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Political Parties and Elections Bill

Volume 481: debated on Monday 20 October 2008

[Relevant documents: The First Report from the Constitutional Affairs Committee, Session 2006-07, on Party Funding, HC 163, and the Government’s response, Cm 7123, and The Committee on Standards in Public Life, Review of the Electoral Commission, Cm 2006.]

Order for Second Reading read.

I inform the House that I have selected the amendment in the name of the Leader of the Opposition.

I beg to move, That the Bill be now read a Second time.

Shortly after Labour’s general election victory in 1997, to implement a key manifesto commitment, our then Prime Minister invited the Committee on Standards in Public Life, under its then chairman, Lord Neill of Bladen, to conduct a major inquiry into the funding of political parties. Lord Neill’s report was published in 1998. It was followed by a White Paper and draft Bill that I published in 1999. The process of consultation on that draft Bill culminated in the passage of what became the Political Parties, Elections and Referendums Act 2000 in autumn that year.

Lord Neill’s report and the subsequent Act were based on some key and agreed principles that are fundamental to the health of any democratic system. They are that there should be clear limits on the amount that can be spent by political parties on election campaigns and that voters have a right to know who is funding those parties. To ensure that those principles were put into practice, PPERA—the 2000 Act—set out a new regulatory regime and established the independent Electoral Commission, to be answerable to the House, and not, I should add, to any Minister. Although there was, quite properly, careful scrutiny of the Government’s proposals, and arguments about some of them in the 1999 Bill that became the 2000 Act, I was determined that there should be cross-party consensus on the new Act if it was at all achievable, and indeed it was. I was, and still am, in no doubt that the need for broad consensus in this area of policy is a third key principle.

By any international standard British politics is fundamentally clean, because of spending limits, transparency and our political culture; but ultimately it is clean because there has been an understanding between the parties that changes made to secure partisan advantage would be impermanent and would serve only to undermine the public’s faith in the democratic process. For a wide range of matters that come before the House, the knowledge of Members is necessarily at one remove. We articulate the experiences of our constituents, of business people, homeowners, the elderly and the young, and only sometimes will they be within the direct experience of individual Members and their families. However, in the area of party funding and control, Members articulate their experiences and, understandably, every Member claims expertise, so I make the following remarks with some trepidation.

First, the reforms that the House agreed in the 2000 Act were, and are, fundamentally right. The historical system of controls on candidate spending was a necessary response in the days when election campaigns were fought entirely at local level, but those controls were not on their own sufficient for the circumstances in which we now find ourselves, when general election campaigns are co-ordinated at national level and often commence many months, or sometimes years, before the official starting gun is fired.

Secondly, the old system, which was in essence one of self-regulation, had its advantages, as do all systems of self-regulation, especially for those being regulated, but over the past 20 years the House has increasingly insisted that one area of society’s activities after another should be subject to external regulation. That is why a decade ago the House, led by my party, decided that we needed to prescribe for ourselves the remedies that we were prescribing for others.

Thirdly, there is recognition that the new system of transparency and of more comprehensive regulation is what the public expect. However, as is almost inevitable with a new system of regulation, not every aspect of it has worked out as well as was intended, so 10 years on from Lord Neill’s report it is right to take account of those experiences and revisit the 2000 Act framework to ensure that its key features—transparency, sensible control on spending and an effective Electoral Commission—are maintained, strengthened and, where necessary, reformed.

The Lord Chancellor is speaking as though the Hayden Phillips committee had never existed, yet he and I served on it for many long months and strove mightily to reach consensus until the Conservatives walked out. Having striven mightily to produce consensus, why has the Lord Chancellor brought forth this pathetic little mouse of a Bill, which does not deal properly with the abuses of party funding in terms of either donations or spend? It does not deal with what he acknowledges are absurdities in some aspects of trade union funding and it does not deal properly with third-party funding of parties. Why do we not have the Bill that we deserve?

While the hon. Gentleman was indicating that he wanted to intervene, I was indeed debating whether to go on to the next section of my speech, which mentions the Hayden Phillips report. I disagree with the hon. Gentleman’s description of the Bill, and I ask him to reflect on the likely outcome of parliamentary proceedings in which there was a dogfight between the parties and no consensus was achieved. The simple fact is that we do not live in circumstances of exact symmetry between each political party—no democracy should. Each party has a different history and a different demography in terms of its supporters, although that is changing over time. There is another fundamental difference that changes over time and which I have had the privilege of seeing from both sides—he, sadly, has done so only from one side: the perspective of a political party when in office is different from when it is in opposition.

Of course I regret the fact that we were not able to reach agreement in the Hayden Phillips talks, in which the hon. Gentleman and I were broadly on the same side. However, if we get into a party political dogfight on the issue—I am happy to have a party political dogfight about virtually anything—any changes that are made will be impermanent and will not be properly enforced. The whole body politic will suffer as a result. That is not to say that we should back away from difficult issues; I do not suggest that for a second. What I was able to achieve in what became the 2000 Act was a broad acceptance of some key principles that I think have stood the test of time.

The Government were aided in reaching the conclusion that we need to re-examine the experience of the 2000 Act by the work of successive independent inquiries, including the report of the Constitutional Affairs Committee, published in December 2006, the review of the Electoral Commission conducted by the Committee on Standards in Public Life, which published its report in January 2007, and the report and draft agreement published by Sir Hayden Phillips in March and October last year. Each of the reports had a particular focus, but some common themes are clear.

The Select Committee report to which the Secretary of State referred was indeed a consensus; it was supported by Members of all parties, and Sir Hayden Phillips’s report was, to a very large extent, based on that. Why could not the Secretary of State use that consensus as the basis for saying that he would put before the House not proposals peculiar to his party, but proposals on which there was already party consensus?

The answer is that I have not put forward in the Bill proposals “peculiar” to the Labour party, any more than the proposals in the 1999 Bill were “peculiar” to my party. I want to seek a consensus on the proposals. The right hon. Gentleman was a party to the talks. I greatly regret that no agreement was reached, but he knows that Sir Hayden Phillips entered those talks saying, quite properly, that nothing was agreed until everything was agreed. We can spend time going backwards and forwards on the issue of what happened in those talks, but the simple fact of the matter is that there was not agreement. At the risk of tedious repetition, I repeat that there is little purpose served by the House ramming through changes to the party funding regime that do not command a consensus.

If the right hon. Gentleman does not believe me, he need only consider what happened in another area of electoral law when there was not consensus. He went to the United States; there is no consensus there about boundaries, so what happens, as he will know if he has ever seen a boundary map of congressional districts, is that each side gerrymanders the boundaries, which are subject to one rule only in basic law, which is that the boundaries should connect. It leads to a ridiculous position. I do not want to get into that situation. Nor do I want us to experience what has happened in at least two western European countries, where the electoral system was changed for political advantage. We have to be very careful. In particular, there is a responsibility on the Government, who have a majority, to be careful.

I am sure that the Secretary of State will appreciate that huge advantages of incumbency are inbuilt in our electoral system. Of course Members of Parliament need money to do their job, but over the past five or six years, we have absolutely stuffed ourselves with additional money. Perhaps the least attractive allowance is the communications allowance. Would it not be a good start if the House got together at the earliest opportunity and scrapped that allowance, thereby saving the taxpayer about £6.5 million a year?

There could be great debate about whether incumbents benefit. They do when they are winning, and they do not when they are losing; that is the simple truth about incumbents. The hon. Gentleman’s party knows that, and so does mine. There is a great debate, some of which is brought out in the excellent, as ever, Library note, about the alleged benefits or disadvantages of incumbency.

It fell to me when I was Leader of the House to move the proposals for a communications allowance, but they did not come from the Government. They came from the Members Estimate Committee and the House of Commons Commission. I had something to do with those. My aim in introducing the communications allowance was to cap spending by some right hon. and hon. Members on, for example, franked envelopes, which in my judgment was reaching excessive proportions. In any event, although only one or two Opposition Members voted for the communications allowance, I looked up the figures earlier and, from recollection, I think that 574 Members spent the communications allowance last—[Interruption.] That is what I was told in my brief. If it is inaccurate, I am happy to stand corrected, but that was in my official brief.

With respect, the right hon. Gentleman must not be allowed to get away with that. If he refers to that debate, he will see that many Members made it clear that they would have to claim the communications allowance for expenditure currently incurred under existing allowances. It therefore does not follow that they have made additional claims on the House following the introduction of the communications allowance.

I never suggested that they had, but the right hon. Gentleman makes my point. To my certain knowledge, the House is enforcing the allowance, and it is being used for parliamentary purposes and not for party political purposes.

I thank the Secretary of State for giving way. I have had to use the communications allowance. I have used about 0.02 per cent., I think, because certain advertisements for surgeries that I used to be able to pay for under the office costs allowance must now be paid for under the communications allowance. There is a big difference between that—I suppose I am one of his statistics for using the communications allowance—and Members using £10,000 or whatever the allowance is. I shall stick to my less than 1 per cent. until the communications allowance is abolished, when I can go back to the old system which allowed such minimal expenses under a sensible office cost allowance.

I am grateful. I shall take the Secretary of State back to the Bill. Does he agree that the political consensus on the Bill has been put at grave risk by the Conservative party continuing to fund, by tens of thousands of pounds, marginal constituencies prior to an election being called? That is against the spirit of what the Bill seeks to achieve. It is against what the British people think is fair play. Does that not show how necessary the Bill is?

What has happened is that parties seek to spend within the current rules. The hon. Gentleman makes his own point about his views about some of that spending.

I thank the Secretary of State for giving way before he moves off the consensus point. Is not the difficulty with his position that effectively he has given a veto to the Conservative party when the Conservative party benefits from the existing situation continuing? Should he not have thought, “Where are the public on this? Where is public opinion?” and proposed what the public wants, and then challenged all Opposition parties to explain why they are not in favour of it?

I have my views about the kind of changes that ought to be introduced. I have made my point. Different parties will look at the issue from different perspectives. The parties’ position, demography and social base are asymmetrical and there is always an inherent difference between the party in power and the main party in opposition, as well as the smaller parties, including the Liberal Democrats, in opposition.

I understand what the hon. Gentleman says, but we should not make what we think is the best the enemy of the good. If we use the partisan advantage that Government parties, by definition, have and force through changes that do not command broad consensus—not in every detail, but broad consensus about their principles—all those involved in politics and the reputation of politicians will suffer a further knock.

I should continue. There is one issue, of a number, on which there is already a consensus: the need for comprehensive reform of the Electoral Commission. The creation of the Electoral Commission was a recommendation of Lord Neill’s that all parties supported. It was the right decision and an essential development in the context of a stronger regulatory system. However, there was a critical design flaw. Lord Neill recommended, and I accepted, as did the House, that the commission should not have in its membership anyone with recent experience in party politics. With hindsight, I should say that that was an error, for which I take my share of responsibility. The move has exposed the Electoral Commission to criticism, which many will consider well founded, that it has lacked a degree of understanding of the organisations that it regulates, and in particular that it has failed to recognise that political parties are kept going not by unscrupulous people on the make, but by enormously dedicated volunteers who work all hours, usually for no reward, for their values and commitment to their cause and no other reason.

My right hon. Friend is absolutely right.

One of the great problems that worry many of us about the Bill relates to schedule 19. Under that schedule, the homes of the literally hundreds and thousands of people who volunteer as agents or as candidates—successful or unsuccessful—for councils or Parliament, or of those who give a little bit of money to a party, can be raided on the orders of the Electoral Commission. A justice of the peace has to give a tick, of course, because there has to be reasonable cause. However, if the commission is to do its job, it has to investigate and it will not know whether there is reasonable cause until it has gone into everybody’s home to take away any papers to do with party funding. I do not want to get into a dogfight with my right hon. Friend, because I know who would lose, but I put it to him that that provision is a worrying threat to the volunteering instinct of the British nation and to its democratic system.

I understand my right hon. Friend’s point, which we have discussed outside the House. If he would not mind waiting a little, I shall deal with that issue a little later; I hope to reassure him and the House.

In a highly critical conclusion in its 2007 report, the Committee on Standards in Public Life stated:

“An effective Electoral Commission is a necessary and vital part of the modern institutional architecture. Its core duties should be as a regulator to ensure integrity and public confidence in the electoral process and in the framework that governs the political party funding and campaign expenditure. Through a combination of deficiencies in its current mandate, that is too weak in some areas and too broad in others, combined with a lack of courage, competence and leadership in its regulatory and advisory approach, it has not successfully performed these core duties…The Committee has therefore made a range of recommendations designed to refocus the mandate of the Commission on these two core duties and to provide the framework that will enable it to deliver this mandate successfully.”

Before my right hon. Friend presumes an overall consensus on blaming the Electoral Commission, may I ask whether a bad craftsman blames his tools? Is not the core weakness of the Electoral Commission in applying the principles of both Neill and Nolan that the law that it has in front of it is in some examples far too strong but in others far too weak? Transparency is therefore not possible because the commission does not have the right balance of powers to do what Nolan and Neill wanted it to do.

Both factors are involved. The Committee on Standards in Public Life used exactly the same adjectives as my hon. Friend; it said that it was too weak in some areas and too strong in others. The issue is partly to do with its powers. Far from strengthening the total powers of the commission, this Bill qualifies powers and provides additional but more sensible powers. Another factor has been the nature of the commission and the fact that individuals with recent political experience have not served on it. The Committee on Standards in Public Life and the Constitutional Affairs Committee both recommended that a minority of commissioners should have practical experience from across the political spectrum. Those bipartisan reviews also recommended that the commission’s regulatory role should be clarified, that its investigatory powers should be changed and that it should be given a flexible range of civil sanctions to enable it to consider alternative avenues in cases where breaches have occurred and where the only options at present—this is a part-answer to my right hon. Friend the Member for Rotherham (Mr. MacShane)—are to name and shame or to refer the matter to the Crown Prosecution Service or the police with a view to a criminal prosecution. The Bill takes forward all those proposals, and I shall come to their detail in a moment. There is already all-party consensus on these changes in principle, and relevant measures are included in the Bill. However, I hope that through the process of parliamentary scrutiny we can carefully examine them and improve their detailed operation where necessary.

In addition to reform of the Electoral Commission, the Bill contains important measures to ensure that the true source of donations to political parties is made known to the public. All parties have called for openness and transparency in party funding, so I hope that these measures will secure all-party support as well. It has been a common aim of all legislation, going right back to 1883, that overall spending by parties should be controlled. While of course there may be argument about exactly how to control it, that common aim continues to be shared by the parties. I entirely agree with the hon. Member for Arundel and South Downs (Nick Herbert), who said last year that

“we are much more interested in reducing the cost of politics and that is what David Cameron has made clear.”

The Bill therefore includes measures to improve the control of spending. Although there are strong arguments in favour of a comprehensive overhaul of the system of expenditure controls—to pick up on a point made by Liberal Democrats—and Sir Hayden recommended the introduction of what amounted to continuous all-encompassing spending caps, it is clear that there is not currently consensus on taking such a step. Consequently, I have not included those proposals in the Bill.

How did my right hon. Friend come to the conclusion that the level at which a donation can be declared should be reduced from £1,000 to £200? Why does not he take it down to zero, given that there will be problems under the Freedom of Information Act 2000 if he does not do so?

First, political parties are not defined as public authorities for the purposes of the Freedom of Information Act and therefore do not have to cope with FOI requests—thankfully, because they would not have the apparatus to do so. Secondly, we have received representations from all the main parties and some of the smaller parties asking for the £200 limit to be raised and for the burden of that provision to be made lighter rather than more difficult.

Instead of comprehensive, continuous, all-encompassing spending caps, the Bill tackles one of several weaknesses in the existing controls—the absence of any controls on spending that takes place outside the official election period at a local or candidate level. The Bill proposes a return to the principle of the pre-2000 system known as “triggering”, which will ensure that all expenditure for the purposes of a candidate’s election is regulated. I hope that that will command the same level of support as it did before 2000. During the passage of the Political Parties, Elections and Referendums Act 2000, as the White Paper that I published last June indicates, a Conservative spokesman in the Lords, Lord Mackay of Ardbrecknish, moved a “belt and braces” amendment to put the continuation of the trigger beyond doubt. His amendments were withdrawn only on ministerial assurances, sadly not because experience had shown that they were not necessary.

Much of the right hon. Gentleman’s speech has been about the need for consensus. On the need for consultation, where in the Hayden Phillips proposals, or indeed anywhere else, has the proposal on triggering been discussed or consulted on?

There was self-evidently a consensus up to and including the passage of the 2000 Act. Everybody believed that the trigger arrangements in the Representation of the People Act 1983 would continue through the passage and implementation of the Act. That is clear beyond peradventure. Lord Neill said that his proposals were designed to buttress the arrangements in the 1983 Act. That was also the view of both Ministers and the Conservative Opposition. Indeed, I regret the fact that we did not accept the amendment from the late Lord Mackay.

Secondly, Sir Hayden Phillips refers on page 15 of his report to the concerns, which were expressed by some parties but not others, about the lacunae, as it were, in the current arrangements. He says that he takes such concerns seriously, discusses how to deal with them and then says:

“The parties will need to consider carefully what level of local control is necessary to realise their commitment to limit campaign spending as a whole.”

