paper might be forgiven for not realising that. Chapter 8, on referendums, says:

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

That is Government speak for "The committee's report contains one major recommendation, which the Government reject." That semblance of acceptance of Neill, with the Government in denial mode, was repeated by the Home Secretary on Second Reading. He said:

"I have sought to ensure that the spirit, as well as the letter, of the Neill committee's recommendations on referendums is introduced into the Bill."--[Official Report, 10 January 2000; Vol. 342, c. 36.]

That was a surprising assertion, as Neill considered and specifically rejected the Home Secretary's solution. The Government not only rejected the committee's principal conclusions, but went on to adopt a solution that the committee had explicitly rejected--an expenditure limit based on votes at the most recent general election. That formula is set out in schedule 13.
There are three options. The first is that each side in a referendum campaign spends the same amount. Option two is that what each participant can spend is limited. Option three is that there are no limits. The intuitive solution is option one--that in a referendum campaign, the yes and the no side should have equal funding. Sadly, that is ruled out by nearly everyone. However attractive it may be to try to corral all those with an interest in the outcome into two large camps, each with an identical spending cap in the interests of equity, it does not work. When it was tried in Quebec, it was struck down on legal grounds as a violation of the right of freedom of expression of those who did not want to be in one of those two camps. As the Home Secretary said on Second Reading, if we tried to do that here, it would be vulnerable to legal challenge under article 10 of the European convention on human rights. In the clause 98 stand part debate, the Minister said that option one, with each side spending the same, was a cloud cuckoo land solution.
If that option is not available, those who favour spending restrictions on participants are driven to option 2, which is set out in clause 111 and schedule 13. However, spending restrictions on participants do not work either, particularly when the participants are defined as they are in the Bill.
In paragraph 12.21, Neill clearly made the point that
"in referendums the political parties may be pitted one against

another, or most of the parties may find themselves on the same side . . . or one or more of them may be seriously split . . . 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."
Neill dismissed the assertion by the Labour party in its evidence that
"the focus of any regulation should be on the political parties."

It is worth repeating Neill's conclusions:

"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".

But that is exactly what is manifested in the Bill.
In fairness to the Government, they recognised the vulnerability of their proposals during our debate on Second Reading. The speeches of Ministers were peppered with recognition of the difficulties, and with almost desperate invitations to the House to come up with something different. The Home Secretary said:
"We remain open to argument if better, more workable proposals can be introduced."--[Official Report, 10 January 2000; Vol. 342, c. 39.]

The Under-Secretary of State for the Home Department said in winding-up:

"I repeat that we do not have a closed mind on the issue."--[Official Report, 10 January 2000; Vol. 342, c. 113.]

This debate will test that assertion.
On Second Reading, this aspect of the Bill engaged the attention of many of those who spoke; and the Government's proposals took on board a fair amount of water. That is significant because it was in the context of broad support for the Bill, which had an unopposed Second Reading.
The right hon. Member for Birkenhead (Mr. Field) said:
"For the proposals on the financing of third parties that want to campaign in a referendum to be workable, we shall have to lock some people up."--[Official Report, 10 January 2000; Vol. 342, c. 54.]

I recognise that, with the present Home Secretary, that may well be an argument in its favour, but the more squeamish among us will want to see if there is a third way.
My right hon. Friend the Member for South Norfolk (Mr. MacGregor), who was a member of the Neill committee, reaffirmed its recommendations. He said:
"That is why the Neill committee found that it would be difficult to have a fair, workable system of capping in referendums. I still hold to that view",--[Official Report, 10 January 2000; Vol. 342, c. 67.]

