Political Parties: Funding

Lord McNally Excerpts

Thursday 1st July 2010 Lords Chamber

[Lord Tyler]

To ask Her Majesty’s Government what proposals they have to reform party funding and to limit donations to political parties.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, my right honourable friend the Deputy Prime Minister indicated during the debate on the Address that the Government will pursue an agreement on limiting donations and reforming party funding to remove big money from politics. The approach to party funding is being worked up as part of the overall programme of reforms and an announcement will be made in due course.

[Lord Tyler]

My Lords, I am grateful to my noble friend for repeating what the Deputy Prime Minister said. I wonder whether my noble friend recalls a question that was posed in this Chamber:

“Is it not time for all parties to return to Sir Hayden Phillips’s report on party funding and put in place a tight cap, some firm regulations and an Electoral Commission with teeth to enforce them?”—[Official Report, 5/12/07; col. 1700.]

The questioner was my noble friend. Can he now tell us what the timetable is? Is it not important that progress should be made as quickly as possible in the early part of this Parliament, rather than leaving it to the bitter end?

[Lord McNally]

My Lords, I sometimes think that all old copies of Hansard should be pulped on change of Government. Nevertheless, I stand by the thrust of that question. For the good of all parties and politics, we should move quickly to see whether we can get all-party agreement on this. It is good that the Deputy Prime Minister has taken responsibility and has indicated that he will make progress on this issue a high priority at a very early stage in this Parliament.

[Lord Campbell-Savours]

My Lords, why cannot tax relief be applied to small individual contributions to political parties, perhaps to a capped contribution sum of £50 per annum? Will the noble Lord refer the matter to Treasury Ministers, because the proposition has support on all sides of the House?

[Lord McNally]

My Lords, as on many other subjects, I agree with the noble Lord, Lord Campbell-Savours. I have supported that idea for a long time. I can assure him that I shall report our exchange to the Deputy Prime Minister and suggest that he raises the matter with the Treasury.

[Lord Hamilton of Epsom]

My Lords, popular as the idea of tax relief is with the coalition Government, I do not think that it will solve the problem of funding political parties for the duration of a Parliament. I met no one at the last election who complained about the Conservative Opposition receiving £4.2 million of taxpayers’ money. Indeed, I think that very few taxpayers knew that they were contributing to the Conservative Opposition to that extent. It is critical that we get ahead with this. I am disappointed that it was not in the Queen’s Speech as part of our legislative programme for this Session. I suspect that at the next election no one will be talking about it.

[Lord McNally]

I take the point that my noble friend is making. That is why I said that we will be getting ahead with the issue early in this Parliament. We need to deal with this. As long as I have been in politics, one party or another has become embroiled in some scandal or another—and it will happen again unless we face up to the fact that politics costs money. If you want to keep big money and big influence out of politics, you have to do some radical things about party funding.

[Lord Clark of Windermere]

Does the Minister accept that the problem is not only the total amount of money spent on political parties but the disproportionate amounts spent in individual constituencies? It is now so expensive that in certain constituencies independents simply cannot afford to run. That cannot be good for democracy.

[Lord McNally]

That is absolutely true. We have seen in all political parties a nuclear arms race of political spending. I pay tribute to the last Government for putting a cap on it, for which I think even the Conservative Party was grateful in the end. If there was no cap, fundraising would go on and on. The problem with campaign expenditure is that it is like expenditure on advertising: we all know that half of it is wasted, but we do not know which half.

[Lord Ryder of Wensum]

My Lords, while I vividly recall the introduction of Short money 35 years ago and the help that it gave to the then Opposition, does my noble friend not agree that during these days of curbing public expenditure it would be wise for the Short money and the Cranborne money to be frozen at present levels for the duration of this Parliament?