If we had found a consensus in favour of comprehensive and continuous spending caps, the trigger would not be necessary. However, I suggest to the House—I hope that we can achieve a consensus on this—that the trigger is necessary and appropriate. I do not for the life of me understand quite why it should arouse such controversy, given that everybody accepted that it was there before.

I think that “Ardbrecknish” was the place name in my constituency that the Lord Chancellor was trying to pronounce.

The Lord Chancellor started by referring to the fact that political campaigns had become more national. One of the flaws in the Bill, however, is that it contains absolutely nothing that would prevent a political party from deluging a marginal constituency with literature, telephone calls and newspaper adverts urging people to vote for the party, as long as the candidate’s name was not mentioned.

I have dealt with why we have not been able to move forward with those proposals. The trigger arrangements, which have been a feature of electoral law since 1883 and were repeated in the 1983 legislation, did not totally control spending at the local level before a general election, but they did have a dampening effect. Like me, many hon. Members were candidates before the 2000 Act came into force, and the advice to candidates, which again is recited in the Library note, was that we had to concentrate on expounding on our parties’ policies, not on the merits of candidates, which did dampen expenditure.

Let me deal with the ingenious concept that the Justice Secretary has just introduced—that there was a consensus before 2000 that the old triggering arrangements were wonderful and should be retained. Why, then, was there a consensus in the 2000 Act that they should be abolished? He talks about the amendments that Lord Mackay tabled in the other place, but will he acknowledge that they were explicitly described by Lord Mackay as probing amendments and promptly withdrawn?

I am very happy to provide the right hon. Gentleman with the exact quotations between now and the winding-up speeches, but it was never the purpose of either Lord Neill or the then Home Secretary, who happened to be me, that the provisions in what became the 2000 Act should replace the triggering. Everybody thought that the drafting of what became the 2000 Act would complement and supplement the 1983 Act, except in one or two particulars, and not be an alternative to it, and that is a matter of record.

It is quite extraordinary for the Justice Secretary to suggest that there was a consensus that the rules should stay and that they somehow evaporated into thin air. On the contrary, Lord Bach turned down the proposal in Lord Mackay’s probing amendment by saying that “this new formulation”—that is, what the Government introduced—

“represents a considerable improvement on the existing rather ambiguous provisions of the 1983 Act.”—[Official Report, House of Lords, 22 November 2000; Vol. 619, c. 904.]

It is to those provisions that the Justice Secretary intends to return.

I know that Lord Bach said that, but the basis of what he said is not what the hon. Gentleman says it is. I am very happy for this to be dealt with in greater detail in the winding-up speeches, but everybody believed that what was in the 1983 Act would continue. Lord Neill’s report was quite explicit that what became the 2000 Act should buttress what was in the 1983 Act.

I do not think that the observations made across the Floor have been very helpful. My own memory is quite clear: Lord Mackay withdrew his amendments because he was assured that the trigger would remain in place. It was on that basis that there was all-party consensus. Our noble Friend Lord Bach attempted to reassure Lord Mackay that the trigger would remain, but he was wrong. On the basis of those assurances, Lord Mackay withdrew his amendments. There was absolute consensus on the trigger at that point.

My hon. Friend is entirely correct, and that is what the record shows, too.

Let me turn briefly to the detail of the Bill. Clause 1 clarifies the Electoral Commission’s regulatory role to make it clear that a key part of its role is to take appropriate steps to secure the compliance of parties and others, including by helping parties to comply, especially given that parties rely so much on unpaid volunteers. The clause also enables the commission to publish guidance to assist parties and others in this respect.

Clause 2 and schedule 1 change the commission’s investigatory powers. They repeat, with minor changes, the commission’s current power to require political parties and other regulated entities to disclose information relating to finance and expenditure, and for the first time enable it to compel anyone else to disclose or provide information or an explanation, where that is reasonably required for the purpose of investigating a suspected event or contravention of a requirement in the Act. The scope and proportionality of these powers will be examined in detail in Committee, but it is worth pointing out—this relates to the point raised by my right hon. Friend the Member for Rotherham—that the Bill contains important safeguards on the use of these powers, which go beyond those in the Political Parties, Elections and Referendums Act 2000. They include the provision that the powers of entry require a warrant from a court on evidence of a reasonable belief that a criminal offence has been committed. That is not required under the existing schedule 19. In any event, the existing powers have been used only once since the Electoral Commission was established nearly eight years ago.

I would like to echo what the right hon. Member for Rotherham (Mr. MacShane) said a few minutes ago. There are many of us, in all parts of the House, who believe that the powers are far too strong, and that they will allow people to invade the privacy of homes and political offices. There is not even absolute clarity that House of Commons Officers will be immune from this sort of raid. I hope that the Lord Chancellor will listen carefully when these issues are debated in Committee and in the other place, and that he will be willing to accept amendments in respect of them.

I am certainly willing for these matters to be looked at in great detail, but it is worth pointing out that there are already a large number of such powers in the 2000 Act. One area of the Bill seeks to broaden those powers so that the Electoral Commission can obtain an order against any other person as well as against a political party. However, the use of those powers, whomever they are used against, will have to be made through a court, which is not the case at the moment.

I want to make some progress, if I may.

Up to now, the Electoral Commission has faced a genuine dilemma, given the powers available to it: either reprimand or reference to the police, but nothing in between. Clause 3 and schedule 2 give the Electoral Commission access to a flexible range of civil sanctions that may be imposed in relation to certain offences and contraventions under the 2000 Act. The schedule sets out the range of new civil penalties available to the commission, when the commission is able to apply those sanctions, to whom they apply and what appeal processes are available to an individual or organisation subject to a sanction. Which of the offences in the 2000 Act will attract civil sanctions will be set out in secondary legislation. I want to give a reassurance to my right hon. Friend the Member for Rotherham that when a civil penalty is applied by the Electoral Commission, no criminal prosecution can be instituted. That provision appears in paragraph 4 of schedule 2 to the Bill. In practice, therefore, the provision reduces the scope for criminal reference, rather than increasing it.

Clause 4 provides that each person proposed for appointment as an electoral commissioner must be selected in accordance with a procedure put in place and overseen by the Speaker’s Committee on the Electoral Commission. This makes it clear that responsibility for the oversight of the recruitment and selection process remains with the Speaker’s Committee.

Clause 5 enables the appointment of four commissioners with recent political experience. Clause 6 increases the minimum number of electoral commissioners that may be appointed, and clause 7 reduces the time period for restrictions on past political activity for Electoral Commission staff. We have gone rather further than the Committee on Standards in Public Life proposed, but I think we have done so in a sensible direction.

Clause 8 is designed to increase the transparency of political donations by requiring donors giving above a limit—currently £200 in the Bill—to a political party to declare whether the money is its own. If it has received a sum above the limit

“with a view to, or otherwise in connection with”

the making of the donation, it must declare that to be the case and go on to declare whether it believes that certain sections of the Act apply. Those provisions supplement the existing requirements of the 2000 Act by making it clear that the identities of the true donor, on whose behalf the donation is made, must be given to the recipient of the donation. If a donor declares that those sections of the 2000 Act do not apply, they must explain why.

I am afraid that I am about to conclude.

Making a false declaration about any of those aspects will be a criminal offence.

As I said, I am about to finish.

I should say—I referred to it earlier—that representations have been received from a number of parties that the £200 limit is too low, and we also received wider representations about the impact of clause 8 on those charged with complying with the law. Although I am clear that greater transparency is essential, it should not be achieved at the cost of overburdening political parties and I am ready to consider representations on the detail of our proposals in that area.

I am grateful. Before the right hon. Gentleman finishes, will he explain why the Bill says almost nothing about electoral fraud? Five years ago, the Electoral Commission recommended individual voter registration and it has repeatedly done so. Four years ago, the Government said that they accepted it or were at least sympathetic to the principle, so why has nothing happened in the intervening period?

It is not the case that nothing has happened. Indeed, a great deal of work is going on in respect of the matter. By the same token, if, as we hear, the Conservative party is interested in forming a consensus, we need it not just on individual registration, but—[Interruption.] It is not just about the principle, but about how it will work. We are considering proposals, and, for example, the experience of Northern Ireland, which saw a substantial drop in registration. We need to reflect on that experience and much else besides, including in countries such as Australia, before proceeding.

No, I am about to conclude.

Clause 9 helps to lift and partly remove an unfair burden in the 2000 Act by clarifying that, if a party or treasurer is charged with the offence of accepting an impermissible donation, they will not be guilty if they can show that they took all reasonable steps to verify that the donation was from a permissible donor. That was always the intention underlying the 2000 Act; the Bill makes a technical change to put that point beyond any doubt.

Clause 10 will tackle excessive unregulated candidate spending through provisions that, in effect, return to the principle of the pre-2000 system known as triggering—an issue that we have already discussed. The clause achieves that by amending existing legislation so that, in relation to parliamentary general elections, the limit on the amount of election expenses as defined by the Representation of the People Act 1983 will include all expenses of that type where they are used by a person for the purposes of promoting their election candidate. That alters the current position, which is that the limits do not include election expenses incurred or used prior to the date of the dissolution of Parliament or that person’s formal adoption, nomination or declaration as a candidate. Under the new provisions, it will not matter on which side of dissolution or adoption the expenses are incurred or used, provided that they are incurred or used to promote the candidate’s election.

I understand, accept and acknowledge that there are some concerns about that matter, but the principle of strengthening candidate spending rules, which are clearly not adequate at present, must be right. There was broad understanding in the Hayden Phillips considerations that there had to be strengthening and a more comprehensive set of arrangements in respect of total spending.

I note from the reasoned amendment tabled by the Liberal Democrats that they are now expressing reservations about the trigger. That was not the view of the Liberal Democrats in the House of Lords just a few months ago, however, when the noble Lord Rennard argued:

“Reintroducing the trigger for the start of the period in which election expenses are limited and increasing the categories for expenditure that must be included within limits will help.”—[Official Report, House of Lords, 16 June 2008; Vol. 702, c. 846.]

I am glad to have met the Liberal Democrats’ requirements in June, even if they have changed since then.

Clause 11 extends the Electoral Commission’s existing power to issue codes of practice, and finally, the Bill contains two electoral reforms that I hope will command universal support. Clause 12 allows electors registering to vote on household canvass forms to be added to the electoral roll in the event of an election being held during the canvass period, to prevent the potential disfranchisement of electors in that situation, which can happen. Clause 13 will enable European parliamentary elections to be administered by local authority returning officers on local authority boundaries, which will assist in the effective administration of European parliamentary elections.

I hope that we can agree on broad principles today, while we can work in Committee on what I hope will be agreed positions on practicalities. I repeat my commitment to do my best to reach a consensus, and in that spirit, I commend the Bill to the House.

I beg to move, To leave out from “That” to the end of the Question, and to add instead thereof:

“this House declines to give a Second Reading to the Political Parties and Elections Bill, because it imposes arbitrary and partisan new local spending rules at the end of a Parliament, which are designed to give an unfair advantage to Labour hon. Members in marginal seats in the forthcoming general election, proposes the commencement of vague trigger rules at Royal Assent, before Electoral Commission guidance has been produced, in contravention of the Government Code of Practice on Guidance on Regulation, contains new powers of entry into people’s homes which risk undermining public confidence in giving to political parties, imposes disproportionate additional costs on local constituency associations and voluntary political parties, fails to tackle growing concern over electoral fraud, and lacks a comprehensive package of proposals to restore trust in politics, which would include the introduction of individual voter registration and an across-the-board cap on donations covering individuals, business and the trade unions.”

Democracy requires there to be political parties, and political parties require money. In any democracy that money comes either from the taxpayer or from voluntary donations and subscriptions—or more usually, as is the case in this country, by some combination of the two. We believe that democracy is healthier when the bulk of the parties’ revenues are met from voluntary donations. It is important to recognise that it is as much in the public interest to support democracy by supporting a party financially as it is to support a charity. It is a public-spirited activity.

Perhaps I could get a paragraph or two into the speech before, very happily, giving way to the hon. Gentleman.

It is a matter of the greatest regret that a Bill has been introduced by Labour that every other party seems to oppose. It has long been a tradition, as the Justice Secretary acknowledged, that on such matters every effort should be made to reach agreement between the major parties. It is undesirable that a Government should use their majority to force through a major change that would advantage the governing party against opposing parties without even trying to consult those other parties.

More broadly, the Bill is a wasted opportunity. After months of discussions and negotiations under the patient and resourceful chairmanship of Sir Hayden Phillips, we had the chance to put through serious reforms to party funding that would create a long-term settlement to deal once and for all with the big-donor culture. We do not favour additional state funding for political parties, but we agreed from the outset of those discussions that if all the current concerns were dealt with by means of a comprehensive cap on donations, we would reluctantly go along with additional state funding. As it turned out, despite Tony Blair’s intentions—good intentions, I think—Labour simply refused to agree that donation caps should apply equally to trade union affiliation fees, so the chance to settle these matters once and for all was lost.

I wonder whether it is legitimate for political parties to take money from people who are not resident in the United Kingdom for tax purposes.

It is legitimate for political parties to take money from legitimate donors who are allowed under the law. If the hon. Gentleman wants the definitive word on the matter, I simply remind him of what the Justice Secretary said when he was asked about particular donors to the Labour party during our debate in December. He said that the tax status of individuals is a matter for them.

The right hon. Gentleman is saying that he wants to be a virgin and have sex at the same time—he cannot do that. His noble friend Lord Fowler, a former colleague, said in a book published a couple of months ago that the Conservative party should have gone in the 1990s for complete state funding and put an end to all external financing. If the Conservatives do not do that, they will always end up being tainted by Lord Ashcroft, loans and so on, and if there is a change of Government in the next 10 or 20 years, under proposed new schedule 19 to this Bill they will know all about that.

I bow to the right hon. Gentleman’s superior knowledge in respect of the first part of his intervention. I listened with interest to the rest, but I am afraid I cannot agree with him that the answer is universal state funding. I completely understand the view expressed by my noble Friend Lord Fowler. He, like me, has been chairman of the Conservative party, and is scarred—as we all are—by what has been associated with the big-donor culture. That is why we believe that the answer is not simply to replace everything—to nationalise the whole process, as the right hon. Gentleman seems to suggest.

It may be the vogue for the time being, but it is not a very desirable vogue. The right answer is to apply a comprehensive cap on donations, at such a level that no one will seriously believe that the donor—whether it is a trade union, an individual or a company—can have significant influence on the party involved. [Interruption.] The right hon. Gentleman says casually that a donor can parcel it out. Under the arrangement that we came close to agreeing during the Hayden Phillips discussions, that could not happen. The cap is on the total amount given by a particular donor in a particular year. That deals absolutely with the issue that seems to exercise so many Labour Members, who seem to feel that they are especially vulnerable in their marginal constituencies.

I agree with what the right hon. Gentleman is saying about the state funding of political parties, but in its evidence to the Neill commission the Conservative party said that it was relaxed about trade union funding supporting the Labour party. I feel that the fundamental issue is the Conservative party’s unwillingness to make a distinction between a donation from a trade union and an affiliation fee. The Labour party is a federal party. The trade unions pay affiliation fees, participate in our affairs and help to make our policies. That is very different from what happens in the other parties.

As a former Labour leader used to say, I am glad that the right hon. Gentleman raised that point. We went into it exhaustively during our discussions, and considered very fully whether affiliation fees were to be disaggregated and treated as individual donations, thus necessarily falling below any cap that would be imposed. However, the idea that affiliation fees were in any sense voluntary individual donations was blown out of the water.

We discovered during the discussions that a Liberal Democrat Member of Parliament had been sent a ballot paper for Labour’s deputy leadership election because, completely inadvertently, he or she—we do not know who it was—had become a member of the Labour party by not opting out of the political levy. We also know that some trade unions casually register not just that 100 per cent. of their members are making this “voluntary individual donation”, but, in some cases, that more than 100 per cent. are doing so. Two are paying, I believe, 108 per cent. and 107 per cent respectively. The idea that this is an individual donation or subscription is ridiculous.

I have no objection to trade union funding of the Labour party or, indeed, of any other party. Still less do I have any objection to individual trade union members voluntarily making a subscription to any political party. That is absolutely fine. I entirely understand the historic relationship between the trade unions and the Labour party.

I will finish my point first, if I may, because it is important.

When, during the discussions, we canvassed the possibility of something so simple and basic that most people might think it already existed—a simple box on a trade union membership application form to be ticked by an applicant wishing to opt either in or out of the political levy and thus the affiliation fee; we left aside the question of which it should be—the Labour party representatives were not even willing to discuss that as an option.

As I have said, the idea that this could in any sense be a voluntary donation was blown out of the water. If the right hon. Member for Rotherham (Mr. MacShane) has any influence with his colleagues, as I am sure he has, I ask him to encourage them to revisit the issue; sorting it out would be a major step forward.

I am puzzled by the right hon. Gentleman’s description of the fate of the Hayden Phillips talks. We do not have Hayden Phillips to tell us, but we do have the specialist academic adviser Professor Justin Fisher, who says:

“The desire to jeopardise the entire relationship between Labour and the unions is not reasonable. It appears nakedly partisan”.

Is that not the truth of what happened?

