Political Parties (Funding and Expenditure) Bill [HL]

Lord Young of Cookham Excerpts

2nd reading (Hansard): House of Lords
Friday 10th March 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I am grateful to the noble Lord, Lord Tyler, for the opportunity to debate this important issue, and to all noble Lords who have spoken in the debate. I congratulate the noble Lord, with whom I have been debating in a variety of institutions for 57 years—he said 55 but I make it 57—on producing a substantial piece of legislation: a much richer diet than we are normally used to on a Friday. As he said, this is based on work by MPs of all three parties, supported by some professional input. I am grateful for his kind words about me and I reciprocate by complimenting him on his consistent campaign on matters of constitutional reform over a number of decades.

As the noble Lord indicated, he has been here long enough to know that a Bill that gets its Second Reading in the first of two Houses on the last sitting Friday has a short life expectancy. However, this is an important subject that deserves an airing. I was struck by what the noble Lord, Lord Wallace of Saltaire, said when he opened a short debate on a similar subject on 3 November last year. He said that,

“party funding reform is rather like Lords reform: we come back to it every other year, or at least once every Parliament; we … get round to setting up a working group; the parties fail to agree; we go away and significant change is rarely made”.—[Official Report, 3/11/16; col. 867.]

I think that parallel is actually instructive, and I will return to it later.

The current regime to regulate political parties and party funding was established in the PPER Act 2000, on which I and, I think, the noble Lord, Lord Tyler, were our respective parties’ spokesmen as it went through the other place. Since then there have been a number of proposals to reform the system. Indeed, the proposals of both the Committee on Standards in Public Life in 2011 and those of Sir Hayden Phillips in 2007 are drawn on in this Bill. However, despite a decade of talks, there has been no cross-party agreement on changes to party funding. Wide-ranging talks were held in 2012 and 2013, with representatives meeting seven times. Many of the issues raised by noble Lords today were covered during those talks.

Unfortunately, as on previous occasions, the parties did not reach agreement during those talks. No consensus has emerged since then and, understandably, the Government are reluctant to make changes without that consent. In a debate on 9 March last year the noble Lord, Lord Tyler, quoted Winston Churchill counselling in 1948 against one party imposing its will on another on matters affecting the interests of rival parties. Several noble Lords have called for cross-party talks on this subject to be resumed. For those to be worthwhile, there would need to be some agreement about the basis of the talks so that we do not simply repeat the fruitless exercises of the past. I will return to this point at the end of my remarks.

The Bill uses the proposals of the CSPL from 2011, in particular, as its foundation. We must remember that that report did not receive cross-party support. Indeed, there were dissenting opinions within the report itself. Both Labour and Conservative members of the committee disagreed with its conclusions, as the noble Lord, Lord Bew, reminded us.

The Bill suggests reallocating and increasing state funding for political parties in Clauses 10 to 14— a subject touched on by the noble Lord, Lord Whitty. The Government do not believe that there is any public appetite for more taxpayer funding of politicians and political parties at this time. Noble Lords will be familiar with the advice of Nick Clegg in another place 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.]

That advice seems as relevant today as it was then. Indeed, as substantial demands are likely to be made on the public purse to restore the building in which politicians work, it might test the patience of the public if at the same time we were to ask for significantly greater support for the trade we carry on within it.

Instead, we want to reduce the cost of politics, and we are taking steps towards this by reducing the size of the House of Commons—which I hope noble Lords will support when the relevant SI comes before us—freezing ministerial pay and stopping unanticipated hikes in the cost of Short money.

[Lord Bassam of Brighton (Lab)]

What about reducing the number of Peers?

[Lord Young of Cookham]

We tried to reduce the number of Peers in the previous Parliament, as I know to my cost, but it did not have the consensus that we needed.

Often, the starting point of our discussions is that the spending of political parties should be reduced and that, in the absence of stricter rules, an arms race is taking place between the parties. Research published by the CSPL in August 2016 showed that this is not the case. There has been no arms race in party funding in recent years. My party spent less in the 2015 general election than in 2010—and that was a lower figure than in 2005. The less we spend, the better we seem to do. Taking into account inflation, the CSPL research showed a steep fall in central party spending since 1997. Neither of the two main political parties in the 2015 general election came close to its spending limit.

Like other recent attempts at reform, the Bill suggests complex and, at times, controversial structural changes to the party funding system. Talks that have focused on these ideas have so far always failed. Perhaps real progress could be made if the focus was instead on smaller reforms that might gain cross-party support.

