Political Parties: Funding

Lord Campbell-Savours Excerpts

Wednesday 10th December 2014 Grand Committee

[Lord Campbell-Savours (Lab)]

My Lords, I am very pleased that the noble Lord, Lord Dykes, has raised this debate today, because it is a debate that is very close to my heart, going back over some 30 years. I am also glad that he raised the issue of IPSA, because I am utterly convinced that IPSA has effectively destroyed Parliament for many parliamentarians. It has so circumscribed the rules on expenses now in the Commons that many people—worthy people—who should be attracted to Parliament will no longer stand for Parliament. I know people who will not come to Parliament any more, because they believe that the way in which the new regime has been set up, effectively based on distrusting Members of Parliament, leaves them exposed to media attack for the smallest of sins, if you might call them that. They are not prepared to risk their family and professional reputations, or indeed their careers, on the basis of something where they can be removed on a whim. If I was starting off again in my first election as a candidate, all those years ago in 1974, I would have second thoughts about coming into Parliament in the light of developments that have taken place following the introduction of IPSA.

In my view, one of IPSA’s biggest sins was to presume that it could propose a substantial increase in Members’ salaries and justify it on the basis that it was cutting back on the expenses regime. What it did not realise, and what a schoolboy with an elementary knowledge of politics could have told it, was that the moment you talk about a 10% increase for MPs prior to a general election, MPs get bombarded with letters asking whether they are going to take the increase. I know that MPs are currently writing back to their constituents and saying, “No, I am not going to take the increase”. What a ludicrous position we are in whereby MPs, because of the power of the press and concerns about the ballot box, are now turning down increases that should legitimately be accepted. I completely blame IPSA for that, along with those who proposed the idea of this monstrous organisation four or five years ago.

I now want to speak specifically to this debate. I believe that the issue of political funding is a festering sore undermining the credibility of Parliament, parliamentarians, the political process and the political parties. I do not think we should underestimate the level of cynicism in the mind of an electorate following articles alleging impropriety in the relationship between politicians and money.

People are becoming heartily sick of these stories and wonder what is going on in Westminster. In fact, very little is going on in Westminster that should worry them. The facts are that they read these stories and believe that something is fundamentally wrong. I do not believe that people necessarily follow policy when they vote in general elections. I actually think that people make an instinctive judgment, very often not on the basis of their knowledge of a particular party’s political posturing but on their feelings of trust and distrust. They make up their minds on the basis of an aggregate series of stories they hear over a period of time that undermine their trust in political institutions. This is one of the areas influencing public judgments.

When I first stood for Parliament in the early 1970s, we used to regularly get turnouts of 70-odd per cent. In my by-election in Workington in 1976, the turnout was nearly 73%. We regularly had turnouts of nearly 80% in the general elections up to and throughout the 1980s and 1990s. Now, when one looks at general election results nationally, one sees a collapse in the vote in almost every constituency in the country. We have to ask ourselves why. It is because of this disconnect and distrust that has built up between the public outside and this institution. It is often the case that bad headlines have swamped all the good that we do in this institution. Bad donor stories damage the whole political process.

We read stories about trade unions, and they somehow are condemned for the donations they make. Again there is a misunderstanding. Trade unions and their contributions reflect the collective giving by millions for their collective interest in collective provision. One cannot liken that to the donations of individuals, whether they be companies or people making single donations. Those single donations by companies and individuals are more often than not about personal advancement and advantage. That was the Oakeshott analysis. He and we knew that there are Members of the House of Lords who are here because they paid money to their political parties. It is a fact, and we know it. I know a particular case, not in my party. I know the sum that was paid, the chap is no longer with us, he almost never spoke and he was here because he paid. The police may carry out their inquiries and may find nothing, but the facts are that this system is wrong and has to change. The power of big money and big donations has to be brought to an end.

It was with all that background in mind that I put up, during the passage of the then Political Parties, Elections and Referendums Bill, a proposal to change this system. I want to take down the contribution I made on that occasion off the shelf where it still sits unnoticed and bring it once again before this Committee to consider, because I believe that it would help resolve the difficulty. What I proposed at the time was a system that would have incentivised systems of donations by individuals by allowing taxpayers to reclaim the basic rate of tax on their donations to political parties. It would have limited the relief to the standard rate and operate in the same way as gift aid to charities or covenanting to one’s local church. It was not my idea; it was done in America. Obama had hundreds of thousands of small donors who were tax-relieved. I cannot see why we could not have done something similar in this country. Then we would have mass financial contributions and membership of political parties. This issue has had much support over the years from all political parties and all the organisations that are associated with political debate. The Committee on Standards in Public Life, chaired by the noble Lord, Lord Neill of Bladen, recommended essentially the proposal I made when we were dealing with the legislation. He suggested that 15 years ago. The Electoral Commission’s report of 2004 on the funding of political parties recommended a similar change in the law, with a £200 cap per individual on their tax relief.