The hon. Member for Rotherham (Mr. MacShane) made the point that one referendum campaign--on Europe--is under way already, so the limits in the Bill are to some extent redundant. My hon. Friend the Member for Blaby (Mr. Robathan) said that these sections of the Bill "remain flawed".
My hon. Friend the Member for New Forest, East (Dr. Lewis) used his legendary knowledge of the component parts of the pro-nuclear disarmament movement in the 1970s and 1980s to show how the limits in the Bill could easily be evaded. He concluded:
"That is why the whole concept of putting caps on what may be spent by parties or groups in a referendum is fundamentally flawed."--[Official Report, 10 January 2000; Vol. 342, c. 107.]

I stand to be corrected, but I could not find in Hansard during the Second Reading debate one explicit endorsement of the Government's proposals. There was criticism from all sides, and even the Ministers were uncharacteristically hesitant in their advocacy.
The reality is that they have come up with something that is neither defensible intellectually, nor deliverable in practice. It is fatally flawed in relating spending power to votes at the general election. There is no intellectual argument whatsoever for that limit. As Neill pointed out, general rules governing the conduct of referendums cannot be based on predictions about parties' behaviour or assumptions about their role. If we are resolving in a referendum an issue that it has not been possible to resolve through a general election, and on which major parties may be split, why should we base spending limits on the basis of votes cast at the last election? If, for the sake of argument, the amount Labour could spend on a yes vote in a euro referendum was based on how many votes it got at the next general election, that would be assuming that everyone who votes Labour would like to join, but we all know that that is not the case.
If we had a referendum on proportional representation, how would Labour's entitlement to spend be determined? It has no policy on PR--we all know that it is split. Why should all Labour's spending power be allocated to one side of the argument according to the whim of the national executive? That is an absurd proposition, rejected by Neill and supported by no one.
It is also incongruous to place spending limits on the protagonists in a referendum, when the media remain free to sponsor or promote any campaign they see fit. Indeed, one of the protagonists could simply buy a newspaper or magazine and circumvent the restrictions, and the message might not be seen as an advertisement, but as unbiased editorial comment.
Not only are there some arguments of principle, but there are some practical problems, many of which were rehearsed earlier in Committee, including the so-called amoeba factor where a group simply divides itself into two. Individuals can form an unlimited number of partnerships or establish an unlimited number of companies. If they registered as permitted participants, they could then each spend up to an amount prescribed in the Bill. Of course, any spending controls can be got round by spending prior to the official commencement of the campaign.
One interesting point that we raised earlier in Committee was that political parties can donate to other political parties under clause 48(2)(c). On Second Reading, the Home Secretary defended his limits as being unbiased because, he said, it was a "racing certainty" that the Liberal Democrats could never raise £3.5 million. However, they would not need to raise the money themselves because Labour could simply give it to them under clause 48(2). We heard earlier about the potential role of international organisations. I do not wish to spend too much time on Europe, but in effect the Minister pleaded with European institutions not to get involved in domestic referendums and another hon. Member remarked that that might be counterproductive. That may be right, but the Minister's pleading may fall on deaf ears. On top of what might be spent in this country, foreign donations--about which we have heard so much--could influence the outcome of a domestic referendum.
We are left with option three of no spending limits, which is the preferred option of Neill and others. I think that that is the best solution, certainly in the short term. Of course, we want to avoid a re-run of the situation in Wales, where one side had lots of money and the other very little, and the possibility--I put it no higher than that--that that influenced the outcome. However, let us look at the likely referendums in the near future, which include first-past-the-post against alternative vote plus, and entry into the euro. In neither case is it likely that any side will want for financial support. On the euro, there are some big battalions on both sides, as there are on the voting system. Once those two referendums are out of the way, new clause 4 can kick in, and the Electoral Commission can reflect on that and come up with its views.
The Government have been flexible on the Bill, and they have said that they will consider and reflect in the light of our debates. It really is important they do the same on this issue, otherwise the verdict of the referendum will not have the validity that we all want. A few hours ago, the voting closed in the Labour party's selection of a candidate for the mayor of London. I do not mind the Labour party having strange rules for its internal elections, but the Committee should think twice before it imports unchallenged into the Bill the propositions before us tonight.

 
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