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Parliamentary Candidates (Expenditure)

Volume 471: debated on Tuesday 29 January 2008

3. What steps he plans to take to limit spending by parliamentary candidates between elections. (182468)

The issue of expenditure limits has, as my hon. Friend knows, recently been considered by the Constitutional Affairs Committee, by Sir Hayden Phillips’s review and during inter-party talks. The Government were committed, under the Queen’s Speech, to bring forward proposals on party finance and expenditure, and work on that is in hand.

My right hon. Friend will know that the Political Parties, Elections and Referendums Act 2000 removed the triggering of election expenses from electoral law. That has led to a situation in which tens of thousands of pounds are already being spent by some candidates in marginal seats as though an election had already been called. That is being done on the basis, presumably, that they hope that the candidate with the most money, rather than the best policies, will win the next election. Although the issue of triggering was not covered by the Hayden Phillips inquiry, will my right hon. Friend consider reinstating the 1983 legislation on the triggering of election expenses?

It is a moot point whether the legislation or its subsequent interpretation has made it more difficult to enforce limits locally, but it is clear that a combination perhaps of the detailed drafting of the Act and its subsequent enforcement has had a consequence that no one on either side of each House ever intended—indeed, the opposite was the case, as the then Conservative spokesman in the Lords, the late Lord Mackay of Ardbrecknish put on record in Committee in the other place at the time. All of us at the time believed on very good evidence that that part of what became the 2000 Act was faithfully implementing Lord Neill’s conclusions—shared by all the parties, as he said, who gave evidence to his Committee—not just to maintain the existing controls, but in his words, to buttress them.

Does not the Lord Chancellor except that, after the events of the past few weeks, we need not only rules that work, but rules that everyone stick to? On that basis, will he now bring forward as a matter of urgency the proposals set out by Sir Hayden Phillips—not just the bits that suit any one party, but the whole package—fundamentally to reform the system of party funding before irreparable harm is done to our democratic systems?

As the hon. Gentleman in particular knows, the all-party talks were operating on a good consensual basis until earlier in the summer last year, and I am very reluctant to proceed without a consensus, because the system of party funding should not advantage or disadvantage in a partisan way one party or another. He will also know that the recommendations in the report of Sir Hayden Phillips were “welcomed”—that was the phrase used—by the then Opposition spokesperson, the right hon. Member for Maidenhead (Mrs. May), and it is a matter of concern to us that the Conservative Opposition have moved far away from what was proposed. But it is also clear that there was, and I believe there remains, a complete consensus. Anyone who reads the record going back to the recommendations of Neill, back into the 1980s, and back to the debates on the 1999 draft Bill, which became the 2000 Act, will see that everyone in every part of both Houses believed—indeed, the Conservative Opposition in the other place proposed an amendment to clarify the law to make this clear, although at the time Ministers thought that was not needed—that the 1983 controls would continue to operate and be completed by the national controls that Neill proposed.

I thank my right hon. Friend for what I took to be a clear statement of an intention to close the loophole, whether by legislation or by guidelines. If legislation is used, what is the earliest date by which he would hope to close that loophole, given the clear statement in an article in The Times earlier this month that the deputy chairman of the Conservative party is already pouring money into constituencies?

I do not know which deputy chairman my hon. Friend is talking about, but if it is the one that I have in mind, that person is on record, as he was in the other place in a speech that he made in November 2006, saying that there should be no controls whatever on expenditure by parties.

As for any proposals, as the Queen’s Speech said, we are committed to introducing proposals in respect of party finance and expenditure. The Government have yet to make the final decisions, but they will be made shortly.

Does the Lord Chancellor recall that the Select Committee on Constitutional Affairs produced its unanimous report on the basis that both spending between elections and trade union funding for the Labour party needed to be addressed? It was therefore a balanced package. If he were to proceed on those lines, he could hardly be accused of being partisan for doing so.

I do indeed recall that, and the proposals in Hayden Phillips’s report cause difficulties, albeit not symmetrically, certainly for both the main parties and to some extent for the Liberal Democrat party as well, but those proposals were, and are, a package—not some kind of à la carte menu—and they need to be proceeded with on that basis. That is my profound concern. Meanwhile, as I say, I have now looked with great care at something that was not directly considered—I am not seeking to make any point—either by Hayden Phillips or, indeed, in the Select Committee report, which I have not only read, but have with me today, for the purposes of greater accuracy. It is absolutely clear, as I have remembered and is now confirmed, that Neill wanted to build on the 1983 controls and absolutely no one on either side of the House thought otherwise, so much so, as I have said, that the late John Mackay—Lord Mackay, who was the Conservative spokesman in the other place and who was well known in this House—moved amendments to address concerns about local controls being dissolved. He was reassured—as it turned out, in error, but in good faith—by Ministers that those controls would not be undermined in any way.

Does the Lord Chancellor accept that it will not be easy to impose spending caps of the type advocated, and that fraud and avoidance will be relatively easy? Given that, will he work hard to bring forward a package of proposals supported throughout the House that recognises the historical link between trade unions and the Labour party?

The truth is that controls of any kind can be evaded, which is a criminal offence, or avoided, which may be just within the law but is not within the spirit of the law. It is incumbent on all parties to ensure that we do not go down the same route that some taxpayers—one fully understands why—go down. It is equally important, as the Select Committee on Constitutional Affairs pointed out, that account is taken of the different parties’ different circumstances. That used to be the Conservatives’ approach, but I regret to say that they have abandoned it.

It also needs to be put on record yet again that the Conservative party made major changes and tightened controls on trade unions’ political funds throughout the 1980s. Although we did not like those changes, we came to accept them in the mid-1990s. When Neill reported in 1998, he not only said that he had no proposals to change them but quoted the Conservative party’s official evidence to him:

“The question of trade union funding of parties is not a matter of direct concern to the Conservative Party. We recognise the historic ties that bind the trade union movement with the Labour Party…The Conservative Party does not believe that it is illegitimate for the trade union movement to provide support for political parties.”