I have absolutely no idea who that academic is; he certainly did not appear at any of the discussions for which I was present. The hon. Gentleman asks what Sir Hayden Phillips’s view is. Well, this Bill will presumably go before a Public Bill Committee, and that Committee can, no doubt, take evidence from Sir Hayden and find out exactly his view.

We actually have rather more on the record. We have the Constitutional Affairs Committee’s deliberations and conclusions on public funding. It reached a consensus, including in a discussion of what might be the role of trade union funding, donations and affiliations. That substantially informed Sir Hayden Phillips’s final report. What has changed in the meantime, after that process of consensus up to the end of the Hayden Phillips report and the eventual discussions? Was there a change of heart on trade union funding, or was there a sudden discovery that the Labour party had a relationship with trade unions that it had sought to change? I would be grateful for enlightenment from the right hon. Gentleman on what happened over that period.

The hon. Gentleman should not underestimate us. We made our position absolutely clear from the outset. In a paper that my hon. Friend the Member for Chichester (Mr. Tyrie) published some two and a half years ago, we put forward the case for a comprehensive donation cap, because we saw—as, indeed, did the former Prime Minister, Tony Blair—donation caps, and not spending caps, as the key to solving the problems of perception. However, we also said from the outset that if there was to be a cap on donations—which we strongly supported and which we have promoted—it had to be comprehensive, and that we could not have a system that was partial. After all, a dam that goes only three quarters of the way across the river is pretty ineffective.

When the relevant report just referred to was written, I was a member of the Constitutional Affairs Committee, along with the hon. Member for Southampton, Test (Dr. Whitehead). The report makes it clear that the reform will work only if it is a package of measures that hangs together. Does my right hon. Friend agree that what is most disappointing about the Bill is that it deals only with a few of the reforms proposed by the Constitutional Affairs Committee, and that the ones that are not proposed seem to be those that are most inconvenient to the Labour party?

My hon. Friend makes absolutely the right point. It is odd that so many of the interventions by Labour Members have focused on what is not in the Bill. I share their disappointment that the Bill is half-baked. It is a hotch-potch Bill. It is spatchcocked together from the lesser parts of the Hayden Phillips report. Some parts come from legislation that was long ago abandoned as unworkable, and some other parts spring apparently from nowhere and so far as we can see are wanted neither by any of the parties nor by the Electoral Commission.

Parts of the Bill are, of course, unexceptionable, and it is important that we deal with them properly. We are content with the proposals for the composition of the Electoral Commission, and I agree totally with the way in which the Justice Secretary set out the case on that. I understand the commission’s concern that it does not want commissioners appointed from the party political world, but I think we all agree that that is a worthwhile step. It is important that the commission’s deliberations in regulating party funding and campaigning, and enforcing that regulation, should be informed by commissioners who have direct, real-world experience of what it is like to raise money and to manage political parties. An advisory committee is very well in its way, but it is no real substitute for having people with direct party experience involved in the decision-making process. Just to be clear, we envisage that nominees in this category would be politicians no longer in the active front line of politics, in order to provide the necessary distance and objectivity, but who were still close enough to be reasonably current with present-day practice.

Likewise, the civil sanctions proposals seem to make sense, providing helpful speed and flexibility to the commission. We shall want to scrutinise them carefully in Committee, but in a positive spirit.

The proposals in clause 12 have merit but, as the shadow Secretary of State for Justice, my hon. Friend the Member for Arundel and South Downs (Nick Herbert), said, we regret that there is still no plan to introduce individual voter registration in Britain, as opposed to Northern Ireland. We believe that that would significantly improve security and limit electoral fraud. The failure to introduce the much tried and tested Northern Ireland system, which has cut fraud in the Province and to which everyone, including the Government, have been committed—there is genuine consensus—allows the possibility of electoral fraud that could readily be avoided. We therefore propose to table in Committee amendments that would give effect to what the Government have already said should be implemented. I hope that they will command consensus throughout the Committee and the House.

On the subject of voter registration, is not another enormous and disappointing absence from the Bill any mention of steps that should be taken to improve voter registration by expatriate Britons living abroad? Some 2.5 million are eligible to vote, yet we have one of the lowest expatriate participation rates of any country in the industrialised world. Why is there not a single mention of the matter in the Bill?

My hon. Friend makes an important point. There is an interesting disjuncture between the lack of any requirement of individual voter registration, except in Northern Ireland, and the process that an expatriate voter has to go through to register. It is extraordinarily difficult and immensely more burdensome than what someone in Northern Ireland has to do under the requirements of individual voter registration. As he rightly points out, the result is that an extremely small proportion of those who are entitled to vote are able, or encouraged, to do so. It would be useful for the Electoral Commission to do more to encourage them. Whether they are expatriate or live in this country, those who are legally entitled to vote should be encouraged to do so.

Clause 2 would extend significantly the Electoral Commission’s investigatory powers. We all agree that the commission must have appropriate powers to enable it to carry out its duties, but there is real concern about the proliferation of search and entry powers. Last year, the Prime Minister himself seemed to share that concern. He pledged last October to curtail powers of entry with what he described as a new “liberty test”. He pledged that any change to entry powers would be accompanied by new guidance on using such powers and on the rights of members of the public to be guarded against abuse. He said:

“I share the concerns about the need for additional protections for the liberties and rights of the citizen. And I believe that one of the strongest guarantees is a clear understanding of what these rights are and that is more difficult with the very existence of hundreds of laws…

But it is not enough to clarify and subject these powers to the liberty test. Any change should be and will be accompanied by guidance on how these powers should be exercised and the rights members of the public have to take action if those expectations are not met. And we should consider whether we need to do more to offer redress for the individual against any disproportionate use of powers by the state.”

That is pretty clear, one might have thought, so it is disappointing that contrary to what he promised no supporting guidance on the use of the powers has been produced. The Bill fails to meet the conditions and tests laid down in that speech.

The right hon. Member for Rotherham raised a further important consideration. Invoking draconian powers of search and entry in respect of any donor, political officer or candidate, or any of the huge number of volunteers trying to do the right thing by engaging in politics for the best of public-spirited reasons, compounds the sense that making donations to political parties is inherently dodgy rather than a public-spirited activity essential to a healthy democracy. It should be noted by the House that the first time that those powers are used to kick down a party donor’s door will be another step away from voluntary support of parties and towards total state funding—that will be a sad day indeed. Thus, the powers must be exhaustively examined in Committee, and we hope that the Government will think again about them.

Clause 8 requires all those donating or lending more than £200—the de minimis level—to a political party to give the party a written declaration about the original source of the funds. Political parties will be required to confirm that they have received such declarations and to take “reasonable steps” to verify them. We, like all parties, are concerned—the Justice Secretary helpfully recognised that it is a proper concern—that that imposes a disproportionate and excessive regulatory burden. Rather than helping parties to broaden their fundraising, a broad desire to which all parties have subscribed, the requirement will put off small donors and discourage voluntarism.

Sections 40, 54 and 61 of the Political Parties, Elections and Referendums Act 2000 already prohibit donors from concealing the source of donations by channelling money through others—the use of proxy donations by Mr. Abrahams was already illegal. Moreover, if a members’ association is used as an agency to channel a donation from a particular donor, that original donor must be declared under the law, as it stands.

Importantly, the Electoral Commission has said:

“we believe that the benefits of these changes will be quite limited, since all they do is place additional procedural requirements on donors and recipients. They will not extend the current restrictions on concealing donations, nor will they add materially to the transparency of party funding as the new declarations will not be sent to the Commission or made public. However, they will impose potentially substantial new regulatory burdens on parties and donors. It is not presently clear whether the benefits of these provisions will be sufficient to justify those new burdens.”

As we know, the Electoral Commission always expresses itself with the utmost delicacy, but it must be clear to all that it is saying that these provisions will mean a minimal benefit but a massive burden.

The right hon. Gentleman rightly suggests that those powers should be strengthened and that unincorporated bodies should make declarations to the Electoral Commission. He stated that a law already covered the requirement for donations of more than £200 by an unincorporated association to be declared, but that is not the Electoral Commission’s view. When asked, its written response to me and others has been that unincorporated bodies do not have to provide such information. That is a huge gap in the law, is it not?

The position is that if the association is used as a cover simply to channel money directly from a donor to a party by providing a cloak of anonymity, that is against the law, as it stands—and rightly so. No one suggests that that situation should be different. I understand the hon. Gentleman’s concern and his wish for all this to be strengthened, but the proposal does not strengthen things. It is a sledgehammer that manages to miss the nut; it does not achieve what the Government want to achieve. All it does is impose a massive extra burden on local parties and central parties. The impact assessment that has been done by the Ministry of Justice—

I just want to finish this point, because I am conscious of the fact that the Front-Bench speeches are taking a lot of time and many others wish to speak.

The impact assessment is inaccurate. The compliance burden on the central party and the registered treasurer will be very substantial, given the number of transactions involved, the number of accounting units of parties involved and the lack of professional staff in most accounting units. Treasurers in local parties are volunteers, and the threat of new regulatory sanctions being available to the Electoral Commission will cause a flight of volunteers from legitimate party activity. We all earnestly say that we want to encourage more political activism and voluntarism so that more people engage with the political process. The Bill will have exactly the reverse effect.

The impact assessment estimates a cost to political parties of such rules in the region of £7,000 to £10,000, but that massively underestimates the volume of donations over £200 and the cost of verification. The language that is redolent of the anti-money laundering provisions, and the high tests, will require far greater resources in the future. The idea that reasonable steps would involve no more than five minutes’ work, as the impact assessment suggests, is manifestly absurd. Five minutes is no more than one telephone call, which would tell the party little and provide no comfort whatever. For a much bigger donation, any party will delve much more deeply under the existing rules. Having been chairman of the Conservative party, I can say that we do that, although it is not clear from the Abrahams case that Labour has always done the same—I suspect that it does now.

The right hon. Gentleman is suggesting that he supports considerable transparency. How would he deal with the Stargate Holdings to Bearwood transactions, which were outside any proper reporting system? Very strong allegations were made in The Sunday Times and the “Dispatches” programme that the Conservative party gained massive sums of money from Lord Ashcroft without any of it being properly recorded.

It is not news to anyone that Bearwood is a company associated with Lord Ashcroft. The trail shows that clearly, and it is not a secret. The money comes from legitimate activities conducted in the United Kingdom, and therefore the donation is legitimate and permissible. I see no evidence to suggest that anything other than that is the case. If the hon. Gentleman believes that that is not the case, I suggest that he take it up with the Electoral Commission.

The activities that have been described are already illegal, and the Electoral Commission has made it crystal clear that the Bill provides no better protection for the public interest in transparency than we have already. All the Bill would be is a massive hammer blow against exactly the sort of voluntarism and wider participation that we all genuinely want to see. I am delighted that the Secretary of State for Justice has accepted the need to go back to the drawing board on that provision.

I now move on to the partisan heart of the Bill. It was a grave disappointment when over the summer the Secretary of State committed, in the White Paper, to the measure in clause 10: the reintroduction of “triggering”, the archaic, confusing and discredited system under which many of us were elected and re-elected—indeed, some of us lost elections, too. It is the system in which election spending limits are triggered when a candidate first does something that is capable of being interpreted as campaigning to be elected to Parliament.

The Secretary of State rightly makes much of the fact that when he took through the Political Parties, Elections and Referendums Bill, he did so on a consensual basis. That is indeed to his credit. In his statement in the summer, he made a brave stab—and he tried to continue it this afternoon—at maintaining that this provision would also be consensual, on the slender ground that the then Conservative spokesman in the other place had tabled some probing amendments on the removal of triggering.

Let me finish this point, as it might help the hon. Gentleman. I know what his majority is, and I know that he has expressed views through the newspapers on many occasions about his great anxiety that his seat is under serious threat from, if I may say so, a most admirable, hard-working and energetic candidate, who I hope will be in his place after the next election.

On the question of whether there is any agreement on the triggering provision, it is worth recalling that in the course of the Hayden Phillips discussions—those who were there at the time can bear this out—the question of the arrangements put through by the Justice Secretary eight or nine years ago came up. There was explicit agreement that they should not be changed. The idea that somehow consensus has mystically emerged on the idea of going back to something that has been so discredited over such a long period seems bizarre.

I thank the right hon. Gentleman and I am flattered that he so anticipated this point that he took the trouble to check up on the size of my majority. Surely my right hon. Friend the Justice Secretary has better reason to believe that there was consensus on the issue, and not only because of the amendment that Lord Mackay of Ardbrecknish moved in the House of Lords. Incidentally, when Lord Bach said to him:

“If he withdraws his amendments, I promise to look at the point that he has raised”,

Lord Mackay replied:

“I am happy to do that”—[Official Report, House of Lords, 24 October 2000; Vol. 618, c. 229.]

That sounds as though the amendment was meant seriously, rather than as a probing amendment. Surely, the main reason for that belief is that Opposition Members in the House of Commons made no attempt in Committee, on Second Reading or on Third Reading to move any amendment to change the nature of triggering.

Sadly, in every way, Lord Mackay is no longer available—he is in another other place, and we miss him very much—and he cannot tell us what was in his mind when he moved the amendments. However, he said at the time that they were probing amendments and we are entitled to take him at his word.

I find it slightly trying that the Government and Government Members are seeking to invoke some apparent consensus from eight years ago to justify reintroducing something now when there was plainly consensus about getting rid of it, as the decision was made without a Division. The situation is very bizarre. Let there be no doubt that there is not consensus on this provision. I have said it many times before, and I will say it again if I need to. There is no consensus, for reasons that I shall expand on after I have given way to the Justice Secretary.

I am listening to the right hon. Gentleman with care. When the 2000 Act was going through, everybody thought that it provided for comprehensive controls on spending at a national and local level, not only within the specific, typically four-week election period but outside that period too. That was one point that was made by the late Lord Mackay. He said that the key, for him, was that a candidate’s election, for funding purposes,

“should start from the first moment that he or she, or anyone on their behalf...takes any action to promote their candidature for an election at which they are subsequently nominated. It could not be simpler.”—[Official Report, House of Lords, 22 November 2000; Vol. 619, c. 903.]

Surely the right hon. Gentleman is not now arguing that in 2000 it was assumed that we would end up where we have ended up, with national campaign expenditure controlled for the 12 months leading up to a general election, while candidate spending, far from being controlled more than it was before 2000, is controlled less and only for the last four weeks of an election.

If the Justice Secretary wants to put forward a proposal that constituency spending by a candidate should be controlled and capped for the 12 months before an election, which would put it on the same basis as the national cap, let him make such a proposal. I would be willing to discuss it. There are considerable problems with the idea, as there are with the fact that the national cap runs for 12 months when, as we know, unlike local elections or devolved elections, there is no certainty about when a general election will take place. However, it is at least a proposal that would have merit and could be discussed.

The Electoral Commission proposed that there should be a four-month period. Such a provision was in the Bill introduced—although not by the Justice Secretary—two years ago, and did not go through, but it was a rational proposal that makes some sense and we would be willing to discuss whether something similar might be a solution to the problem. However, to revert—almost through lack of anything else—to the old discredited regime is a bit pathetic. There are so many reasons for dropping the provision that it is hard to know where to begin.

The provision would reintroduce law already acknowledged to be bad. In the Fiona Jones case back in 1999, the Lord Chief Justice, Lord Bingham, remarked:

“This is a field in which misunderstanding is rife…There is no simple and decisive test to determine whether an expense is or is not an election expense within the meaning of the Act.”

The Committee on Standards in Public Life, in the report to which the Justice Secretary referred, slammed the old rules. In 1998, the committee noted explicitly that

“there is considerable doubt among individual candidates and the political parties about when, for purposes of the Representation of the People Act 1983, a constituency election campaign is deemed to have begun. There is only a limited body of case law bearing on the subject and interpretations of the Act vary considerably from constituency to constituency and from candidate to candidate.”

Those of us who have been around long enough can all remember the absurdities under the old rules. A candidate’s literature could not show a photograph of him or herself alone, but it was okay if they were with someone else. Candidates were allowed to promote themselves only as associated with the policies of their party. Ridiculous and absurd artificiality was involved, with uncertainty and anxiety for candidates throughout the process. It beggars belief that we should be considering reverting to that discredited system as any part of a modern electoral system.

The provision rests fairly and squarely on the balance of power between incumbency and otherwise. Does the right hon. Gentleman share my concern that if it comes into law any Member who has issued an annual report paid for by the communications allowance will find that they have automatically exceeded the limit come the general election?

The hon. Gentleman makes an ingenious point. I shall deal briefly with the communications allowance and its implications a little later on.

It is legitimate to ask whether the lack of certainty under the previous regime can adequately be dealt with by a combination of statute law and clear guidance. Perhaps it can, but it will require much more time, which brings me to the second objection to the provision. The idea that it could be allowed to come into effect at Royal Assent, let alone from today’s date, is both mad and wrong. The Justice Secretary’s original and outrageous suggestion in his statement in the summer was that the measure could be backdated to the date of Second Reading. That is absolutely monstrous. Such premature commencement is in breach of the Government’s code of practice on issuing guidance—their guidance on guidance—which states that guidance should be issued three months before any regulation comes into effect:

“To give organisations time to prepare for regulations, guidance will be issued at least 12 weeks before a regulation comes into effect, with some necessary exceptions, e.g. emergencies.”

