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Election Expenses

Volume 470: debated on Tuesday 8 January 2008

I am glad to have the opportunity to raise the issue of candidates’ spending before dissolution, as it is a matter of great concern to many of us. I do not know whether any of my hon. colleagues ever look at the register of political donations on the Electoral Commission website, but if they have done so recently, they will have seen quite a rush of Tory donations in the past few months, particularly to Tory candidates in marginal seats. I cite at random £55,000 to Harlow, £47,000 to Regent’s Park, £27,000 to Gillingham and £18,000 to Selby. Colleagues attuned to the issue will recognise those as marginal seats.

My hon. Friend the Member for Dumfries and Galloway (Mr. Brown), who will be fighting his seat at the next election, tells me that £15,000 has been donated to Dumfries and Galloway during the past few months. Hastings and Rye is another case in point, and there are also some Liberal Democrat seats to which large amounts of money have been donated recently.

Overall, Tory associations have raised almost as much from individual donations since the last election as they did in the whole period between 2001 and 2005. On the much more important matter of donations to Conservative central office, which is at a far higher level, the Conservatives have already raised more since 2005—£15 million in individual donations, never mind other kinds—than they did between 2001 and 2005, when they raised £14.8 million.

With no election expected this year, why the sudden rush? The truth is that many Conservative candidates are starting their campaigns now. In doing so, they are importing two of the least desirable characteristics of politics in the United States. We are spending a lot more money than we used to, and we are starting to spend it earlier, although we are nowhere near the obscene amounts spent in American politics yet. Spending has practically doubled in every US election this century. Bush spent $95 million on his primary campaign in 2000 and $269 million, nearly triple that, in 2004. Overall spending by all candidates on primaries, elections and conventions rose from $649 million in 2000 to just over $1 billion in 2004, and all the signs predict that it will rise even higher in 2008.

American politics, I readily confess, is now so distorted by big money that merely saying that we are not as bad as the Americans is not saying very much. Perhaps more alarming is the fact that candidates are following the American example by starting to campaign a couple of years before the election is remotely likely to occur. From all over the country, we hear reports that candidates are starting to deliver regular newsletters, not saying what they are doing—because, of course, they hold no position—but attacking the Government and the incumbent MP. That is exactly what we expect them to do during an election campaign, but they are starting two years early.

The stupid thing is that it is entirely our fault, as we have allowed them to do so. Until 2000, it was impossible for candidates to campaign between elections without it counting towards their election expenses. We accidentally changed the law in the Political Parties, Elections and Referendums Act 2000, so that candidates’ spending limits are switched on not by candidates themselves declaring themselves as candidates or starting to campaign, but by the dissolution. That was never intended; apparently there was a mix-up on the last day of the Bill’s debate in the House of Lords. Although the mix-up was unforgivable, I have never heard anyone take responsibility for it. I should be interested to know the inside story.

What is even more unforgivable in my book is the fact that, in the seven years since then, we have not closed what everybody acknowledges to be an unintended loophole. It is still there on the statute book. I am asking in this debate—I welcome my colleagues’ support, and I hope that the Minister will agree—that we close the loophole and that we do so in time to prevent Tory candidates from building up an unassailable advantage in the marginal seats. A White Paper is due this month, and it will be followed by a Bill on party funding. I am happy with the proposals expected in the Bill about comprehensive spending limits, not just on national spending in election years, but on all spending every year, and about a donation limit, which I hope will put an end to millionaire funding. All that is fine, and I care passionately about it, but it is unfortunately on a completely different time scale from the need to close what for brevity’s sake we call the Ashcroft loophole, although he had nothing to do with creating it but merely exploited it.

To have any beneficial effect, legislation to close the Ashcroft loophole must be on the statute book well before the next election—by summer, or by Christmas at the very latest—as the experience of the past few elections has shown us that candidates and parties tend to launch their campaigns in January of the year in which the election is held. They might be pre-campaigns and not official campaigns, but they are effectively campaigns. They start in the first week of January and last until March, and they set the parameters in which the election is fought. This time, however, Tory candidates have been advised to start campaigning even earlier. Just last week, at the Institution of Electrical Engineers on the Strand, a meeting was held entitled “Take Your Seats”. Candidates have been issued with a special website where they can log on with a password and PIN to find weekly instructions for fighting their campaigns. It is January 2008, and they are already fighting campaigns.