In 2006, the Constitutional Affairs Committee of the House of Commons made a similar recommendation in line with my proposal at the time. The Conservative Party’s Tyrie report of 2006, entitled Clean Politics, also made reference to an amendment of the nature of what I was moving. In 2004, the Liberal Democrats called for a scheme of tax relief of a similar nature, and in 2009 moved an amendment very similar to the one that I was moving during proceedings on the Political Parties, Elections and Referendums Bill. When the Labour Government established the Hayden Phillips inquiry in 2007, they recommended a tax relief match-funding scheme that bore a close resemblance to the scheme that I was proposing. Why was it blocked when we tried to introduce it into the legislation? It was blocked because we were told that negotiations were going on between the political parties. That simply was not true. Mr Clegg told us quite clearly from the Dispatch Box in the House of Commons that negotiations had finished, so that was not an obstacle. The negotiations had ended and therefore we were free, if we wished, to proceed on the basis of changing the law in favour of what I was proposing.

It was also put to me, sadly by people in my own party, that a single party—in this case it was targeting the Conservative Party—might gain by increasing the low tax relief contribution cap that I had set. It may have done, but it would never have set it so high that it was not credible in terms of what the public would accept. Anyhow, the Conservative Party never has trouble raising money; it is always raising money. It is the other parties that have great trouble raising funds from individuals. Therefore, that someone might at some stage in the future be inclined to raise the cap slightly higher than the one I propose is irrelevant to me. I was interested in ensuring that, in raising funds, the smaller parties were in a position to develop this contributory financial base. Finally I was told that the cost was too much. I proposed a cap in the third year of £96 per annum per contributing taxpayer. We could not cost it but we gave an estimate of approximately £3 million per year. It would have begun the process of tax-relieved small sums widening the base of contributions, narrowing the base of big donors and ultimately giving us the much wider contributing base that we all believe is necessary if we are to develop a more healthy politics.

If, indeed, there are negotiations of the conditions of a minority Government next year, I hope that, whatever happens, at least those who are in a minority will demand this change. They will be in a position to do so. If no party has an overall majority next year there may well not be a coalition but there will certainly be a minority Government, and those who can influence that minority Government should use their power to begin to secure that elementary change, which will not cost a lot of money, in the culture of financial contributions in British politics.

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[Lord Wallace of Saltaire]

I wish my party had paid me. The first time I worked for my party, in the 1966 general election, when I took four weeks off from writing my PhD to be the party’s assistant press officer, I worked flat out—probably 14 to 16 hours a day for four weeks. At the end of it, Lord Byers, who was then the party’s chair, presented me with a £50 note, which I had never seen before and which in those days was a substantial sum of money. I and a friend spent a very enjoyable holiday in France on the basis of that £50 note. That is the only occasion on which I have benefited from money flowing the other way.

There is a consensus on the need to limit the impact of money on politics. There is also a particularly negative campaign from the right-wing media that we are all in politics only for the money. All I say on that is that I would encourage the noble Lord, Lord Campbell-Savours, who pursues many very effective campaigns in politics, also to campaign to ensure that those right-wing newspapers pay their full taxes in the country which they seek to defend because we all know that they do their utmost to avoid that.

The problem for all of us is that political campaigning costs money and the public, as consumers of politics, expect the parties to put leaflets through their doors, to phone them and to maintain websites, Twitter feeds and so on. When I was out in Hull two or three weeks ago, people told me on the doorstep, “How good to see you. Hardly anyone ever comes round and asks us about our political attitudes”. I was glad that we were doing it there, but in quite a lot of constituencies, no parties really manage to do that actively. We know that it does not come for free and that maintaining a basic constituency organisation requires a level of funding. Voters complain vigorously when parties do not maintain contact with them but show no willingness to help pay for those activities.

That pushes us towards the question of donors. The noble Lord, Lord Campbell-Savours, and other noble Lords asked whether all the political parties could manage on less money and depend more on volunteers—but we all face similar problems in how many volunteers we can attract. Perish the thought, but if UKIP had three or four really major donors, that might drive the three parties together to an eventual consensus on this issue.