In the case of the hon. Member for Battersea (Martin Linton) it may feel like an emergency, but I doubt whether it would quite measure up to one in the national scale of things. The guidance continues:

“Sometimes more than 12 weeks will be needed, for example if a regulation is complex or costly to implement.”

The provision is both complex and costly.

I want to make progress. I am conscious that we are taking up too much time and that many other Members want to speak. I have given way generously throughout my speech.

The Electoral Commission said that it could not issue draft guidance until Royal Assent, and that it would then expect to consult very fully on such guidance before it became final. In the note on the White Paper circulated to the parties, the commission stated:

“It would take some time after Royal Assent to finalise and issue any guidance.”

I hope the Justice Secretary is listening. I am setting out the Electoral Commission’s view about his provision and what would be involved:

“The Commission would have strong reservations about the practicality of enforcing new rules which depended upon such guidance until the date at which the final guidance was available. The Commission also strongly supports the recommendation of the Gould review of the 2007 Scottish elections, that no changes to the rules surrounding elections should be applied to an election held within six months of those changes coming into force.”

It is unseemly haste to bring into effect a discredited system; it is unnecessary and will compound bad law with reckless implementation.

The third objection to the provision is that it is in effect retrospective. Hundreds of parliamentary candidates from all parties are already in place across the country. Perfectly properly and in accordance with the law that the Justice Secretary himself brought in, they have conducted themselves in a way that under the old rules would have triggered their election expenses. If this monstrous provision came into effect they would have to find some absurdly artificial way of “detriggering”, which would involve taking down websites, pulping literature and changing already published material. [Interruption.] The hon. Member for Pendle (Mr. Prentice) is facing an outstanding and energetic Conservative candidate so I can see why he feels sensitive about the matter. It makes my whole point: this is a thoroughly partisan Bill, which it is wrong to introduce in this way. The fact that two Labour Members in marginal seats, with energetic candidates on their tails, object so strongly, makes the case that this Bill is not in the public interest—it is in the Labour party interest.

The important point is that even if agreed clear guidance were in place so that there was no uncertainty, there would still be a massive, hugely effective penalty on candidates who have behaved completely properly in accordance with the law that the Justice Secretary himself brought in. The House should always reject retrospection and for that reason alone I hope the Justice Secretary will withdraw the proposal.

No, I have gone on too long and I want to draw my speech to a close.

The fourth objection is one of simple equity. We in the House have cheerfully voted ourselves huge increases in the amount of taxpayers’ money we can spend on promoting our activities as incumbent MPs. There is a case for and against that, and we believe that the communications allowance is a step too far. None the less, at the same time as we expand the scope for taxpayer-funded publicity for MPs, it cannot be right for the governing party to try to limit what candidates who seek to unseat us can spend from money that they have raised privately. That is outrageous. We might expect it in Mugabe’s Zimbabwe, but in Britain it is simply unacceptable.

In conclusion, we cannot support this curate’s egg of a Bill. It is good to hear the Justice Secretary sounding rather more conciliatory today than he did in the summer, when he seemed more than usually keen to have the sun of his Back Benchers’ favour warming him—it would of course be wrong for us to speculate on why that might have been, but I am sure that there were the best of reasons. We stand ready to work with him and talk with him to find acceptable answers to the problems, as we have been throughout the process.

It is too late to achieve the long-awaited settlement of party funding that Sir Hayden Phillips worked so diligently with us to achieve. There will need to be another attempt to reach the consensus desirable for such an outcome, but it will have to wait for another day and another year. In the meantime, I commend our amendment to the House.

I am grateful for this opportunity to say a few words in the debate. The speech by the right hon. Member for Horsham (Mr. Maude), which was an excellent statement of the Conservative party’s position, clearly reflected the failure of the two main parties to reach some sort of agreement on the main elements of what could have been a comprehensive package. Having listened to the interventions that have been made, I think that it might be possible to cobble together a majority, with Liberal support. It is undoubtedly right that we should have the objective of securing consensus. Indeed, I was one of a handful of Members of Parliament who gave evidence to the Committee on Standards in Public Life inquiry on the Electoral Commission, and that was one of the points that I made then. There is probably no one in the House who disagrees with the proposition that it would have been much better if it had been possible to achieve an overall agreement on the next stage.

I am proud of the Political Parties, Elections and Referendums Act 2000. Okay, there was an omission in relation to commercial loans, but I do not think that that was the result of collusion between the two major parties; people genuinely had not thought the matter through sufficiently. It is quite a remarkable omission, when one thinks of it, but no one from any of the Opposition parties raised the issue at the time, so legislation had to be introduced to deal with it. There is no doubt that we on the Labour Benches are entitled to be proud of the changes that have been made and the transparency that has been introduced. Obviously, my right hon. Friend the Justice Secretary played a major role in that, and the 2000 Act is the centrepiece of those changes.

The Committee on Standards in Public Life produced its report on the Electoral Commission in January 2007. I think that the proposed changes have broad support; that, as I understand it, is the Conservative party’s position, too. It makes sense to appoint some commissioners—obviously a minority—who have some sort of political background, not least for the reason that the right hon. Member for Horsham gave: there is a big distinction between an advisory committee and having people on the commission, where the decisions are taken, who have experience of politics. He seemed to suggest that those commissioners would be politicians or ex-politicians, but I assume that they would be drawn from a wider group than that; they might be people who had stood for Parliament, or for local government, or who had a track record as an election agent, or had been local chairmen of a political party. Someone who had been a fairly senior party organiser might be considered. I have no strong view on that, but I support the principle of incorporating people with some political experience directly in the commission.

The guts of the issue is the question of expenditure by political parties nationally and locally. I strongly support limits and controls. If we do not have them, we will go further and further towards the US system, in which colossal sums of money are involved. It so happens that this time around, perhaps unusually, the candidate one might expect me to support, Obama, will massively outspend the Republican candidate, but that is an aside. We should have effective limits and controls on expenditure; I think that that is accepted across the House. A lot of national expenditure is wasteful; one might consider some of the huge adverts deployed, usually by the major parties, in newspapers and billboards. Some of them—I include my party’s adverts, as well as those of the Conservative party—have done the parties no good whatever in my constituency.

The right hon. Gentleman is absolutely right about billboards and all the nonsense used by the political parties, but I want to mention one aspect of central party funding that causes me concern in constituencies during election periods. Letters are targeted at named constituents. They do not mention a party candidate, but do mention the party platform and leader. They are, in all aspects, a letter in support of the candidate, but do not mention the candidate’s name. That is completely outside the controls on election expenditure in a constituency. Does he agree that that needs to be addressed in the Bill?

Certainly, it would be a positive step to do so, according to the principle from which I argue. I am generally in favour of controls. The hon. Gentleman makes an interesting and significant point that I shall come on to in a second. In essence, in a first-past-the-post electoral system, if there are to be national controls, there must also be local controls. As we know, the reality is that there are certain seats—they might be Liberal-Conservative, or Labour-Conservative—where there is a second-placed candidate who is the clear challenger. Inevitably, any party that is able to organise large sums of money to spend will be tempted to channel that money towards what it deems to be key seats that it has to win if it is to become the biggest party, if not gain an overall majority, in the House of Commons. To come back to the hon. Gentleman’s point, it follows that if we are serious about controls on expenditure, they have to be local, as well as national.

I listened carefully to the point that the right hon. Member for Horsham—the Conservative party spokesman on the subject—made about the trigger. I must confess that I was not that aware of such problems in the past, although I well remember how careful we had to be as candidates. As I understand it, his prime concern really relates to the present situation; he feels that candidates may have incurred expenditure, and that it would be unfair if that expenditure were now deemed electoral expenditure. In a sense, his point is time-limited, in that it applies only to the next general election. It does not rule out the possibility of some sort of agreement.

The right hon. Gentleman is absolutely right. Going back to a system of triggering might not be the right long-term solution, but at least we could have a sensible conversation about it. What would be outrageous is to reintroduce that system in the manner proposed, and to change the rules, in the middle of the game. It is one thing to make the rules more permissive in the middle of the game, but very much another, from the point of view of equity, to reverse the process when candidates are already in play.

I am grateful to the right hon. Gentleman for confirming that point. Certainly, whatever the mechanism, there have to be effective controls on expenditure at constituency level. That should not exclude direct mailing of the type described by the hon. Member for Somerton and Frome (Mr. Heath).

I have mentioned the commission and expenditure; my third point is about trade unions. I was interested in the right hon. Member for Horsham’s reaction to my intervention. I believe—people might say, “You would, wouldn’t you?”—that my position in relation to the trade unions’ role in the Labour party pretty well reflects the historical relationship between the trade unions and the Labour party. I am supportive of it. The trade unions are now heavily regulated by legislation. Of course, we are talking about affiliated trade unions, which have to have regular ballots to affiliate. I have had views, in the past, on the position of non-affiliated trade unions, which are an important source of workers, and indeed one might consider trying to organise some money—I am particularly thinking of my party—voluntarily through those trade unions. On the affiliates, however, one has to accept that the Labour party is, in a sense, a federal party.

Can my right hon. Friend cite another example, from anywhere in the world, of an organisation that has to have recurrent, full postal ballots of its members in order to donate to a political party? Is there another example of such so-called democracy anywhere else in the world?

The straight answer is that I am not quite sure, but I certainly agree with my hon. Friend’s general point, which is that we are talking about a highly regulated, transparent framework. If I was looking for an example, I would look to Australia, but I do not know enough about the situation there, although obviously the trade unions are involved with the Labour party there; no doubt they learned that from us. The point that I want to make is that although there are other affiliated organisations, such as the Co-operative party and the Socialist Environment and Resources Association, the main organisations affiliated to the Labour party are the trade unions. They are the large ones, the ones that have played a major role in the creation of the Labour party. I am very happy with that and I support it. It is fully democratic. You have to be a Labour party member of a trade union, obviously, to participate in our annual conferences. The examples that the right hon. Member for Horsham gave were errors. If it is true that a Liberal MP had some sort of communication sent to him because he was thought to be a member of the Labour party, that must have been an error.

Yes, I am the Liberal Democrat MP who got the ballot paper for the deputy leadership elections of the Labour party. The House will notice that it is not completed. To be fair to the Labour party, there is a box on it which requires one to state that one agrees with the Labour party before one sends the ballot paper in. That recognises that many people receiving it were not aware that they were affiliated to the Labour party, and I was one of them.

If you do not know enough about your trade union to know that it is affiliated to the Labour party, that is your problem, not the trade union’s problem. It is a remarkable reflection on your interest in these matters. I will give way again if the hon. Gentleman—I hope I do not misunderstand him—was not aware of the position of his own trade union.

Order. May I make it clear to the right hon. Gentleman that whoever is involved in this matter, it is not me, as the term that he was using suggested?

I was indeed aware that the Musicians Union was affiliated to the Labour party. However, I was not aware that that included me as an individual. That is an important point, which the right hon. Member for Edinburgh, East (Dr. Strang) should recognise.

I am grateful, Mr. Deputy Speaker, for your guidance.

The hon. Member for Birmingham, Yardley (John Hemming) makes a valid point. I shall pick up another point, to be as fair and transparent as we can on these matters. The right hon. Member for Horsham referred to a greater number of union members being affiliated than were levy payers in the union. That did occur in the past. There is probably a substantial consensus in the trade union movement that unions should not affiliate to the Labour party on the basis of more members than they have.

They do. I have just explained that there must be a ballot on affiliation, and of course every individual contribution is voluntary. People can easily contract out. I think the right hon. Member for Horsham was referring to the situation where some trade union members, through lethargy or a lack of knowledge, have not contracted out. Okay, that may occur.

The right hon. Gentleman said that it was a voluntary decision of each individual member to donate an affiliation fee. Can he say whether he believes that all 55 per cent. of trade union members who are affiliated, whom opinion polls have shown do not even support the Labour party but vote for other parties, are none the less dedicated as individuals to making sure that they make a donation every year to the Labour party?

The legislation is clear, as the hon. Gentleman says. There is a political levy. Members opt to pay the political levy and if their union is affiliated to the Labour party, one can be pretty sure that some of that money will go to support the Labour party’s return in the elections.

As the right hon. Gentleman knows, this is a matter that we discussed in the Hayden Phillips group. To his credit, the Lord Chancellor accepted the fact that there were anomalies whereby, as described, some unions, as an abuse—I can only think it is an abuse—affiliate more members than pay the political subscription, or pass over more money than they receive in affiliation fees. Given that that is the case, should the Bill not include restrictions on that, which is quite separate from any imagined abuses on the part of the Conservative party, which is its fig leaf for withdrawing from the all-party talks?

The hon. Gentleman can make that point and argue it. What we are discussing is an issue relating to the internal organisation of the Labour party. It is perfectly valid for Opposition Members to say that it has been a weakness in the Labour party’s relationship with the trade unions.

To pick up a point made by the right hon. Member for Horsham, when it comes to making a distinction between donations and affiliation fees, yes, as he rightly pointed out, one way of achieving that would be to treat affiliation fees as a sum made up of those individual donations. That is one way of doing it, but not the only way. It may be a clever and convenient way of resolving the difference between a donation and an affiliation fee, but for any long-standing trade union activist and member of the Labour party, those are different things. An affiliation fee is an annual payment by the trade union to the Labour party, based on the voluntary political levy. To effect that, the union must hold a ballot every so often. The other is a donation, which might come from a business, an individual or a trade union. That is how many of us in the Labour party see it.

I rather agree with the right hon. Gentleman. That is the way it works—affiliation fees are not in any realistic sense individual voluntary donations. The decision that is taken by the leadership of a trade union to give the money as a block to the Labour party, or to other parties, if the leadership chose to do so, should therefore be treated as a single donation. Our point is exactly that. If there is to be a comprehensive cap on donations, it should apply across the board. It should apply to businesses, trade unions and individuals in the same way. But if the intention is that affiliation fees should escape that, they must become what they manifestly are not at present—genuinely individual and voluntary donations.

That is the right hon. Gentleman’s view. He is jumping from the collective overall sum to the individual. I agree with him that there is a distinction between an affiliation fee and a donation. There is no way that we in the Labour party can be expected to treat an affiliation fee as a donation. It is not just about individuals; it is about policy. As a result of paying that money as an affiliation fee, the trade unions help us to develop our policy. I am happy and proud of that. The trade unions organise workers who create the wealth of this country. I am proud of the role played by the working class of this country, if I may use that phrase, and by the trade unions along with them.

I draw the right hon. Gentleman’s attention to the fact that the New Democratic party in Canada had a similar relationship with the trade union movement and was concerned that when a ban on donations was introduced in Canada, that link would be damaged or even broken. We took evidence about that when we were in Canada. What the party found was that it was able to persuade a very significant proportion of its members individually to join the NDP and found other ways of ensuring that they were granted opportunities to maintain and improve their relationship. The NDP was very content with the outcome.

The right hon. Gentleman will understand if I do not respond to his contribution and enter into a discussion about the NDP, as many hon. Members wish to participate in the debate.

The issue is fundamental for the Labour party and is one of the reasons we do not have before us the comprehensive legislation that the Liberal party would like. It may be that no change can be made until after the next general election.

In conclusion, these are important matters. If we believe in democracy, as we all do in the House of Commons, we need money to fund our election campaigns locally and nationally. I hope that in the course of the Bill’s passage, there will be movement towards some sort of understanding. Given where we got to in the discussions and the impasse that was reached, it was certainly worth while introducing a Bill, albeit not as major as might originally have been anticipated.

I have been rather disturbed by how inward-looking this debate has been so far. We appear to be talking among ourselves and completely ignoring the view that people outside have of democratic politics, which we create by our actions and through this sort of debate. Outside the House, there is a crisis of confidence in our democracy, and it is just as profound as the crisis of confidence in the financial markets. Both issues are ultimately about trust—about whether one party trusts what another sells it in the market, or whether individual voters and electors trust anything that politicians say about their motives and what they really think.

One of those crises would be bad enough, but the combination of the two—the crisis of confidence in democracy and the economic crisis—gives me a sense of foreboding, and we should take the issue more seriously than we have so far in this debate. We need to act as decisively to restore confidence in our democracy as we have to restore confidence in our banks. If we do not, we will open the door to a situation in which populist extremists can exploit the economic situation while declaring that conventional, democratic politics has failed. That is what happened in the 1930s, and we must do everything we can to ensure that it does not happen again.

The problem with party funding scandals is their cumulative effect on how people see politics. In a way, the details are not important. As we have seen here tonight, there is a tendency for a kind of card game to be played in how we debate things: one party plays Michael Brown, another plays Lord Ashcroft; one plays the Midlands Industrial Council, another plays the trade union card. We could talk about the £1 million donors to the Labour party, Bernie Ecclestone or David Abrahams, but none of them is the real point. The short-term advantages to any of us of having an opportunity to pin something discreditable on a political opponent are massively outweighed by the damage done to democracy itself by a constant message that politics is not about values and ideas but about buying power and access, and that politics has nothing to offer except to rich donors or powerful interest groups.