Already the Ashcroft money is starting to flow from central office to candidates in marginal seats. Ultra-marginal seats such as my own get £5,000. I did not apply for this debate out of pure self-interest; although the issue affects me, it affects some people far more. Battleground seats get £25,000—they are those with majorities of roughly 5 to 10 per cent., although I have never seen an official figure. Perhaps the hon. Member for Isle of Wight (Mr. Turner) can enlighten us. What are rather coyly called development seats—seats with double-figure majority percentages that the Tories hope to win—get £5,000, although it now seems that the Conservatives may raise their sights and give such seats more money. If the money has not arrived already, as an article in The Times last week stated, Lord Ashcroft

“will soon begin pouring money into constituencies”.

The article even mentioned some of the constituencies that would get the money.

Before that, I must say that Members who wish to intervene should notify the hon. Member who initiated the Adjournment debate and the Minister, but on this occasion, I am prepared to waive that rule if the Minister agrees.

I rise only because my hon. Friend mentioned Lord Ashcroft a number of times, and I wanted to ask him whether Lord Ashcroft is a UK resident for tax purposes. It is a matter that has perplexed many of us.

Lord Ashcroft gave an undertaking that he was. I look forward to hearing any comments from the hon. Member for Isle of Wight, who might know something that we do not about the answer. It is certainly of interest to all of us, as Lord Ashcroft is playing a large part in British politics, effectively attempting to determine the result of the next general election without any clear indication that he is even a UK resident.

I apologise, Mr. Hancock, for not notifying you of my wish to intervene. In addition to what we might call the West Belizean question, there is widespread concern, regardless of Labour, Conservative or Liberal Democrat interests, that all this is leading to the Americanisation of politics and that, ultimately, we will all be forced to spend a great deal of our time fundraising. Does not that concern my hon. Friend as much as the concrete and immediate issue?

We should all be concerned about it. Indeed, it is already in the history books. We know what happened in the run-up to the last election. As a freelance operation, Lord Ashcroft and two other donors channelled £1.3 million into marginal seats outside the Conservative campaign. Ashcroft was typically getting £20,000 or £40,000 cheques to candidates who met with his approval. We also know that it worked. Peter Bradley, who lost his seat in The Wrekin, has calculated that there was a higher swing in the seats that received that money than in other seats. We know that Lord Ashcroft agreed with that assessment because, although things were a bit gloomy at central office on the night of the last election, he was celebrating the fact that 25 of the 33 gains involved candidates to whom he had given money. We also know that he was planning to do the same next time, not as a freelancer outside the Conservative campaign, but as vice-chairman of the Conservative party, sitting in party headquarters and orchestrating things from there. He makes no bones about it in his book, “Dirty politics, Dirty times”—a most appropriate title.

It is vital that we should reimpose spending limits on candidates, not only at election time, but throughout the electoral cycle. The basic requirements of democracy are that it should be fought on a level playing field, that political power should be insulated from economic power and that money should not be allowed to buy power or even to try to buy it.

Money plays a part in the political process because representative democracy cannot function without parties and parties cannot survive without money. We need money to communicate with the voters, but as my hon. Friends may know, the Corrupt and Illegal Practices Prevention Act 1883 made it illegal for candidates to spend money campaigning outside the election period unless it was included in their election expenses.

Surely, none of us would want a return to the position that held before 1883, when candidates bribed voters without scruple. At the last unregulated election in 1880, one candidate made donations to 15 chapels, 17 churches, 23 cricket clubs and 150 societies in his constituency to secure re-election. A contemporary commentator calculated that the amount of money spent by candidates in that election was £2.5 million. It might not sound much now, but that sum adjusted to the retail price index would be £171 million. Indeed, set against gross domestic product—a more interesting figure—it would be £2.6 billion. In Victorian times, politicians in England were spending even more money than is now being spent in America. I do not accuse Lord Ashcroft of consciously trying to drag us back to the Victorian era, but that would be the end result if the loophole was left on the statute book.

Lord Ashcroft has tried to justify his actions in all sorts of ways. In an article entitled “Labour wants to hamstring threatening Tories”, he showed his talent for understatement by saying:

“Several Labour MPs have demanded that the Government change the law to restrict constituency campaigning between elections.”

That, I think, is a pretty universal view. He then went on to blame the communications allowance, which allows us to report back to our constituents on what we have been doing on their behalf in Parliament. The communications allowance did not start until April 2007, and Lord Ashcroft starting giving money to marginal candidates in 2004, so that justification cannot be taken seriously.