We all know the context for this debate. The Political Parties, Elections and Referendums Act 2000 introduced some important changes in the field of party funding. It established the Electoral Commission, about which the noble Lord, Lord Kennedy, has rightly raised issues today and on previous occasions. It required political parties to register with the Electoral Commission, set down accounting requirements for parties, introduced controls on donations to parties and their members, and controlled campaign expenditure within certain periods, both for parties and third parties in national election campaigns. I stress “control periods” because I suspect that all three parties have spent a fair amount of money in the last four weeks. We are just about to start the control period for the election; that is part of the problem. The Act set down rules on the donations received and expenses incurred in election campaigns and required companies to obtain approval before making political donations. These provisions are useful and important. Political parties have to keep records of donations over £500, and donations over £7,500 have to be declared to the Electoral Commission, which publishes details every quarter of donations received by political parties. That information is published on its website and is accessible to all—so far, so good. Parties can only receive donations from permissible sources: individuals who are on the electoral register, UK-registered companies—I stress “registered” as that raises a number of questions of definition—trade unions, building societies and other bodies such as unincorporated associations and limited liability partnerships.

The Electoral Administration Act 2006 introduced further provisions on the disclosure of loans to political parties. Since these reforms, there have been continued public and media attacks on large donations and on trade union funding—to which I shall return—which have led to further reports. These include the 2004 review by the Electoral Commission, reports by Sir Hayden Phillips and the Constitutional Affairs Select Committee in 2006 and, most recently, in 2011, a report from the Committee on Standards in Public Life, which recommended, among other things, a £10,000 annual cap on donations, trade union members having to opt in to fees paid to political parties if donations are to be counted individually—I stress that was a proposal from the Committee on Standards in Public Life; it was not a partisan proposal by other political parties—and an increase in public funding.

The problem is in getting consensus among the political parties on this. We all have different interests and we all have different sources of donations. My party has proudly said on its website that when the Electoral Commission has published the number of donations to political parties, over the past three years we have received on several occasions more individual donations than the Labour Party. The problem is that we have not received half as many large corporate donations or donations from other collectivities known as trade unions, or indeed any other large donations—let alone those received by the Conservative Party. In that sense, it does us good as a democratic principle, but it does not provide us with the money we need to employ staff, work on our website and do all the other things that need to be done.

We had a further round of discussions in the light of the report of the Committee on Standards in Public Life which the Deputy Prime Minister convened in 2012-13. Seven meetings were held and the Deputy Prime Minister made one thing clear in setting out the remit, which was that in the current circumstances of a squeeze on public spending, there was no possibility of increasing state funding for political parties. After those discussions, the group failed to agree, and it is quite clear that between now and the next election we are not going to make any progress. Over the past 25 years we have established a whole set of additional funding for political parties—Short money, Cranborne money and the like—which has been very useful and has helped us to carry out our parliamentary functions and to raise the quality of our political research. However, public support for the expansion of political public funding is clearly absent at the present moment. So those talks broke down and we are stuck. We need to fund political parties and we benefit enormously from not having to pay for radio and television advertising, but politics and political campaigning cost money.

The noble Lord, Lord Campbell-Savours, raised the question of the extent to which the harsh regulation that we all suffer, including under IPSA once you are elected, discourages political recruitment and political retention. I think that that is an enormous problem and we will all need to address it once the election is out of the way and we have seen many good MPs from all parties retire rather than continue. I think that the noble Lord and I would probably agree that some of the best of the new Conservative intake are retiring after one period in Parliament, regrettably, because they really do not want to put up with the situation in which they live. That is a loss to us all in terms of democratic politics as much as those retiring from other parties.

[Lord Campbell-Savours]

I have listened very carefully to the noble Lord. Is he suggesting that there will be discussions about reform of the regime? Has he heard something that we have not heard?

[Lord Wallace of Saltaire]

My Lords, for many of us, the world in its current form ends on 8 May 2015. If anyone here knows what the shape of the new Government will be, I would love them to tell me so that I can put down a large sum with the bookmakers and donate the winnings to my political party. I have no knowledge of that. What I am saying is that awkward people like the noble Lord, Lord Campbell-Savours, should insist, as soon as they come back, that it is put back on the agenda because it is a very important question and we cannot get away from it. I therefore encourage him to continue to stir on all of this.

I am not entirely sure that I agree with the noble Lord that trade unions act as virtuous collectivities, which I think is what he was saying, with benign general secretaries representing the enlightened interests of their diverse memberships. That is not quite how I see all the general secretaries of trade unions, so there are some questions around that.

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[Lord Wallace of Saltaire]

My Lords, the coalition Government have no policy on that, so I had better not comment. I think that that covers all the issues which have been raised. I encourage the noble Lords, Lord Campbell-Savours and Lord Dykes, to continue to press this. It is an issue to which we will all have to return after the next election.

[Lord Campbell-Savours]

The Minister referred to my amendment on this question of foreign donations, over which, if I remember rightly, we defeated the Labour Government. He has given the Committee an explanation, although I did not raise the issue. Could we have a written explanation as to exactly why we have had difficulty in implementing that particular area of the law?

[Lord Wallace of Saltaire]

My Lords, I will see what can be done in that respect and, if possible, I will write to the noble Lord.