All that is entirely exacerbated by the rise of nationally funded and nationally controlled modern campaigning techniques: the direct mail, the phone banks, the mass texting, the e-mailing, the push polling and so on. All that gives people outside this place the impression that politics is now a matter of mass manipulation, not of mass participation.

I am interested in what the hon. Gentleman is saying, but may I put to him a point that a number of hon. Members have made? If we turn large numbers of local volunteers into unintentional law breakers, that will exacerbate mistrust in our political arrangements, not enhance it.

I have a great deal of sympathy with that point. Although it is important to get big money out of politics and protect the political process from the economy and from money, we should not go down the route of treating politics merely as an activity of the state. It is an activity of everybody. To that extent, I agree with the right hon. Member for Horsham (Mr. Maude). The voluntary aspect of politics is immensely important; it is part of our democratic tradition.

However, we have to do something about the rising cynicism about politics in our country, and the Bill is inadequate for the task. There are some useful reforms. I shall not go through all the aspects of the Bill that I happen to agree with. I think that it is a good idea for there to be better regulation of donations by unincorporated bodies. However, we need not tinkering, but comprehensive reform. This is the time not for tactics, but for a clear, statesman-like strategy for rescuing the reputation of the political system.

One can see precisely such a strategy, at least in outline, in the Constitutional Affairs Committee report and the Hayden Phillips proposals for a draft agreement. Those reports do not go far enough for me in many ways, but they propose big enough steps in the right direction—steps that imply sacrifices by all parties which would give people confidence that the proposals are serious and provide a chance for starting the process of rebuilding public confidence.

I want to mention three aspects of a possible strategy and way forward in what the Constitutional Affairs Committee and Hayden Phillips proposed; that is all that I want to do tonight. First, they proposed a £50,000 cap on donations. That was far too high for me personally and other people, but it was a start. As the right hon. Member for Horsham said, we have to prevent any real or apparent possibility of buying policies, elections or access. We all know that upward flickers for any party in the opinion polls suddenly result in the arrival of new and surprising friends, just as lottery winners suddenly find themselves popular. We all know what that is about. There are also dangers in large donations from more principled sources—those who give in support of a particular point of view. All parties are coalitions that have internal debates, and money should not play any real or apparent role in policy formation within parties.

There is also the question of the so-called arms race. I do not want to enter the debate about whether total spending by all the parties is rising or not, although it seems a bit odd to try to calculate total party spending by missing out the Ashcroft money or completely ignoring the spending of my own party. However, the real problem with the arms race is that each party is obsessed not with its total spending, but with the gap between its spending and that of the other parties; parties are always trying to catch up with or stay ahead of other parties’ spending. That is one reason why they become so obsessed with large donations for centralised national campaigning. It is easier to raise a large amount from a few big cheques than from lots of small donors. That is one reason why the influence of large donors is seen as having risen.

On the subject of small donors and in reference to the point made by the hon. Member for Cannock Chase (Dr. Wright), I should say that I was glad that the Lord Chancellor said that he was willing to think again about clause 8. It seems wrong to impose bureaucratically on small donations while doing nothing at all to cap large ones. The priorities seem entirely wrong.

Does my hon. Friend want to reiterate the value of promoting small donations from very large numbers of people? I am sure that he does, because he has been involved in it. Such donations are now a significant part of the financing of parties in the United States, and that is welcome. Some of the ideas put forward by the Constitutional Affairs Committee, including a tax advantage for political donations and a scheme to assist non-taxpayers, should be promoted as part of the package. In that way, large numbers of people will see supporting political parties as worth while, and not the preserve of a few.

Yes, indeed. As my right hon. Friend knows, I am a late and reluctant convert to the idea of any sort of state funding of political parties, but if there is to be any, it needs to be of that nature. It must be based on matching the small contributions of a great number of people, not handing over dollops of taxpayers’ money unrelated to the popularity of the party concerned.

The second main proposal by the Constitutional Affairs Committee and Hayden Phillips was for a global limit on campaign spending that would apply all year round, every year, throughout the electoral cycle, not only at election times. Campaigning is now a permanent feature of political life—it happens all the time. There is no close season any more, and money matters throughout the cycle. One of the things that we learned during the Committee’s visits was that, if there are limits that apply only to particular times or localities, that is an open invitation to create mechanisms for evasion. There must be a global limit—even if there are other limits within it—that applies all the time to all sorts of spending.

That is crucial to control party spending, not just candidate spending. Many Labour Members are concerned about the Ashcroft problem of targeted campaigning outside elections. As the Lord Chancellor said, that is currently not regulated even when the candidate is mentioned. However, that is not the essence of the Ashcroft problem—the essence is out-of-election targeted campaigning. That is why, whatever the Government’s intention—the right hon. Member for Horsham says that it is a partisan intention; no doubt the Government will deny that—bringing back the trigger will not work. It will not control the Ashcroft spending, because that is party spending, not candidate spending. As my hon. Friend the Member for Argyll and Bute (Mr. Reid) said, the only constraint that the trigger will produce is that the people spending that money will have to avoid mentioning the candidate’s name; they will be able to do absolutely everything else. Only by controlling party spending on a national basis can we get anywhere near controlling that sort of spending.

The hon. Gentleman will find on closer reading of the 2000 Act that national spending is defined as anything that is not chargeable as candidate spending. Therefore, if candidate spending is limited, party spending that is not candidate spending will fall below the national £20 million limit.

It does not actually say that, and that is the problem. Local spending is not covered by national spending. That loophole needs to be closed. It is right for the Government to say that it needs to be closed by new legislation, but simply extending the restrictions on candidates does not work. We have to extend the restrictions on party spending to include that spending as well.

I think that the hon. Gentleman will find that he is wrong, but if he is right would not that be an argument for tabling an amendment in Committee? It is extraordinary that we have not heard from him one word criticising any specific proposal in the Bill, yet he proposes to vote against it. Why is that?

Simply because it is an appalling wasted opportunity to do something very important that we need to do now. The hon. Gentleman does not seem to take the problem seriously. He should stop playing the internal game and listen to what is going on outside this House. The Bill is an opportunity for the Government to put on record that they think that the situation is in crisis. They have not done so, and that is why we should not support it.

Before I leave the trigger, I want to emphasise a point made by the right hon. Member for Horsham and urge the Government to come forward with an explanation. Why is the trigger retrospective? Under clause 10(5), expenditure is not retrospective, so one cannot count expenditure before the Bill is passed as part of election expenses. However, it does not say the same thing about who counts as a candidate, with the extraordinary effect that things that Members might already have done, including what we have put into our communications allowance-funded literature, will turn out to be events that have triggered the start of our election expenses. In other words, as soon as the Bill becomes law, our election expenses start. The Bill does not rule that out, so I would like the Government to explain why we should not interpret it in that way.

If the hon. Gentleman looks at the cases that have come before the Standards and Privileges Committee in this regard, he will see that there are careful limits on what may be said in literature that goes out under the communications allowance. In a number of instances, hon. Members who have breached the agreed definitions of what is party political content have been referred to the Committee and reported to the House for breaches of those arrangements, and action has been taken. The definition therefore relates to something that would not fall foul of an amended trigger mechanism in the way that he describes. Does he accept that that is objectively the case as regards such literature?

There are two possibilities. First, someone might breach the rules and trigger their candidacy in that way. Secondly, the two sets of rules may not fit together. Since there has been no attempt to ensure that they do fit together, I would not be entirely confident of what the hon. Gentleman says. It is an issue for the Government to sort out. The fundamental point is that things that we might have done—for example, putting out press releases, whether or not using the communications allowance—might trigger our own candidacies. The clock starts ticking against us as soon as the Bill goes through.

I have here a copy of a newspaper dated 14 October in which Chuka Umunna is described as the

“Labour Party parliamentary candidate for Streatham”.

What will the Labour party say to him if the Bill becomes law?

There is a problem as regards whether that person will now be a candidate following Royal Assent. If that is not what the Government intend, they must say so.

We need a global capping of expenditure, because that is the only sort of cap on expenditure that has a chance of working. I am puzzled by the position of the Conservatives. Democracy and the market are different things; in the market, it is £1, one vote; in a democracy, it is one person, one vote. The right hon. Member for Horsham talks as if the two things should be confused, but if we do that, we end up undermining the basic equality that lies at the heart of democracy. The Conservative amendment does not mention, as ours does, a global cap on expenditure. I would be interested to know whether the Conservatives have abandoned that aspect of the Hayden Phillips compromise. As the hon. Member for Rugby and Kenilworth (Jeremy Wright), who is sadly not in his place, said, the Committee and Hayden Phillips proposed a package deal, and that package includes the global expenditure limit that the Conservatives should not renege from—I hope that they have not done so.

I can help the hon. Gentleman with that. Spending caps were not within Sir Hayden Phillips’s terms of reference, which were explicitly about limiting donations. In a spirit of wanting to be as helpful as possible and to build a consensus, we were willing to agree to a global cap on spending, if it was necessary to achieve an overall long-term sustainable package. However, I repeat that we do not consider the level of spending to be the problem. Indeed, Dr. Pinto-Duschinsky’s recent research makes it clear that much of the methodology used to show that there is some kind of arms race is flawed.

That is one of the reasons why I mentioned the rather odd nature of Dr. Pinto-Duschinsky’s own methodology, which missed out my party’s entire spending and, because of the years that he chose, most of the Ashcroft money. Nevertheless, I am still confused about whether the Conservative party does not think that total spending is a big problem but is willing to go along with a cap, or whether the right hon. Gentleman does not think that there ought to be a cap at all.

I thought that I had made the position very clear. We do not think that that is the problem, and neither do we think that just having a cap on spending will solve the big donor culture, because by definition only a donation cap will solve that problem. However, if it is necessary to have an overall spending cap that is not overly bureaucratic and burdensome, particularly for volunteers, we would, in an irenic spirit, go along with it. I am not going to pretend that we are enthusiastic about that—we are not—but we want to get it done on an agreed basis that is sustainable for the long term.

I thank the right hon. Gentleman for that. At least it was some progress.

The third and final thing that the Constitutional Affairs Committee and Hayden Phillips dealt with was the vexed issue of the relationship between the Labour party and the unions. Both the Committee and Hayden Phillips were clear that there should be a compromise that would take us from where we are now, so that the Labour party cannot just stay where it is, but not be a threat to the fundamental link between the Labour party and the unions. It would be quite inappropriate to try to destroy another political party’s historical method of operation by changing party funding law. There should therefore be a compromise—the Boston compromise, for those members of the Committee who were there.

It is important to distinguish between donations by the unions as organisations, which should be subject to the same donation cap as anything else, and contributions by individual members to the Labour party made via the political levy. From the point of view of the law, the best way to see the issue—the Labour party can see it differently if it wants to—is that the union is, to use an American phrase, bundling the small contributions of individuals. Each contribution does not violate the cap. They might in total violate the cap, but such contributions are treated not as a single donation, but as the bundling of individual donations.

However, if that distinction is to be made and if the unions are to be treated as bundlers in respect of at least some of the money that they give—indeed, perhaps the vast bulk of it—there must be some extra regulation, so that regulators can tell whether a payment is a donation by the organisation or is bundled individual contributions. There must be the possibility of a clear audit trail from the individual contribution through to the party. It must be clear that the money was in fact a contribution to the party via the union, not something else.

I appreciate that the unions split from the Liberal party in 1906, which is some time back, but the 1984 law, as amended, is quite precise about the audit trail. Indeed, there is a bureaucracy, paid for by the taxpayer, to oversee it. The certification officer is backed by statute. The position in this country is unique, in that the law dictates how political involvement should take place, thereby creating that precise audit trail.

I think that the hon. Gentleman is talking about the political fund, which I should remind him was created by a Liberal Government, in the Trade Union Act 1913, not the Trade Union Act 1984. I am talking about the audit trail back to the individual contribution, where I believe there is a problem.

I agree with the right hon. Member for Horsham that there are serious difficulties with how things work now. We have already heard from my hon. Friend the Member for Birmingham, Yardley (John Hemming) about his situation. I have here an application form to become a member of Unite that was sent to a member of my family. Nowhere in the application form is the political levy mentioned. We have in law an opting-out system, so there should at least be something in the application form that people can tick to say that they wish to opt out. However, that does not exist in this form. As far as I know, Unite is an affiliated union and has a political fund, according to the 1913 and 1984 Acts. Nevertheless, only someone who is very well informed about that sort of thing—perhaps a student of 1980s labour law or a student of Professor Keith Ewing—will know about the opportunities to opt out, unless they are set out in the form.

The hon. Gentleman is on to a very important point, which was at the heart of why we failed to reach an agreement. The Labour representatives— the Justice Secretary and Peter Watt, who was then general secretary of the Labour party—would not contemplate a requirement for even an opt-out box to be on the application form. Will the hon. Gentleman confirm the other astonishing fact that emerged during our discussions, which is that even if someone manages to go the extra 10 miles and discover how to opt out, most unions will not let them pay any less money?

That is sometimes the case, but not with Unite, on which I do not want to cast any aspersions. If someone persuades Unite that they do not want to pay the political levy, it will let them off 20p a week.

The point is that it is not unreasonable to ask the Labour party and the unions to be more transparent about what happens, in exchange for the unions being treated as bundlers—that is, as bundling together individual contributions—and not as making organisational donations, when they hand over what the Labour party is, quite reasonably within its own terms, entitled to treat as an affiliation.

One important point is the fundamentally democratic nature of trade unions. Unions decide their policies at their annual or bi-annual conferences. The leadership is then duty-bound to implement those policies and to argue for them in the Labour party and the wider community. At the end of the day, those leaders are elected. Indeed, thanks to previous legislation they must be elected; it used to be possible to be a general secretary for life. One therefore has to give some leeway to organisations to elect their leadership and to allow that leadership to make the case.

But there is an important distinction between the organisation deciding through its democratic processes to make a donation from the political fund to a political party and individual contributions being channelled through the political fund to a political party. The first is a donation; the second is bundling. The first, which the right hon. Gentleman mentioned, should be treated as a donation subject to the cap. However, if the unions want to be treated as bundling together individual contributions, which they should be allowed to do, they need to be more transparent about what they do.

That seems a perfectly adequate deal, and one that is far more favourable to the unions than the Canadian one, which the New Democrats have found not to be all that much of a problem. In fact, the New Democrats’ performance in the recent election was rather more impressive than our equivalent party’s performance.

I do not want to go into the detail of the Bill; I just want to say that the three proposals, from the Committee and from Sir Hayden Phillips, form the core of a workable compromise that would start to restore public confidence in the political system. The question with which we started the debate still remains: why does the Bill not incorporate those proposals? The Government say that there is no consensus on them, and that is true. They say that the Conservatives pulled out of the talks in disputed circumstances. Yes; so it is true that there is no consensus. It is also true, however, that the biggest gainer if nothing happened would be the Conservative party, although that might not remain the case after what has been happening in the City. Nevertheless, on the whole, that is where we are.

Even if that is all true, however, it still does not explain why the Government have effectively given the Conservative party a veto over major reform of party funding. The question that I asked the Lord Chancellor in an earlier intervention remains: why do the Government not propose Sir Hayden Phillips’s framework, which has public opinion behind it, even if the parties are not there—it is public opinion, and what is going on outside, rather than inside, the House that matters—and then challenge the rest of us to explain why we do not support it? That would be an act of statesmanship. Instead, we have this petty, inadequate pusillanimous Bill. I ask the House to reject it.

It seems to me that the Bill is about better regulation. We are looking at whether the Electoral Commission has been an effective regulator, and the consensus in the speeches that we have heard so far is that it could do better. I share that view. If we look at the principles of good regulation—proportionality, accountability, consistency, transparency and targeting—we see that some of the measures in the Bill will help in that regard. For example, the present burdens on voluntary treasurers in local political parties are such that I would never volunteer to be one. I bless the guy who is the treasurer of Slough Labour party, and I hope that he lives for ever, because if he does not, I do not know where we would find another.

I also fear that our regulation of donations has not been sufficiently proportionate. It has placed a very heavy burden on volunteers, and some of the proposals in the Bill—perhaps with some amendment—could ease some of those burdens and make them more proportionate. Some of the powers that make some of my hon. Friends anxious—my right hon. Friend the Member for Rotherham (Mr. MacShane) was one—are the ones that we expect of most regulators. They include the powers to investigate and to call for documents, and they are held by regulatory bodies from the General Medical Council and the Charity Commission to the Financial Services Authority. I do not think that we should fear them. However, most of those bodies have a duty to keep their investigations confidential in the early stages, and not to go running to journalists to say that they are investigating this or that politician. One weakness in the Bill is that such a duty will not be placed on the Electoral Commission, even though that is one of its present failures.

Another of the Electoral Commission’s present failures is the fact that it knows nothing of that which it regulates. That will be helped substantially by the proposal to add some commissioners with recent electoral experience. I am depressed by the commission’s lack of a sense of inquiry into the electoral process. In a way, it has followed an agenda that was, I am afraid, invented by journalists, rather than one that is determined by what is happening on the ground during elections. I am very concerned about what happens on the ground during elections.