Lord Ashcroft also blames the incumbency factor—a justification, as he sees it, for correcting the inbuilt electoral advantage that Labour MPs enjoy. I asked the House of Commons Library to produce figures on the incumbency factor, but there turns out not to have been one in 2005. Those Tories who were sitting candidates did 1.3 per cent. better, but Labour and Liberal candidates who were sitting MPs did not do as well as the average. In total, there was no incumbency factor in 2005. It may come as a shock to my hon. Friends, but although we like to think that there was an incumbency factor—there may have been for us—on average, there was not; and in 2001, it was less than 1 per cent. That argument does not stand as a justification.

Although Lord Ashcroft’s blaming the communications allowance is a device, we should accord the argument some serious consideration. He said:

“Few would object to the idea of enabling MPs to stay in touch with their constituents”,

but he added:

“Inevitably, though, the effect of a glossy newsletter detailing a member’s tireless work and record of success, delivered free to every voter, will be to make it more likely that that member will be re-elected.”

I find that a rather strange argument. Surely, if a Member has been working tirelessly and comes to the electorate with a “record of success”, that should make it more likely that he is re-elected. Is that not the idea of elections? Is Ashcroft merely complaining that we work too hard and that our Government have been too successful?

Lord Ashcroft describes the parliamentary communications allowance as

“de facto state-funded campaign contributions”.

For the good of the House of Commons, we need to put that argument to bed. If it is true that all such money came from de facto campaign contributions, questions should be asked. However, we all know that, when we spend the communications allowance on producing annual reports and reporting back to the voters, we cannot mention party; we must do nothing more than give a description of what we have done. If that makes it more likely that we are re-elected, it can only be because the voters think that we are doing the right thing. I do not follow the argument that, because MPs are allowed to report back to their constituents, Conservative candidates should be able to spend unlimited amounts on campaigning between elections.

It is extremely important that we close the loophole. I look forward to an assurance from the Minister that it will be closed sooner rather than later. I cannot emphasise strongly enough that it will be no good closing it in the run-up to the election. It needs to be closed before then to prevent what we know happened in 2004 from happening in 2009 or 2010, but on a far larger scale—an unfair battle funded by Lord Ashcroft against MPs in marginal seats, using a loophole that we created.

I congratulate my hon. Friend the Member for Battersea (Martin Linton) on securing this debate. It is a crucial subject, and one in which all Members of Parliament have an interest. My hon. Friend put clearly and succinctly the arguments about the attempts by some people—he mentioned Lord Ashcroft; I shall return to him—to buy elections. I was interested in the statistics that he gave on the Victorian era. I hope that we follow neither the American system nor return to the Victorian era. Although they were brief, the contributions by my hon. Friend the Members for Pendle (Mr. Prentice) and for Broxtowe (Dr. Palmer) were important. Indeed, my hon. Friend the Member for Pendle has a private Member’s Bill on a related area. I look forward to hearing him expand on the subject in a few weeks.

My hon. Friend the Member for Battersea mentioned the communications allowance, which he said was used by Lord Ashcroft to challenge Labour MPs. The allowance is available to all MPs, regardless of party. If Lord Ashcroft thinks that sitting MPs’ use of the communications allowance somehow gives them an advantage, and if he wants to equalise the campaigning, perhaps some of his great wealth could be dispersed to Labour or Liberal candidates in Conservative seats. That might help to put to bed his rather illogical position on the allowance.

We all know that in politics mud sticks. Is it not the case that, quite rightly, the communications allowance cannot be used to attack another party or candidate? However, that does not stop Opposition candidates regularly having an unfair go at sitting MPs, who cannot respond in kind.

My hon. Friend is absolutely right. The House officials who deal with the communications allowance are very helpful and knowledgeable about the extent to which we can use it. However, he rightly made the point that candidates with no locus can say and do more or less what they want.

It is important to put on the record the fact that maintaining faith in the probity and fairness of our electoral system is a serious issue that is vital to the health of our democracy. Our democratic system should be the best that money cannot buy. I hope that that is what we are all striving for and seeking to achieve. It is one of the reasons that we set up Sir Hayden Phillips’ review of party funding, which concluded that

“the debate about the financing of our political parties is a debate about the health of our democracy and how we can improve it.”