[Lord McNally]

It would ill become a government Minister to start suggesting that. I was a special adviser to the Government who brought in Short money and I know the benefit that my party got in opposition from Cranborne money. I know that it is easy to play to the media on this, but political parties need proper funding to do their democratic duty. If you do not do it through legitimate, open, transparent public funding, big money will come in, which, in the end, corrupts the whole system.

[Lord Howarth of Newport]

My Lords, what is “proper funding”? Would it not be better if the political parties spent less on advertising, opinion polls and helicopters, raised more money voluntarily in accordance with the new localism and resisted the blandishments of the noble Lord, Lord Hamilton, to pick the taxpayer’s pocket?

[Lord McNally]

Again, we have all heard “picking the taxpayer’s pocket”—it gets approval from the media, which have an interest in keeping politicians and politics weak and dependent on their approval—but it is time that politicians got off their knees. I agree entirely with the noble Lord, Lord Howarth, that too many of the consultants and advisers who surround political parties think up ways of spending money to justify their own existence. Perhaps the answer lies in what the noble Lord, Lord Campbell-Savours, suggests: some tie-in between small donations and tax relief that would give a greater and broader base to funding.

[Lord Goodlad]

Is my noble friend aware that in Australia in the early 1920s, because the political parties were finding the cost of getting people to the polls in a huge, sparsely populated country very onerous, compulsory voting was introduced, with universal support? It has had universal support ever since. The noble Baroness the Leader of the Opposition said the other day that she supported compulsory voting. Will he give it his consideration?

[Lord McNally]

I will certainly give it my consideration and I will report it to the Deputy Prime Minister. I think that I had better stop there.

[Lord Grocott]

Is it not worth noting one of the lessons from the history of funding and politics? At the end of the 19th century, very strict limits were introduced on the amount that could be spent in individual constituencies, for very good reasons. Does it not strike the Minister that to concentrate on how much is being spent is more important than examining precisely where the money comes from? We need to look, at a national level, at the ludicrous amounts of money that are spent in general elections; we do not want to get anywhere near American levels. Any review should concentrate on putting much more severe, strictly applied limits on expenditure.

--- Later in debate ---

[Lord McNally]

I think that we are on common ground. I worked on the Bill that set up the Electoral Commission with the noble Baroness, Lady Gould, and a representative from the Conservative Party who had worked in Central Office. The three of us had worked in the political parties’ headquarters and thought that there was a ludicrous amount of detail in the Bill about the responsibility of party treasurers at local level. The debate was couched in terms that would lead one to think that being a treasurer for a local party was one of the pinnacles of political achievement, whereas, as everyone in this Chamber who has been active in party politics knows, you look for some poor dumb cluck—as the noble Lord, Lord Kinnock, helpfully said, the person is usually absent from that meeting—to take on that responsibility.

We are awaiting the report of the Electoral Commission on this issue. We are some way from a general election. Perhaps one of the advantages of a fixed-term Parliament is that, at this early stage in a five-year Parliament, we can look at this issue without saying, “Well, what implication will it have for us in the impending general election?”. We can take a proper cross-party look at this. We can look at what Hayden Phillips recommended, which I still think is a good basis for negotiations, and move with it with some sense of urgency.

[Lord Dykes]

My Lords, my noble friend has given some sensible and wise answers on these questions today. Does he share my anxiety, bearing in mind that politicians are, quite rightly, individually and collectively severely criticised in a lively British press, that almost every British newspaper now has overseas-based owners who do not pay United Kingdom taxes?

[Lord McNally]

That is another matter that is beyond this Question. However, if politics really wants to be respected, it has to be less beholden to big money and less subservient to our press.

[Lord Lea of Crondall]

Does the Minister agree that a trade union is not the same as an individual when it comes to a cap?

[Lord McNally]

I thought that we might have a question on that. This is the first time I have had to look at my notes. We are keen to ensure that any future system for party funding is fair and, importantly, one that the public can trust. Sir Hayden Phillips noted in his review the specific issues around trade unions. We are looking at his work when considering how to deliver the coalition agreement commitment to take big money out of politics.