I am also very concerned that, in some constituencies, the process of electoral registration is not picking up the people who should vote. The number of people in inner-city constituencies, for example, who are eligible and registered to vote is substantially lower than the number of people who are entitled to vote. Even in the small town that I represent, which is very diverse, I have seen people turning up at the ballot box wanting to vote but being unable to do so because they find, to their horror, that they are not on the electoral register. They did not know that they needed to fill in a form, or whatever.

I am depressed by the fact that the Electoral Commission has done so little to increase electoral registration. I was not really surprised that the Conservatives were concerned about registering people overseas and about individual voter registration. I believe that there are circumstances in which we should consider individual voter registration. I represent a town in which there has been substantial, sustained electoral fraud. Eight members of the Conservative party will shortly face criminal charges at Reading Crown court for roll-stuffing—that is, registering people who do not exist. Some 200 people who did not exist were registered in one ward in Slough. We discovered this, and our Labour party volunteers put huge human resources into collecting the evidence that was eventually presented in an electoral court to show that the person who had overthrown, by 120 votes, the first ever black woman mayor in Britain—she had been a long-serving councillor—had got there by cheating. A by-election followed, and Labour won the seat back.

In places where there is evidence of such corruption, there might be a case for individual voter registration. I would not support its introduction universally at the moment, because when it was introduced in Northern Ireland the number of people registered to vote went down by 10 per cent. That is not a tolerable consequence.

The question that the hon. Lady must ask is whether the 10 per cent. of people who were lost from that list were real people or fictional people.

As someone who has spent a lot of energy finding out about fictional people in one ward in Slough, I believe that, even where corruption has existed for a substantial period of time, it is beyond the bounds of possibility that any party could generate a quota of 10 per cent. of fraudulent registrations. I have seen how hard it was for the people who did this in Slough.

The hon. Lady is making a powerful case for individual voter registration, which we support. Even though the numbers in Northern Ireland fell, I am pleased to say that, after a period of time and now that the register has been cleared up, the numbers are increasing again. In other words, once the security is in place, there is a basis for growth.

The hon. Gentleman makes it quite clear—in contrast to what the hon. Member for New Forest, East (Dr. Lewis) said—that the fall in numbers in Northern Ireland involved real people who had not been registered, and that they are now coming back on to the register after efforts have been made as a consequence of the fall to register them. That is why I do not think that it would be a proportionate or targeted response to demand individual voter registration. But I do back individual voter registration in Slough, because I do not trust the Conservatives in Slough not to have done the same thing in other wards where we have not put in the same efforts.

I also believe that, in areas where there is evidence of the abuse of postal voting—there are some such constituencies—we should take powers in the Bill to tackle that abuse. It is among the most serious abuses of the electoral system. William Hogarth got it right in the 18th century. We need to regulate the real abuses. We have become obsessed with the details of individual donations, but we should be obsessed with the right of the voter to have their views counted, and with whether the democratic process is able to work. We do that by preventing the dead, the non-existent and the invented from voting—very visibly illustrated by Hogarth’s skeletons voting, although in Slough it was non-existent people in central ward—and by preventing abuse of the postal vote system, which is easier to abuse than the vote-in-person system. We also do it by preventing personation—another subject that the Electoral Commission has put no effort into dealing with, although we know that it occurs in some places.

I am concerned that we have a weak regulator that runs to the media rather than tackling the abuse of democracy. I believe that that is what we face. Although there may not be a united view across the Chamber and although there may be individuals in many parties who have abused the system, as members of the Conservative party did in Slough, I do not believe that any of the parties wish that to be the case. I believe that the political parties are united in wanting democracy to prevail and real people to have real votes that should really count. I believe that they want a system of regulation—a system that is proportionate and targeted—that can guarantee that.

That is one of the reasons why I am making a bid to sit on the Public Bill Committee in order to be able to do something about it. What I am saying is that some aspects of the Bill strengthen the Electoral Commission, which could make it face up to its real job. I believe that, ever since it has existed, it has failed to do that job, so changing that is the first step towards dealing with some of these issues. I believe that the Electoral Commission is a weak regulator; it has been a self-indulgent regulator, doing the easy stuff and avoiding the hard stuff. Unless we turn it into a stronger, more effective regulator, nothing we agree about—whether it be how donations should be counted, how we should behave in the pre-election period or when election expenses should be triggered—will make any difference. A difference will be made only if we get a regulator that can do its job.

I am sure that the hon. Lady’s words will be heard by the Peterborough Labour party, particularly three of its members. One, a former councillor for central ward and former Mayor of Peterborough, went to prison. It is not necessarily inappropriate to trade different experiences. I find myself agreeing in my many respects with the hon. Lady, but she is being slightly unfair on the Electoral Commission, which has consistently argued over the past few years for individual voter registration. More importantly, it has also argued for a review of the Representation of the People Act 1983, particularly with respect to gaining the ability to challenge those people who might be guilty of personation. The hon. Lady’s Government have done nothing about that.

The hon. Gentleman, to be straightforward, did not listen to what I said. I expect that Eshaq Khan might visit the former Mayor of Peterborough in jail—with our present jail overcrowding, they might even share cells. However, I said that I did not believe that any party in this Chamber wanted that to occur within their own party. I actually believe in political parties. If the hon. Gentleman or any other Member wants to know what legislation I would introduce, they should read a pamphlet that I wrote some 18 months ago entitled “Parties for the Public Good”, in which I set out my proposals. They are not reflected in the Bill—quite usual with my record in the Labour party! Nevertheless, public opinion on political parties was dealt with in my pamphlet. When asked which two or three organisations or groups had the most impact on meeting the long-term needs of people in this country, political parties came as high as third after the Government and public services such as the NHS. In other words, political parties beat charities, trade unions, local councils and all sorts of other organisations as bodies in which people had faith in order to deliver for the future.

I also have faith in political parties, but the Electoral Commission clings to the standpoint of believing that political parties are rogues, which feeds an anti-party attitude. It would be better if the commission properly did its job, which is fundamentally to ensure that elections and democracy work. It should look into where the big abuses of democracy and elections lie and assess whether we are tackling them. I do not believe that the Electoral Commission is doing that. It has made demands about what others should do without itself taking action that it is in its power to take. I hope that the Bill will begin to encourage it to do what it should do.

The Electoral Commission was created to be independent, but it has to be answerable to someone for pay and rations, as it were, and the body to whom it is responsible is the Speaker’s Committee on the Electoral Commission, on which I sit. I am the Chairman of the informal sub-Committee of the Speaker’s Committee and I answer to the House on behalf of that Committee. I am Mr. Speaker’s nominated deputy as Chairman of that Committee. I thus thought it appropriate to make some comments on the Bill before us.

The Speaker’s Committee on the Electoral Commission supports the principle of the recommendations in the 11th report of the Committee on Standards in Public Life, which was the genesis of the Bill. The principle is that there should be representation of politics and the political process at the highest level. The Speaker’s Committee took the view that that would improve the overall effectiveness of the commission. On the CSPL report, the Committee noted that the individuals appointed

“should bring their experience to bear in a non-partisan manner. The appointment process for such Commissioners would need to be consistent with this.”

The Speaker’s Committee went on to say in its response that there would be difficulties in the representation of small parties and it took note that that problem would need to be addressed. I observe that the Speaker’s Committee has, in practice, been appointed and asked by the Speaker to advise on the appointment of the Chairman and members of the commission and that clause 4 effectively endorses the practice that has emerged from the Speaker’s Committee.

As I said earlier, I am not proposing to burden the House with the views of the hon. Member for Gosport this evening, but I want to put on record some comments by the Electoral Commission. I ask to be allowed to be a conduit for the point of view of that commission and to put on the record any points that it believes should be recognised. The first of those is that the commission welcomes the provision to amend its sanctions and investigative powers and, with some qualification, the proposed changes to the rules on recent political activity for its employees. However, the Electoral Commission has expressed concerns about the proposals to change the rules on the appointment of electoral commissioners.

The Electoral Commission has for some time expressed the view that it should be given more tools to establish the facts in any case, and to take appropriate and proportionate enforcement action where necessary. The commission believes that the proposed changes to its investigation and sanctioning powers will achieve that end within a well recognised framework of good regulatory practice. The proposed sanctions are consistent with those provided by other regulators under the Regulatory Enforcement and Sanctions Act 2008 and are, quite rightly in the commission’s view, set within a framework of procedural safeguards, including new rights of appeal.

Several hon. Members, notably the right hon. Member for Rotherham (Mr. MacShane), have expressed concerns about the powers that the Electoral Commission already has. It would like to point out that under section 146 of the Political Parties, Elections and Referendums Act 2000, it already has powers to enter premises and demand documents. In fact, the commission has only once served notice that it requires documents to be produced to it, and it has never used its powers to enter premises.

If hon. Members are concerned about the broad range of powers to enter premises and the other powers given to the Electoral Commission in the Bill, I suggest that it is entirely appropriate for those concerns to be raised in Committee, and I am sure that the commission will be happy to discuss the regulatory sanctions it has and the need for breadth.

The commission has set out its concerns to hon. Members about the proposed changes to the rules on the appointment of electoral commissioners. As has been well rehearsed, as things stand the commissioners must not have political experience. The commission said that it understands and agrees with the intention behind the provisions in the Bill. It must have a thorough and up-to-date understanding of the way political parties work, and it therefore welcomes the proposal to relax the restrictions on recent political activity for most employees, which it believes would go a long way towards meeting this need. It has stated, however, that it would like to extend the proposed new five-year rule to posts other than that of chief executive.

The commission notes that clause 5(3) states that commissioners appointed from a political background should not participate in boundary decisions, but it takes the view that there is a wider range of issues with which it becomes involved, and it believes it appropriate for the Committee to consider carefully a range of activity in which commissioners with a political background should not participate in discussions. It takes the view that the participation of commissioners with a political background in discussions involving exclusion, criminal sanctions against individuals and so on could give rise to legal challenges on procedural grounds of alleged bias. I am sure that the Committee will want to take account of that; indeed, I see the Minister acknowledging that there is a point to be considered.

The regulated period for candidate expenses has been commented on and criticised by many hon. Members. The Bill proposes that the regulated period should start when expenditure is incurred

“for the purposes of a candidate’s election.”

The trigger would be activity on the part of the candidate, whether or not they were declared as a candidate at that time. As with any change to the rules, the commission has stated that it will produce guidance for parties and candidates on what they will need to do to finalise the process as soon as possible after Parliament has completed its consideration of the legislation. In the commission’s view, the more precisely Parliament defines the kind of behaviour that will trigger the regulated period, the more straightforward the commission’s guidance on how to comply with the legislation is likely to be.

The Bill proposes to require those donating or lending more than £200 to a party to provide a written declaration about the original source of the funds. The commission has said that although it generally supports any measures designed to underline the principle of transparency, it has concerns about the compliance burden those provisions would place on parties. The commission is not convinced that the benefits of the new rules would justify that, and my right hon. Friend the Member for Horsham (Mr. Maude) and the hon. Member for Slough (Fiona Mactaggart) made the point that we must not discourage voluntarism. It is important to ensure that people are prepared to work for political parties, and they should not be discouraged from doing so.

Madam Deputy Speaker, thank you for the opportunity to make these contributions, which were put to me by the Electoral Commission. I am obliged to the House; I hope that the points will be considered by the Committee, and that the House will forgive me for referring more heavily to notes than usual because I wanted to make the points made to me by the commission.

I start by welcoming the Bill. It is limited and focused on specifics, and it is intended to be. I would support spending caps and caps on individual donations, and I would support a greater degree of state funding. Like my hon. Friend the Member for Slough (Fiona Mactaggart), I spelled out all my views in a pamphlet many years ago. It was called “Money and Votes”, and was published by the Institute for Public Policy Research in 1994. Many of those proposals went to the Neill Committee and became part of the Political Parties, Elections and Referendums Act 2000.

I fully recognise, however, that the agenda is still unfinished. There are many things that should be in a second political parties Act. I would argue, however, that those things should not be in this Bill, which is about closing the gaps and loopholes in existing political parties legislation. Clause 8 deals with what one might call the Coleshill manor clause—unincorporated associations. Clause 10 is what I would call the Ashcroft loophole clause. I know that the noble Lord did not invent, create or cause the loophole, but he was the person who first exploited it as a donor, and he is now doing so as deputy chair of the Conservative party. Clause 11 is what one might call the autumn election clause, dealing with registration during the notifying period.

While many other reforms may be desirable, I should point out to the hon. Member for Cambridge (David Howarth) that although opposition often takes the form of delay, he should beware of supporting opposition that is intended to cause delay and to defend unfair and unintended advantages enjoyed by one party. It is hugely important to implement the Bill in good time before the next election. That point is almost too obvious to make. Like many of my hon. Friends, my prospective opponents in my constituency are the recipients of Ashcroft money, which gives them an unfair advantage. It is important to proceed as fast as possible with the Bill, which essentially will right the wrongs in the 2000 Act. Any attempt to put spending or donation caps in the Bill, desirable as those things might be, would undoubtedly be the cause of further delay. I would support minor amendments, such as lightening the burden on treasurers. Like my hon. Friend the Member for Slough, I am equally grateful to the treasurer of my local party, Councillor Tony Belton, whom she knows well. He is one of many people who put up with a huge burden of regulation as the treasurer of a constituency party.

The most important clause in the Bill is, in my view, clause 10. I have before me the Hansard report of the famous night in the House of Lords when the loophole in question was inadvertently created. My right hon. Friend the Secretary of State has never tried to conceal the fact that it was a mistake. In fact, it was made in the House of Lords long after the Bill left the Commons. The crucial phrase was “the dissolution of Parliament”, which appeared in the Bill only some time after it left this place. My right hon. Friend is right in saying that there was an amendment from a Conservative peer to remove the clause. It was not described by that peer as a probing amendment, but as a genuine point, and when the Minister, Lord Bach, asked him to withdraw the amendment so that he could look into the point, the Conservative peer agreed.

There was consensus at the time, but a clearer sign that there was consensus was that the Opposition in the House of Commons did not, at any stage during Second Reading or the Committee dealing with the Bill, propose to remove triggering, or propose to remove the spending controls on local candidates. That was never mentioned during the debate. My only criticism of the Government is that it has taken us seven years to get from that initial mistake to a Bill that will close the loophole. I do not pretend that reintroducing triggering is a 100 per cent. foolproof way of preventing excessive candidate spending, but it is the best way available at the moment. I look forward to a Bill that will introduce limits on national and local spending that will be far more effective.

Given what has been said so far by many Members on both sides of the House, does the hon. Gentleman think that it would be fair to introduce the measure before the next general election?

Of course it would. If it was unfair to remove the spending limits on candidates, it must be fair to reinstate them.

Let me remind the hon. Gentleman what happened before this country imposed limits on candidates’ spending. To do so, I must go back to the 1880 election, when one candidate made donations to 15 chapels, 17 churches, 23 cricket clubs and 150 societies in his constituency in order to secure re-election. A contemporary commentator calculated that the money spent by candidates in that election—in 1880—was £2½ million. When inflation is taken into account, that is a huge sum, equivalent to roughly £171 million in today’s terms. If it is calibrated to the earnings index rather than the retail prices index, it amounts to £2.6 billion.

That was the political world before candidate spending limits were introduced, and those who oppose their reintroduction should bear in mind that it is the world to which they are attempting to return us. Anyone who wishes to see a more contemporary example need only look across the Atlantic, where expenditure of $1 billion has already been exceeded in a presidential election campaign—and who knows what next month’s election will do?

Lord Ashcroft started on a very moderate basis, giving cheques for £20,000 or £40,000 to candidates in the 2005 election. I do not know whether Opposition Members were beneficiaries, although I can see one or two who may have been. In this election, as deputy chairman of the Conservative party, he is handing out cheques for a mere £5,000 or £25,000, depending on the perceived marginality of constituencies. But, of course, in the wake of those donations from central office, there often follow much larger private donations, taking advantage of the loophole—which everyone acknowledges to have been unintended—that there is no limit on candidate spending. That is why it is so important for us to legislate to close the gap.

I do not think that the hon. Gentleman has grasped the central point, which is that the Lord Ashcroft money is party expenditure and not necessarily candidate expenditure. All that Lord Ashcroft, or someone acting in the same way, needs to do to evade the measure in the Bill is not to mention the candidate’s name. Everything that the hon. Gentleman has cited will still apply, but will not be covered by the Bill.

We have already discussed this. I suggest that the hon. Gentleman speak to some lawyers—[Laughter]—unless he is a lawyer. If he is, he should know better.

As I read it, the provision clearly states that there are only two forms of spending: a national form of spending that is covered by the national limits, and any form of spending that could be defined as a candidate expense, which is covered by the local limit. If the letters that have been referred to—I have seen some in my constituency—are not included in candidates’ expenses when candidate spending limits are re-imposed, they will automatically be set against the national limit. There are only two kinds of spending, and every instance of spending must be of one kind or the other. That, in effect, closes the loophole.

I think that the hon. Gentleman should look at the existing legislation, which exempts from the national limit—which, incidentally, is only one year before the election anyway—

“any expenses in respect of newsletters or similar publications issued by or on behalf of the party”

—the word “party” should be noted—

“with a view to giving electors in a particular electoral area information about the opinions or activities of, or other personal information relating to, their elected representatives or existing or prospective candidates”.

