Party Funding Reform

Baroness Chisholm of Owlpen Excerpts

Thursday 3rd November 2016 Lords Chamber

[Baroness Chisholm of Owlpen (Con)]

My Lords, I must thank the noble Lord, Lord Wallace of Saltaire, for tabling this Question, and all noble Lords who have contributed.

The current regime for the regulation of political parties was established in the Political Parties, Elections and Referendums Act 2000. Since that time, there have been a number of proposals for further reform, most notably a review of party funding by Sir Hayden Phillips in 2007 and a report from the Committee on Standards in Public Life in 2011. Cross-party talks followed on both occasions but no agreement was reached on a package of reforms. The most recent talks in 2012 and 2013 covered many of the issues raised by noble Lords today. Despite a decade of talks, there is still no cross-party consensus on the broad issue of party funding at this time. This is ultimately a matter for the political parties; the Government cannot impose consensus from Whitehall.

Many noble Lords called for a further round of cross-party talks to be convened, thereby echoing the Select Committee on Trade Union Political Funds and Political Party Funding. But before such talks can start, there needs to be a sense that all parties agree on the basis for discussion. Without such an agreement such talks are likely to fail. As many noble Lords will be aware, the Committee on Standards in Public Life in 2011 produced a comprehensive report but was unable to get cross-party support for all its recommendations and conclusions. Both parties opposite objected to at least some of the conclusions in the report.

It is interesting—I want noble Lords to hear this, and the noble Lord, Lord Bew, mentioned it—that research published by the Committee on Standards in Public Life in August 2016 showed that there has been no “arms race” in party funding. In fact, taking into account inflation, the research shows a steep fall in central party spending of the three main established political parties in general elections since 1997. It also showed that there was very little difference in the spending of the two main parties in the 2015 general election, and neither party came close to its spending limit.

There are major stumbling blocks to progress. The Committee on Standards in Public Life’s suggestions from 2011 included taxpayer funding of political parties under a scheme which was estimated would cost around £20 million a year at 2010 prices. The problem is that this would represent a considerable increase in taxpayer funding of political parties. As my noble friends Lord Leigh and Lord Sherbourne, and the noble Lord, Lord Bew, mentioned—and the Government agree—there is no case for more taxpayer funding of politicians and no public appetite for state funding of political parties. This is a widely held view. Indeed, in 2011, the Government said that,

“the case cannot be made for greater state funding of political parties at a time when budgets are being squeezed and economic recovery remains the highest priority”.—[Official Report, Commons, 23/11/11; col. 25WS.]

Those are not my words, but the words of Nick Clegg when Deputy Prime Minister in a Written Ministerial Statement. Instead, we believe that savings are needed to help reduce the cost of politics. We are taking this forward, by reducing the size of the House of Commons, freezing ministerial pay and stopping the unanticipated hikes in the cost of Short money.

There are steps that we can take forward. Over the past decade, cross-party talks have focused on controversial and complex structural changes. This may be one of the reasons they have failed to reach a consensus. The Government are open to constructive debate on how we can move forward on this issue. A possible way would be to concentrate on smaller reforms, which may command broad support.

I repeat the offer made by my noble friend Lady Neville-Rolfe during the debate on the report of the Select Committee on Trade Union Political Funds and Political Party Funding. The Government would be willing to take forward work to find practical ways of encouraging smaller donations from a wider audience if there were a positive reaction to such a potential step from the main political parties. For example, technology has changed the way that people make small donations to charities. It may be possible to look into how such technology can be utilised by political parties, while ensuring that large donations remain transparent.

The Government would be willing to look at regulatory obstacles to small changes, while maintaining transparency around donations. If there were a positive reaction to such a step from the political parties, the Cabinet Office would be willing to take it forward for further consideration—for example, by publishing a discussion paper in the first instance.

I thank the noble Lord, Lord Bew, for his speech and for the important work that he has done on this matter over many years. I shall now turn to answering some of the questions that were raised during the debate.

The noble Lord, Lord Wallace of Saltaire, mentioned getting round donation rules by loaning money. Controls on loans were in place during the EU referendum, and it is for the Electoral Commission to enforce those rules.

The noble Lords, Lord Wallace and Lord Wrigglesworth, mentioned gift aid. I will pass all the issues raised in this debate to my ministerial colleagues in the Cabinet Office, including the point on gift aid in relation to donations to political parties and the question of tax relief, raised by the noble Lord, Lord Wrigglesworth.

The noble Lords, Lord Wallace of Saltaire and Lord Whitty, asked about the Government’s response to the Select Committee on the Trade Union Bill. I reassure them that the Government have taken account of the committee’s report. Indeed, many of the recommendations on union and political funds now form part of the Trade Union Act, as the noble Lord, Lord Whitty, explained. A formal government response is a matter for BEIS.

My noble friend Lord Leigh mentioned provisions being brought in for Cranborne money similar to those for Short money in the other place. This is a matter for the House of Lords to take forward. I echo my noble friend’s praise for the volunteers in all political parties. Along with, I am sure, everyone here, I have huge admiration for their dedicated work.

The noble Lord, Lord Oates, asked whether the 2012 report of the Committee on Standards in Public Life should be used as the basis for discussions. As the noble Lord, Lord Bew, explained, the committee’s recommendations in 2011 did not obtain cross-party consent. Indeed, dissenting opinions were expressed in the report and, for assorted reasons, the Labour Party and the Conservative Party disagreed with its conclusions. The report does not represent a basis on which to reform party-funding legislation.

The noble Lord, Lord Tyler, talked about revising the legislation on how political parties target, for example, their national spending in constituencies. The Government are currently considering the Electoral Commission’s recommendation on party spending in support of candidates. They are also considering the proposals from the Law Commission on consolidating electoral law, as well as the review by Eric Pickles on electoral fraud.

The noble Lord, Lord Wallace, and the noble Baroness, Lady Hayter, mentioned votes for life and the letter that appeared in the Mirror Online. I reiterate that donations from foreigners remain banned. This has nothing to do with donations; this is about enfranchising British expats, as pledged in the Government’s manifesto. It will ensure that people who have given something to our country are allowed to participate in our democracy, including war heroes such as Harry Shindler.

Increasingly, expats have strong links with the United Kingdom. They may have families here and indeed they may plan to return here in the future. Modern technology and cheaper air travel have transformed the ability of expats to keep in touch with their home country. So far as the Government are aware, there is no evidence as to the voting habits of overseas electors. There is no reason to believe that expats are more inclined to vote for one party or another. In fact, a lead campaigner on votes for expats, Harry Shindler, is a Labour Party member.

The noble Baroness, Lady Hayter, also mentioned a cap on donations, as did several other noble Lords. Although it was not included in the 2015 Conservative manifesto, the principle of capping donations was considered in the cross-party talks held in 2012-13.

I reiterate that I will pass all issues raised in this debate back to my ministerial colleagues in the Cabinet Office. Perhaps now there really is the momentum for cross-party talks. I will of course write to noble Lords if I have failed to answer any questions raised.

House adjourned at 7.06 pm.