Here, I return to the parallel drawn by the noble Lord, Lord Wallace of Saltaire, with Lords reform. As I know to my cost, heroic attempts to reform your Lordships’ House failed because there was basically no consensus between the two Houses and within the two main parties. Subsequently, there has been useful incremental reform, with two Private Members’ Bills reaching the statute book and the possibility of further incremental reform coming from the Lord Speaker’s Committee.

Indeed, I wonder whether the noble Lord, Lord Burns, who has tackled difficult subjects such as hunting with dogs, the Trade Union Act and Lords reform, might thereafter apply his resourcefulness and ingenuity to this subject. As with incremental reform of our House, I think we should adopt the same approach to party funding: moving ahead with smaller reforms that may command broad support, rather than trying and failing to achieve an all-or-nothing solution, as this Bill does.

I was interested in what the noble Lord, Lord Bew, said, in the debate on 9 March. Commenting on my party’s evidence to the noble Lord, Lord Burns, which suggested smaller reforms rather than an all-or-nothing, big-bang solution, he said:

“That is an interesting observation. We could address certain aspects of what is a very difficult problem in its totality, in the event that we do not within this Parliament achieve the big-bang solution. These smaller reforms could include finding practical ways to encourage more and smaller donations from wider audiences”.—[Official Report, 9/3/16; col. 1377.]


He repeated that suggestion this afternoon.

These smaller reforms could include finding practical ways to encourage more and smaller donations from wider audiences. As the Minister for the Constitution said when he appeared before the Constitution Committee earlier this week, the Government are open to constructive debate and dialogue on small-scale measures that could command broad support, if there was a positive reaction to such a potential step from the main political parties. I think that today’s debate has shown that there is such an appetite, and I shall return to that in a moment, when I have addressed some of the issues raised in the debate.

The noble Lords, Lord Bew and Lord Rennard, raised the issue about the lack of transparency in donations in Northern Ireland. On 5 January, the Secretary of State for Northern Ireland announced that he would write to Northern Ireland political parties seeking their views on ending the current arrangements on donations and loans to political parties. He asked whether now was the right time to move to full transparency, and he remains keen to make progress on the issue of donations to political parties now that the election has concluded.

The noble Lord also asked about the review of third-party campaigning by my noble friend Lord Hodgson. The Government welcomed that review of campaigning in the 2015 general election, and welcomed the noble Lord’s conclusion:

“Restrictions on third party expenditure at elections are necessary”.


He recommended a balanced package of measures; some would tighten the rules and some would relax them. We are considering his recommendations carefully, along with the Electoral Commission’s response to them.

My noble friend Lord True raised two important issues. Firstly, on impermissible donations, he rightly said that all three parties had been affected but focused his comments on the Michael Brown case and asked whether the Electoral Commission should be able to secure the return of donations which are later found to be the proceeds of crime. The Electoral Commission has recommended that the rules on company donations should be reviewed following its investigation of donations made by 5th Avenue Partners Limited to the Liberal Democrats in 2005. We are considering that issue alongside a number of other issues related to donation matters.

My noble friend also raised the matter of reports about a £250,000 donation being offered to the Green Party before the Richmond by-election. This was denied by the Green Party, and the Electoral Commission records for the relevant period do not show any such donation being made. Laws around such donations relate largely to ensuring that they come from a permissible source and that they are properly declared to the Electoral Commission to comply with transparency requirements. If the donation in this case had complied with those requirements, it is unlikely to have broken any laws. But my noble friend raised an interesting question as to whether the law applied to parties as well as to individuals. That is an issue that we need to reflect on further.

The noble Lord, Lord Wrigglesworth, made a valid point about social media and the changing landscape of political campaigning. I agree that it would be better if all parties were less reliant on large donations and we had a broader base of membership donations on which to rely.

The Bill proposes a number of reforms to political party funding, including caps on donations and new schemes for public funding. These are complex structural reforms which could be taken forward only on the basis of a cross-party consensus. No such consensus exists at this time, so the Government believe that it is premature to consider a Bill at this time.

However, anticipating that there would be an appetite in today’s debate to make progress and try to break the logjam that we now have, I spoke to the Minister for the Constitution earlier this morning. He would be happy to have a meeting with the noble Lord, Lord Tyler, and other noble Lords who have spoken in this debate, to see whether we can find a way forward along the lines that I have suggested of incremental reforms that achieve cross-party support.

That may not be the giant step forward that the noble Lord hoped for in his opening remarks, but I hope that he accepts it as a constructive response to the debate and a helpful way forward, even though we cannot take his Bill very much further forward today.