I am referring to a different part of the legislation. I cannot quote from it now, because I do not have access to it. However, I suggest that it is disingenuous of the hon. Gentleman to have made a speech in which he did not make a single criticism of any proposal in the Bill. [Interruption.] No, he did not make a single criticism of it. Now he proposes to vote against it. He should beware of supporting an Opposition who clearly have an interest in delaying the Bill, when his own parliamentary colleagues are suffering from the effects of this loophole because Ashcroft money is being spent against their interests as much as those of Labour Members.

Let me read the hon. Gentleman what Lord Ashcroft said in his last book, appropriately entitled “Dirty Politics, Dirty Times”. He pointed out gleefully:

“Of the 33 candidates who won seats from Labour or the Liberal Democrats, no fewer than 25 had received support from the fund that I had set up with Leonard Steinberg and the Midlands Industrial Group”

—which, incidentally, clearly meant making use of that loophole.

Earlier, the hon. Gentleman took us back to 1993. The central thrust of his argument about escalating expenditure during elections is not supported by the Library research paper on the Bill, which plainly states—in two separate places on page 44—that spending levels have been falling.

My neighbour and hon. Friend the Member for Southampton, Test (Dr. Whitehead) is checking the context, but even if that were true, this would be a point of principle. For more than 100 years there have been limits on spending by candidates. They have been inadvertently removed, and they should be reintroduced. The way in which they are reintroduced should of course be fair to all parties, but we should not hold back from reintroducing them because of practical difficulties.

My hon. Friend may be interested to know that the two references on page 44 of the research paper relate, first, to a disputed analysis for the Policy Exchange, which does indeed exclude Ashcroft money and Liberal Democrat income, and, secondly, to a declining amount of local constituency expenditure as recorded by the Constitutional Affairs Committee, not a decline in national expenditure. The “arms race” is all about a discussion of the rise of national party expenditure.

I thank my hon. Friend. I shall take that up with my old friend and sparring partner Michael Pinto-Duschinsky, with whom I have often been happy to disagree on issues to do with party funding.

I have always advocated—both to the Neill committee and to the Committee that dealt with the first political parties Bill—that it was wrong to distinguish between national and local spending, because it would lead to questions of definition and might create loopholes. I have always argued that, as in the Canadian system, a single limit should apply to both national and local spending. I urge my hon. Friend the Minister, even at this late stage, to consider that as a far better solution. If national spending must be divided equally between all constituencies, the constituency limit effectively bites on the national spending limit, and there can be no room for moving spending from one category to the other.

Clause 8 deals with unincorporated associations. I should have thought that that reform, too, was clearly intended. It was not intended in the 2000 Act that such associations should escape the disclosure provisions, and I have heard no Opposition Member argue that they deserve to.

I see that the hon. Member for Chichester (Mr. Tyrie) is present. He was the beneficiary of a £3,000 donation from an organisation called the Churchill luncheon club. I am sure that it is an entirely legitimate organisation, but that £3,000 donation may conceal many donations over £200 which escape declaration simply by being channelled through the luncheon club. I am sure that the hon. Gentleman attends its meetings and has a very good lunch, but I should have thought that, as a believer in disclosure, he would be one of the first to insist that his donors are happy to declare their identity, if indeed their donations are above the disclosure limit. I look forward to hearing whether he thinks that there is any particular reason why they should be exempt.

I shall now briefly refer to the parts of the Bill that deal with the Electoral Commission. I take very much the point that it has too few regulatory tools at its disposal—it can either issue a reprimand or refer to the police—and I agree that there should be many intermediate offences.

I understand that the Minister has already said that there will be a careful consideration of proposed new schedule 19A to the 2000 Act and that his ears will be open to counter-proposals. There is a great deal of concern about the powers to enter MPs’ offices and seize documents. The hon. Member for Gosport (Sir Peter Viggers), who speaks on behalf of the Speaker’s Committee, says that these powers have been used only once, but if they are to be extended in this Bill it is important that we do not create a situation where people could feel at greater risk of unnecessary intrusion into their affairs. We have seen what has happened to some Members of this House. I shall not mention specific cases, but reporting an unintended failure to disclose to the police is an incredibly serious issue. That is a power that should be used with extreme caution, if at all—indeed, we should think very seriously about whether that power should exist.

Let me make a final point. It is on the issue of consensus, which has been mentioned on all political sides in this debate. It is important that we understand the limits of consensus. It would, of course, be highly desirable for this Bill to be passed on the basis of consensus. Indeed, before tonight I expected the official Opposition and the Liberal Democrats to agree to these proposals, because, after all, they have always agreed to candidate limits, and they agree about the deficiencies that exist, and it was not intended that the 2000 Act should remove candidate limits. Therefore, there is no particular reason why any of the Opposition parties should vote against the Bill. However, we need to think back through history to 1976, when the Houghton committee, which the Labour Government set up in 1975, reported to the House on a series of proposals including disclosure of donations, donation limits, spending limits and an element of state funding. They were discussed more than 30 years ago. However, all those proposals had to be shelved because the Prime Minister of the day believed it was necessary to have consensus between all parties before progressing with any proposed party funding legislation. As a result nothing was done. I believe that happened because Lord McAlpine, who had recently become the treasurer of the Conservative party, had advised the then Leader of the Opposition that, however bankrupt their party was, doing as he said would hurt the Labour party more than them.

Therefore, nothing was done, and we entered a period of 30 or so years when funding gradually fell into disrepute. The bottom of the barrel was scraped and scraped again, individual donations were chased, and millionaires were tapped for funds. I shall not embarrass the Conservative party by mentioning all the names involved in all the scandals of the 1990s, but they well know that as a result of that failure to tackle the issue in 1976 the politics of this country fell into disrepute, and now we are left, 30 years later, trying to pick up the pieces. Therefore, a Government should never hold back from doing what they believe is right simply because they cannot achieve a consensus, especially if that consensus is being unreasonably withheld by an Opposition who well know that their candidates are enjoying an unfair advantage, and who never opposed candidate limits in the first place, but choose to oppose it now.

I say to the Liberal Democrats that it would be terrible if they were to oppose the Bill simply because of what is not in it. They must judge the Bill by what is in it and whether it is right or wrong. It would be a dereliction of duty by both main Opposition parties if they failed to give this Bill a fair wind.

Order. I do not wish to stifle this interesting debate, but I am conscious that several Members wish to make a contribution and I have an eye on the clock. I therefore ask Members to restrict their contributions just a little.

It is a great pleasure to follow my hon. Friend the Member for Gosport (Sir Peter Viggers)—and, indeed, to follow the hon. Member for Battersea (Martin Linton). It occurs to me that there is nothing to prevent a Labour candidate or MP from doing exactly the same as the Conservatives have done in respect of Lord Ashcroft. However, I shall ignore that issue for most of my speech. Instead, I wish to raise some issues regarding elements of the Bill, and also to mention one issue that has been omitted.

The new powers to be awarded to the Electoral Commission are of concern to me. I believe that some of the civil sanctions that the commission would be able to exercise following the enactment of the Bill may prove unacceptable in practice. Paragraph 10 of proposed new schedule 19B to the Political Parties, Elections and Referendums Act 2000 allows the commission to impose so-called stop notices. These are to be imposed on individuals to prohibit them from carrying on an activity that the commission believes is “likely to involve” their committing an offence under the 2000 Act. The wording implies not “has done”, but merely “may do”. Likewise, a stop notice can be imposed if the commission believes the person’s activities are likely to lead them to commit an offence or contravention of the Act.

Does the Lord Chancellor recognise that those measures could interfere with an individual’s wholly legal actions? An individual could be treated as if they had already committed an infringement, even if their actions never led to such an infringement. Is not the Electoral Commission’s purpose to ensure that elections are run legally and to punish individuals appropriately once an infringement has occurred, and not before? Does the Lord Chancellor not also agree that absolute clarity is needed when qualifying situations are deemed “likely” to lead to an offence?

Also of great concern is a proposed change under clause 2 that would give the commission an investigative power akin to a search warrant. The power allows authorised commission staff to enter an individual’s or party’s premises to access financial records and information. In many situations, not least during an ongoing election campaign, such action would be highly disruptive; it may, in fact, damage the electoral system rather than safeguard it. Does the Lord Chancellor not agree that this power should be used only in the most serious circumstances? Would it not be better to have the power suspended during the period of an election campaign? Would not complaints escalate if it were possible for people to disrupt an opponent’s campaign? Indeed, it is difficult to imagine a situation in which the need to search a premises is so great that it would not be a police matter to begin with.

The change under clause 7 that relaxes the political restrictions on membership of the commission is another concern. Currently, people must have had a 10-year period out of politics before they can become a commissioner. That prevents politically active and potentially partisan individuals, such as donors, party members or employees of political parties, from becoming commissioners. I accept the relaxation of political restrictions on the commission’s chief executive from 10 to five years out of politics, but I feel that the relaxation for all other commission staff from 10 years to just one year is too extreme. I do not agree that any political member should be allowed to be the chief executive. The commission must be politically savvy, but not at a cost to its independence or credibility. Under the current proposals, it is not unfeasible that someone such as the former Prime Minister, Mr. Blair, could become a commissioner in a year and a day. Does the Lord Chancellor not agree that a period of at least one Parliament, or five years, out of politics is needed for all commission staff, to minimise the possibility of current politicians being investigated by their contemporary rivals—or indeed friends?

One issue that is not covered in the Bill but requires serious consideration is the existence of multi-seat electoral divisions and how such boundaries are drawn up. In my constituency, Isle of Wight, 40 seats will be contested at the next county council elections. Among those, there are 38 single-seat electoral divisions and the solitary, and in my view anomalous, two-seat electoral division of Bembridge, Brading and St. Helens. Single-seat divisions enjoy the clear accountability afforded by a single elected member, but an unusual two-seat electoral division is more problematic.

Whether a given geographical area has two single-seat divisions or one double-seat division can affect the outcome of an election. For example, in the case of two single-seat divisions, the Conservative party might win one with a large majority and the Labour party the other with a small majority. That is perfectly reasonable, because there will be two clear winners of the seats, one Conservative and one Labour. In a two-seat division covering the same area, with the same votes cast, the Conservative party would win both seats. My concern is that the drawing up of such boundaries could inadvertently lead to a less representative outcome for the voters. At least, it would be inadvertent on the part of the Boundary Commission; it could be a very advertent action by those who propose a multi-member constituency. That is an unacceptable state of affairs, and the matter should be investigated carefully.

I agree that current legislation is imperfect and that changes must be made. The public must be shown that the electoral process, from funding to polling, is transparent and fair. I hope that the whole House will agree that we must be careful not to damage the current system or undermine the Electoral Commission’s position with the very Bill that is designed to increase efficiency.

I commend the final comments of the hon. Member for Isle of Wight (Mr. Turner) that the electoral system must be seen to be transparent and fair. One of the realities behind the Bill is that that is not accepted as being the case. Each one of us, as a serving politician, has a duty to engage in dialogue to try to ensure that we deliver to the people of this country a political system in which they can have confidence.

I agree with my hon. Friend the Member for Slough (Fiona Mactaggart) that, paradoxically, even though there are things for us to consider, many people of all parties, including some whom I have known for many years, engage in party politics because they regard the political system as part of their public duty. We ought to point out that many of those people have credibility and integrity of the highest order. However, that gives us all the more reason to ensure that we have robust laws that crack down on the concerns that lead to suspicion that the political system is not as it should be.

I shall start by mentioning certain aspects of the Bill that, although they may be non-controversial, I hope can be improved as it makes its way through its various stages. There is common agreement that the Electoral Commission needs improving. Most of us have been unhappy with its work, and I certainly welcome the fact that we are relaxing the limitations on those who can actively serve on it. We probably also need to consider the £200 spending limit that appears in the Bill, because there is concern in all parties that that does not reflect reality and will be an impediment not to those who wish to transgress spending rules but to those who are engaged in proper and acceptable politics.

I hope that my hon. Friend the Minister will take account of the concerns that have been raised about the concept of entry-and-search powers. I agree with the hon. Member for Isle of Wight that if things are so serious that entry and search are necessary, it probably ought to be the police who perform that function rather than the Electoral Commission. I do not wish to trivialise the matter, but there is something Monty Pythonesque, Spanish inquisition style, about the Electoral Commission entering somebody’s home. It ought not to happen to people engaged in the proper activity of party politics at local or any other level.

I wish to say a few words about the trigger. I am astonished that the Liberal Democrats seem to have switched their position on it entirely. It seems to me to be a rare occasion when their principles and expediency are pulling them in the wrong direction. Both principle and expediency ought to lie on the side of having the trigger, so they should consider carefully why they have come to their conclusions about it.

I should like an even stronger trigger, and the concept of introducing a local trigger is important. As my hon. Friend the Member for Battersea (Martin Linton) said, there should be no ambiguity about the debate that occurred some years ago in the House of Lords. It was entirely about the giving of reassurances that the trigger would remain in operation. That was the only reason why Lord Mackay, speaking on behalf of the Conservative party, withdrew his amendment. Opposition Members need only reread that debate to realise how central that was.

I am not normally in the habit of wishing to say unkind things about other hon. Members’ speeches, but the justification that the right hon. Member for Horsham (Mr. Maude) gave in opposition to the trigger was astonishing. He said that there were many reasons for opposing it, but I think that he gave one. When the case of my erstwhile colleague Fiona Jones came to court, the difficulty was in drawing a legal distinction between what was within and without the rules, because of the narrow nature of the trigger at the time. I would prefer to see proper whole-Parliament spending limits locally. I say to my hon. Friend the Member for Battersea that I would like it to be separate at national level, as there is an important distinction between the two. Nevertheless, whole-Parliament spending limits make an awful lot of sense. The right hon. Member for Horsham gave no proper reason why the Conservative party opposes them, other than expediency.

The point about having a single limit on both national and local spending, as in Canada, is that the national limit—£20 million in this case—would be divided between each constituency and act as a constituency limit as well. That would prevent people from finding any loopholes by juggling money from one limit to the other.

I understand that point, but in this Bill we will probably not be engaged in fine-tuning it, so perhaps it is for another occasion. We disagree on it, but we can return to it privately. The important point is that among the limited number of justifications given by the right hon. Member for Horsham and by one or two of his Conservative colleagues was the suggestion that by reintroducing the trigger we are being unfair to candidates. Electoral law and electoral practice are not about candidates; they are about the integrity of the electoral system and being fair to the electorate.

That touches on the nature of where our political system is going. A short debate took place earlier about the arms race. Hayden Phillips’s report “Strengthening Democracy: Fair and Sustainable Funding of Political Parties” states:

“PPERA sought to control the level of spending, but it has proved inadequate to the challenge. Parties may be complying with the letter of the law, but not the spirit.”

There is no doubt that a political arms race takes place in every electoral cycle, and it matters not whether the absolute volumes increase election by election—the constant trend has been upwards.

The hon. Gentleman has correctly quoted from Sir Hayden Phillips’s report. I participated throughout these negotiations, and can tell him that Sir Hayden commissioned a paper on the arms race that drew pretty much the same conclusions as the Pinto-Duschinsky work and that Conservative Members have asked for it to be published. That work was commissioned after Sir Hayden’s first report had been published, and I am reasonably confident that he would not have come to the same conclusions had it already been before him.

I have heard the hon. Gentleman make that point before, but he is wrong on two grounds. First, it is a question not only of whether there is an absolute increase in the volume of spending, electoral cycle over electoral cycle; it is also about what takes place within the electoral cycle. We have seen a number of consequences in how we fund party politics, one of which is that we bunch the spending into the last dash for growth at national level, and that, in itself, is not necessarily a healthy part of the democratic process. Secondly, there has been a consequence at local level: a massive concentration of intense spending. In some constituencies, candidates are outspending their opponents by factors of eight to one. That might be a matter of party difference, but anyone who examines this matter objectively can see that it is not healthy for the body politic.

The arms race exists at national level between the parties over different parts of the electoral cycle and it is intense at local level. Increasingly, our elections are no longer about democratic choice among the whole population; things are concentrated on those who live in the marginal seats deemed to influence elections. My hon. Friend the Member for Battersea mentioned Lord Ashcroft’s claim that 25 of the 33 seats that changed hands were among the 41 on which he spent money, and that shows, as he himself concluded, that money perhaps begins to talk. That is a dangerous and unhealthy trend.

I wish to spend a few moments discussing that kind of spending. The American experience tells us that the correlation between high spending levels and campaigning is that high levels of spending are increasingly associated with negative campaigning; it is not about the positive establishment and advocacy of ideas, values and policies, but about doing down the other—that applies at local level in particular. Local campaigning is in grave danger of being turned entirely into that form of negative campaigning, and that would be a disaster for our political process.

All hon. Members ought to take that point seriously and question where we are going. The plethora of funding structures that make that situation possible might be advantageous for individuals—I am in a happy position, because neither Lord Ashcroft nor the golfing associations would be interested in my seat and that perhaps gives me a sense of relaxation personally—but constituents, including mine, are entitled to dynamic politics fought by all political parties at local level. I do not take for granted constituents who are not in those marginal seats; nor should anybody else, including my party.