We should not allow a debate on party funding to besmirch the role of political parties, which are important in, and a healthy part of, our democracy; we should continue to ensure that the electorate and the media are aware of that. Political parties play a vital role in our democracy and mature democracies around the world. It is important, however, that electoral expenditure is transparent. It must not distort an election or be perceived to do so, which is why ending the spending arms race is fundamental to building trust in our political system.

Some form of spending control has always been at the heart of our electoral reform. There has been a long-standing agreement in UK politics that it is right in principle to regulate candidates’ expenditure and that the aim of that regulation is to prohibit what could be considered as the buying of elections. My hon. Friend the Member for Battersea mentioned the 1883 Act, which, along with the introduction of secret ballots, helped to reform the electoral system, as he graphically illustrated.

Some 100 years later, in 1993, that measure was consolidated by the provision for the regulation of candidates’ election expenses, which set a maximum limit on expenditure for parliamentary elections. However, that did not go far enough in recognising the larger role that national political parties had come to play in our modern democracy. That became clear during the 1990s; so much so, in fact, that in 1998, the Neill Committee—the Committee on Standards in Public Life—carried out an investigation into party funding and concluded that

“parties’ belief that elections can only be won by the expenditure (mainly on advertising) of vast sums of money has given rise to something of an arms race. This in turn has put enormous pressure on party fundraisers to devise innovative ways of attracting donations. The result has been the well-publicised, very large donations to both main political parties and also the development of strategies—such as the fundraising dinner attended by senior party figures—which together give credibility to accusations that money buys access to politicians.”

We all know of examples that have arisen since then, and we still have work to do to rectify the situation. The Neill Committee commented on that arms race and I am sure that my hon. Friend and, indeed, colleagues on both sides of the House, would agree that spending on advertising is probably the least productive method of persuading the elector, as those of us know who regularly knock on doors and pick up the phone to contact them. A cap on spending, therefore, will become more and more essential.

As my hon. Friend said, we passed the Political Parties, Elections and Referendums Act 2000, which introduced a national limit on campaign expenditure, created the Electoral Commission, made funding more transparent by requiring that all donations of £5,000 nationally and £1,000 locally be made public, and outlawed foreign donations. In a sense, this comes back to a point made by my hon. Friend the Member for Pendle about whether someone who is not a taxpayer in this country, or if we are not sure that they are such a taxpayer, qualifies under the system laid down by the Act. My hon. Friends are quite right to challenge the transparency of such donations and to ask whether they fall within the current remit. Undoubtedly the Act was a positive step forward, but it has become clear that there are gaps that we need to look at. That was one of the reasons for Hayden Phillips’ review.

Lord Ashcroft has taken great delight in the fact that at the last election, 25 of the 33 candidates who won seats from Labour or Liberal Democrats received support from the fund that he set up with Leonard Steinberg and the Midlands Industrial Group. We know that a variety of such groups give money to Conservative associations. He is so proud of that that he has mentioned it in several books, including one called “Smell the Coffee”. Another inappropriate title! Clearly expenditure affects the result of an election to some extent, but nothing affects the result more than the work that we do as politicians on the ground. My hon. Friend the Member for Battersea made that point very clearly when he commented on the use of parliamentary reports to outline the work that Members do. It is important not to get this matter entirely out of proportion.

Encouragingly, there is a growing perception and consensus among members of all parties that action is needed to control party expenditure. The Constitutional Affairs Committee warned unanimously in a report in 2006 that we needed a tighter cap on overall party spending. That proposal was supported by Sir Hayden in his March 2007 report:

“PPERA sought to control the level of spending, but it has proved inadequate to the challenge”.

He went on to say:

“However robust the controls we put in place over the sources of the parties' income, the current problems of financial instability must be expected to recur unless we also do more to curb campaign spending. We should limit it through generally accepted, easily understood, and enforceable rules”.

The shadow Leader of the House at the time agreed, and said that the Conservative party supported Sir Hayden’s review. The right hon. Member for Horsham (Mr. Maude), too, supported the review, but sadly, during the summer, as the hon. Member for Somerton and Frome (Mr. Heath) pointed out, when Lord Ashcroft moved in to central office, the Conservative party took a different view and is now trying to block further attempts to achieve consensus on party funding.

I have every sympathy with the position outlined by my hon. Friend the Member for Battersea in this debate, and I hope that—

It being Two o’clock, the motion for the Adjournment of the sitting lapsed, without Question put.