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Political Parties (Funding)

Volume 450: debated on Monday 16 October 2006

20. If he will make a statement on progress on his plans to reform the funding of political parties. (93390)

Sir Hayden Phillips is undertaking an independent review of the funding of political parties. He has been asked to produce recommendations that, as far as possible, are agreed between the parties. Sir Hayden will publish an interim assessment on Thursday this week. He has been asked to report to the Prime Minister with his final conclusions before the end of December this year. Once we receive those conclusions we will consult, and we will make decisions in due course.

I thank the Leader of the House for that reply. Does he agree that, if any of the recommendations suggest that funding should be capped, such capping should apply equally to all who donate to political parties, including trade unions, private individuals and businesses, and that there should not be discrimination against individuals or the private sector? The trade unions have to play their full, open and transparent part.

May I point out to the hon. Gentleman that, as the Neill Committee on Standards in Public Life said in 1998, the trade unions are the most regulated of all donors? During the 18 years of the Conservative Government, the trade unions suffered one adverse change after another in their financing regimes, while nothing whatever was done in respect of companies. I am surprised that the hon. Gentleman is leading with his chin on the issue, because there is one unquestionable improvement that we must make in regulation, which is to ensure that the unregulated funding of local parties by unincorporated associations such as the midlands industrial council is brought to an end. I note that although he spent just £11,000 during the four-week election period in 2005, he received a total of £55,000 in the eight months before the election was called from Lord Leonard Steinberg and the midlands industrial council, and I assume that he spent that, too. That shows that there is a glaring loophole continuously exploited by the Conservative party, enabling them to spend large sums of money and not account for them before the election period kicks in.

Does my right hon. Friend agree that there is scope for political parties to spend less before there is any question of further funding, particularly from the state? In addition, is there not a strong case for an immediate inquiry into the midlands industrial council? It is a sinister organisation—it is not accountable in any way, and it makes a mockery of the reforms that the Government have brought about.

I strongly agree with my hon. Friend’s latter comments. I recall that when the Political Parties, Elections and Referendums Act 2000 was considered in the House, there were high-sounding comments from the Opposition, who said that they wished for as much transparency as we and the Liberal Democrats wished for. Such comments have been repeated, but I note, too, that the Conservative party exploited a loophole in the law that allowed unincorporated associations, such as the midlands industrial council, to give thousands and thousands of pounds to local constituency associations without the latter accounting for that or providing any details about who was behind those shady organisations until it was forced out of them.

I do not expect the Leader of the House to pre-empt the report from Sir Hayden Phillips, which is due later in the week, but if we are to achieve consensus, there are three essential ingredients, and he has already touched on some of them. First, there must be proper capping of individual contributions. Secondly, there should be a firm regime to prevent the abuse of enormous spending in constituencies outside the election period particularly, as often happens in marginal constituencies. Thirdly, there should be proper transparency about the way in which all parties are funded, and no more secret clubs and cabals.

I agree strongly with the hon. Gentleman’s second and third points. As far as his first point is concerned, when the Neill Committee on Standards in Public Life reported in 1998, it recited all the changes that had been made in respect of the trade union donations to the Labour party and concluded:

“We have received no evidence to suggest that the legislation is not working satisfactorily, and no case has been made out for any reform…No change should be made in the law”.

There has been no evidence since of any case for change.

The idea of caps on donations sounds interesting, but in the United States it has spawned a vast evasion and avoidance industry. We are more likely to get true transparency if we have controls on spending that apply at all levels of political parties’ spending and in respect of all kinds of donors, including shady organisations such as the midlands industrial council.

My right hon. Friend has touched on the point that I wish to make very strongly. There is a strong body of opinion in our party that there should be much lower limits on spending, which should be much better policed, so that no party becomes the hireling of big business, rich people or, indeed, the state. We should retain our independence by having much lower levels of spending and, therefore, much lower levels of donations.

The truth is that there is effective, or relatively effective, control during the short election period defined in the 2000 Act, but there is no control during the much longer period before elections, notwithstanding the fact that because elections take place almost every year, campaigning is now almost continuous. I hope that we can achieve a consensus between the parties that the issue of control of campaign spending at all times is what most needs to be properly addressed.

I have listened with care to what the Leader of the House has said, and he will know that in the spirit of consensus we have put forward a series of serious proposals for party political funding, prepared by my hon. Friend the Member for Chichester (Mr. Tyrie). Unfortunately, the Leader of the House has already set his face against elements of those proposals. Does he not accept that whatever else the Government might do about the funding of political parties, if they do nothing about the significant contribution to the Labour party by the trade unions, the public will remain rightly sceptical about the influence that continues to be wielded by the unions on this and every other Labour Government?

The Conservative party has always dined out on the fact that the Labour party and the trade union movement are in close association. It can continue to do so for as long as it wishes; that is entirely its right. What is not its right is to seek partisan advantage by forcing through changes in the financing regime, which would have the effect of wholly disadvantaging one political party and forcing changes in our constitution, when no such changes have been forced on the Conservative party—[Interruption.] The right hon. Lady says from a sedentary position that there would be a cap on business donations, too, but she knows very well that her party decided to focus on the trade unions continuously during the 18 years of Conservative government from 1979 to 1997. They changed the law and they changed the law and they changed the law again, but they did nothing whatever in respect of companies, so much so that in 1998 the Neill Committee on Standards in Public Life said that it had received no evidence of any case for further changing the law. I have challenged the right hon. Lady and the hon. Member for Chichester (Mr. Tyrie) as to whether there is a scintilla of evidence of any mischief in the way in which the regime for trade union funding of political parties has altered since then. The answer is that there is absolutely none. What we have had, however—