I have been listening carefully to the hon. Gentleman’s remarks, and he is developing the interesting theme that the level of money may make a clear difference to the outcome. Will he also comment on the amount of money paid to his party candidates by the trade unions, because in many cases it is higher than the donations that he has mentioned? Secondly, where does the communications allowance figure in his deliberations? It provides a considerable sum over a four or five-year Parliament that would appear to aid the incumbent.

Let us put this matter into context. I am told that in some constituencies Conservative candidates are spending in the order of £50,000 or more a year on local campaigns.

I would love to be able to tell the hon. Gentleman that the rich trade union members provide such sums—I have been a lifelong trade unionist, and I am proud of my associations with the trade unions, particularly the Labour-affiliated ones—but that dwarfs anything that the trade unions put into any constituency by enormous volumes. There is no comparison in the figures involved.

On the communications allowance, the hon. Gentleman need only do the mathematics to work things out. Conservative Members also benefit from the communications allowance, but it has a very different structure. The fundamental difference is that as long as hon. Members on both sides are confined to using the rules of this House, the communications allowance is restricted to that communication in which any Member of Parliament can engage as a Member of this House without reference to party politics. That is not the same thing as the constant drive of party politics that is being fed through things such as the golfing associations, the Ashcroft moneys and the unincorporated associations from which Conservative Members obtain such benefit.

We perhaps also need to address another difference, which poses a real challenge to every Conservative Member. Anybody can look at the accounts of my constituency party or that of any Labour Member to see exactly what money went in and from what source, be that trade unions or otherwise. I talked to the general secretary of the Labour party tonight, and he told me that the Labour party must ensure that it is seen to honour both the letter and the spirit of this legislation. What is not clear is whether Conservative Members want to honour that same letter or that same spirit.

Conservative Members will know, as I do, of the allegations made in “Dispatches” and in The Sunday Times that the route from Stargate Holdings, a Belizean company, through to Bearwood Corporate Services Ltd has been used to channel moneys into our political system to work outside the impact of our legal framework. That raises questions that ought to be answered by the Electoral Commission, by those who investigate such allegations of unacceptable activity and by the Conservative party if it is genuine in wanting to operate within the spirit and the letter of the law. This is not just about beggar-thy-neighbour politics; it is about genuinely wanting to offer the British public clean and transparent politics.

I am aware that other hon. Members wish to speak, but I wish to make some further points. Real questions remain as to whether Lord Ashcroft is a registered elector in this country. He has said that he was a major donor to the Conservative party when the Political Parties, Elections and Referendums Act 2000 was in operation, and questions remain as to whether he was a permissible donor and whether the Conservative party’s stewardship was such as to ensure that the moneys going into the party were proper and acceptable. Those questions must be answered.

I have met and worked with many Conservatives, both when I was a local councillor and even here in Parliament. They are people of the utmost integrity, and I would never wish to suggest that being a member of the Conservative party, of itself, is anything other than being about the highest sense of public service and duty. When these allegations are made about our own parties—my party has had to face such allegations in the past—each of us must see whether the activities are consistent with proper and decent transparent politics. On that basis, I would say to this House that there is a long way to go.

It is a pleasure to follow the hon. Member for Manchester, Central (Tony Lloyd), who made a thoughtful speech, and I agreed with what he said at the beginning about regulation and the powers of entry. However, I am afraid that I did not agree with him on clause 10 and the trigger mechanism. The Secretary of State for Justice can normally be relied on to make a robust defence of whatever proposition he is putting to the House, but when he reached clause 10 in his speech today he was extraordinarily defensive, with an over-reliance on an Opposition amendment tabled 10 years ago in the other place. Any objective listener to the debate will have found the counter-arguments, put first by my right hon. Friend the Member for Horsham (Mr. Maude), very powerful. He holed clause 10 below the waterline. Before the smoke had settled, there came another torpedo from the hon. Member for Cambridge (David Howarth), headed the same way. I shall be amazed if clause 10 survives its passage through both Houses in the form in which it is currently drafted.

My right hon. Friend put on the table a genuine offer that would deal with the Lord Ashcroft issue. We would be happy to discuss a cap on donations of £50,000. If the hon. Member for Manchester, Central and his colleagues are worried, that is an offer that should be pursued, because it would address some of their concerns.

I agree with the Secretary of State that the regime introduced by the 2000 Act has, on the whole, worked fairly well, setting up the Electoral Commission and introducing controls on parties and elections. However, since its introduction, a range of committees has considered it—the Hayden Phillips committee, the Constitutional Affairs Committee, the Committee on Standards in Public Life and, of course, the Electoral Commission itself. The time has come to make some running repairs to the 2000 Act. Some of the recommendations from those bodies are included in the Bill, but some are not.

I begin with a word of warning about the Government’s approach to matters dealing with elections. Party advantage has not always been erased from their mind. When the original legislation went through, I was my party’s spokesman on these matters and I recall that one key recommendation of the Neill Committee was not in the Bill: the principle of match funding to encourage party membership. The absence of that recommendation caused the Government much difficulty with the Bill in the other place. Since then, that recommendation has been repeated by several bodies. At the time, its omission was seen as partisan because it would have benefited the Conservative party. The alibi that that was unaffordable was destroyed by the Government’s subsequent munificence in almost every field of public expenditure. I mention that in the context of today’s debate because the Government have form in seeking to tweak electoral legislation for party advantage, and we need to be clear to prevent it from happening with this Bill. My right hon. Friend put down some markers in that respect, and I am sure that the other place is on red alert.

I wish to speak briefly on two issues, the first of which relates to clause 5 and putting politicians on the Electoral Commission. The commission has made it clear that it does not like that suggestion. It has said:

“We are deeply concerned that public confidence in the Commission’s independence would be undermined as a result of the Government’s proposals.”

That is seriously overplaying its hand. If four of the 10 commissioners were put forward by the leaders of the political parties, it would enhance the credibility and effectiveness of the commission, rather than contaminate its independence. I have met many of the commissioners, and they did not strike me as people who would be walked over by politicians and of course they would remain a majority. Nor is it the case that politicians are always partisan. Anyone who has been a Minister or a Chairman of a Select Committee will realise that politicians are perfectly able to switch to neutral mode. If I may say so, Madam Deputy Speaker, the Deputy Speakers are good examples of that. They are elected with a party hat, but they serve the House impartially and neutrally.

The Committee on Standards in Public Life has representatives of the political parties, and I have seen no evidence that people think it less independent because there are two MPs on it. My Committee has powers to make recommendations, and although it is composed solely of party politicians coming from four different parties, I do not believe that that has compromised its effectiveness or credibility. So I believe that the anxieties expressed by the commission on that score are misguided.

My second point relates to clauses 2 and 3, coupled with schedule 1. I apologise to the hon. Member for Cambridge, because this is an internal matter for the House. The clauses will extend the investigative powers of the commission considerably, and Members of Parliament will be subject to the new provisions. This part of the Bill is relevant to the ongoing debate about how best to resolve the current requirement on colleagues to register certain interests both with the Registrar of Members’ Interests here and with the Electoral Commission. How do the proposals to extend the investigatory powers of the commission and their application to MPs fit the provisions of section 59 of the Electoral Administration Act 2006, which has not yet been brought into effect?

When the 2000 Act was introduced, nobody spotted that it introduced two parallel reporting regimes for MPs, and that has caused much confusion. Colleagues who have registered their interests on the register here and whose entries are accessible online are now getting letters in some cases from the Electoral Commission saying that they have committed a criminal offence because they have not also registered the identical item with it. That is absurd, but it is what the law currently requires. That is why the House, after full consultation with the Electoral Commission, passed section 59 of the Electoral Administration Act 2006 which, in a nutshell, would introduce a one-stop shop for MPs in respect of the vast majority of what are called “permissible donations”. We would register our interests here, and the commission would get the information it required for its registers from us, streamlining and simplifying the process without compromising on transparency.

Section 59 cannot be enacted without a commencement order laid by the Secretary of State. There is real pressure from both sides of the House to get on with this. The issue is central to assessing the impact that the proposals in the Bill will have on hon. Members, and other holders of “relevant elective office”. In practice, once section 59 is commenced, MPs will remain subject to the overall legislation on donations, but would be relieved of the personal obligation to report each recordable donation we receive to the Electoral Commission as well as the register. Consequently, we will no longer be at risk of committing the criminal offences that can arise from a failure to comply in full with the statutory requirements. As such donations make up the overwhelming bulk of donations that Members report to the commission, the decision on commencement is of considerable significance when looking at the potential impact of this Bill on the House.

So, what is the Government’s policy on commencement of section 59, which they put on the statute book two years ago? The Secretary of State wrote to me in August, saying:

“It might be considered that there is an inconsistency between the strengthen the Commission’s powers and sanctions...and the removal of MPs from the investigatory and sanctioning powers of the Commission. I am concerned that commencement of section 59 could therefore prove difficult for the reputation of the House, particularly when viewed in the context of the reforms to the Electoral Commission which the PPE Bill proposes.”

That implies that the Government may now have set their face against bringing this provision into force. What the House needs today from the Minister is a clear commitment on whether the Government still support the commencement of section 59 and, if so, on what time scale. As he will know, the Standards and Privileges Committee is working towards creating a registration structure that is consistent with achieving that, and gave a commitment in our 13th report to the House before the summer recess that it would aim to make firm proposals shortly after the summer recess.

If the Minister gives a clear commitment to the commencement of section 59, I can tell the House that it should be possible, subject to the Government’s finding time, to complete the steps necessary to clear the way for commencement well before this Bill receives Royal Assent. There is widespread support across the House for an end to dual reporting of donations. Commencement of section 59, the inclusion of which in the 2006 Act all parties supported, as did the Electoral Commission, would achieve that for 99 per cent. of donations. I invite the Government today to confirm their commitment to taking that step.

If the Government are unwilling now to commence section 59, I hope that the Minister will tell the House why, and what alternative plans he has for ending the thoroughly unpopular requirement for dual reporting. If legislation is needed to deliver an alternative approach, the Bill provides the appropriate vehicle. On a more consensual note, I am happy to discuss these matters further with the Secretary of State and the Electoral Commission, but they will need to be taken forward urgently if the opportunity to change a system that many hon. Members find unacceptable is not to be lost.

It is both a pleasure and a problem to follow the right hon. Member for North-West Hampshire (Sir George Young). It is a pleasure because I substantially agree with many of the things he had to say and the thoughtful way in which he said them, and a problem because it is clear that I shall now have to exempt him from some of the remarks that I might make about the likeness to a certain mint sweet, sold in tins in the House of Commons shop, that appears to have pervaded certain parts of the debate this evening.

The word “consensus” has been used quite freely in the debate. It is true that the efforts of Sir Hayden Phillips, who had to deal with a problematic initial brief in his inquiry, and of the Constitutional Affairs Committee produced an output that moved substantially towards the possibility of consensus on the wider issue of what we are doing here, as far as our political practice is concerned, and how that needs to be validated in the public eye in the long term. It seems to me that that is what most of the debate is about.

People will have different versions of what is the most important part of that issue. One of the most important parts of validating what we are doing here starts with the Jeremy Bentham dictum that all should count for one and none should count for more than one. If someone is not registered to vote, for whatever reason, or has disappeared off the electoral register, they do not count for one. Alternatively, if large sums of money flood into a contest where everybody would otherwise count for one, distorting their ability to count for one, people will not count for one in the same way. Consensus would have to take account of the real world and what happened in elections.

The consensus achieved by, among other things, the report of the Constitutional Affairs Committee took account of the differences in political parties’ histories and how those differences come into the political system today. The recommendation on the subject of trade union affiliations and the relationship between trade unions and the Labour party, which we have already discussed this evening, stated:

“Any move to change the nature of party funding must not stray into prescriptive devices to require political parties to organise internally in ways that violate their democratic relationships with other institutions.”

I felt that that was a good formulation of where parties have come from, as far as their political backgrounds are concerned. Our political system has never been perfect. We have never had a moment in our history when we could write the entire political system anew and hope that it would work according to the ideal principles that we proposed.

Any idea of how better to regulate the system has to come from where we are and where we are going, and any consensus must take that into account. I am concerned about the extent to which “consensus” has, in this evening’s debate, begun to be interpreted as “veto”. Those two words are very different. When engaging in a partisan debate, people will of course conclude that their position of expediency has more principle attached to it than an outside observer might accept was the case.

It is generally accepted that the difference between the near consensus in the discussion on party funding several years ago and the recent position relates, to some extent, to the fact that the Conservative party, in particular, when it was worrying about its position on funding, had a warmer view of consensus on including donations and a whole-term cap on party expenditure. I personally think that that would be an important part of the process of allowing the public to see that what we are doing makes full sense, as far as their participation in elections is concerned.

As the political funding atmosphere changed, a number of people in the Conservative party began to feel much more lukewarm about the idea that such a compromise might be a good thing in achieving consensus. This is where the mint sweets in the shop come in to it—that move towards a veto has been dressed up as high principle. The Conservative party withdrew from the talks because, in my view, in the end it felt that it was more to its advantage to be out of them than to be in them. In those circumstances, short-term consensus is very difficult to achieve.

What does one do in such circumstances? Do we simply say that because there is no consensus we should do nothing? Do we say, “Let’s do what it is possible for us to do in circumstances where there is no full consensus, but we can reasonably argue for a number of things without its being in a spirit of over-partisanship, although obviously all contributions will be seen as to some extent partisan. Let’s see what we can do to move towards a better version of how the system works”?

What disappoints me about the Liberal Democrats’ position is that they appear to be repudiating such an idea and saying that unless the full consensus and the ideal outcome can be achieved, nothing should be considered at the moment. I can understand how that position arises, but, bearing in mind the description I have given of how we have moved away from consensus in recent years, we are nowhere near reaching a perfect outcome. Should we therefore say that nothing will happen in the meantime, until such an outcome is achieved? I am afraid that that, for much less honourable reasons, appears to be the position of those on the Conservative Front Bench.

I think the hon. Gentleman misunderstands the position of my hon. Friend the Member for Cambridge (David Howarth). The hon. Gentleman played a valuable and crucial role in achieving consensus. The point that my hon. Friend and I were trying to make to the Lord Chancellor was that there was consensus. A document was produced by members of three parties, which was then developed by an independent referee, and so the Lord Chancellor could not be faulted if he persisted in carrying the recommendation forward even though one party had since resiled from it.

The right hon. Gentleman makes a strong point in one sense, inasmuch as it would be technically possible for the Lord Chancellor to introduce such legislation, but I think he will understand that in those circumstances the chances of its getting anywhere at all in the House would be remote. We must continue to pay attention to what is practically possible right now. What we do in the current circumstances will be under the magnifying glass of whether partisan advantage is being obtained by one side or the other. That seems to be at the heart of this discussion.

Can my hon. Friend tell the House whether he would have any sympathy for Liberal Democrat candidates who are blown out of the water at the next election by Ashcroft money as a result of their party’s refusal to support the Bill in this place or in the House of Lords?

As one of the longest failed key seat Labour candidates in the south of England, I have always had sympathy for people who are blown out by opponents, and I have particular sympathy for those blown out by opponents who appear to be able to spend their way to victory rather than winning entirely by the force of debate and discussion during the election. One of the things we need to consider is what might be done both in theory over a long period and practically over a much shorter period, so that elections are fought on the basis of better arrangements for what the public want, with debate between the candidates on the issues so that people can use their vote in the best way possible, rather than on more abstract principles about the overall fairness of the system in the longer term. Consequently, the Bill’s provisions largely pass the test of what it is reasonable to do in a not over-partisan way in existing circumstances.

The appointment of political commissioners to the Electoral Commission is important, and the right hon. Member for North-West Hampshire made the strong point that the Committee on Standards in Public Life had no problem with the presence on the commission of members who are active politicians, not just recent politicians. As we can see in the Committee on Standards and Privileges and other Select Committees, Members are not always partisan. The idea that we would always be partisan eventually betrays us to the argument of anti-politics—that we are all rogues in this House and that the parties contesting elections are rogues, so it is in the public interest to be protected against all of us. I do not accept that and I think the Electoral Commission would be immensely strengthened by the addition of political commissioners.

There has been substantial discussion of triggering. We appear to have had something of an Aquinean discussion on the extent to which the original debate on the Political Parties, Elections and Referendums Bill in the House of Lords was based on a mistake, consensus or withdrawn amendments. I prefer to put the question whether we have a perfect outcome in a slightly different mode. My hon. Friend the Member for Battersea referred to an election in 1881—

I apologise; 1880 was the year of the general election. I was thinking of the by-election. In the 1895 election in Southampton—my city—the Conservative candidate, Sir Tankerville Chamberlayne, arranged for a horse and cart to be deposited outside the Cowherds public house, which is at the top of the city. The cart was unhorsed and six strong men pulled it down Above Bar to the party headquarters, with Sir Tankerville standing in the back throwing out sovereigns as they went. Quite reasonably, that behaviour was reported to an election commission and he was unseated.

The point of the story is that what appears, by suggestion, to be tolerated now is that the metaphorical throwing out of sovereigns in a modern context is okay until the day the election is called, but then it is not okay. Even the argument that candidates should spend money they have legitimately raised for themselves would stand objective examination only if one did not agree that there should be restraints on electoral expenditure during elections anyway.

As I understand it, we all agree that there should be constraints on election expenditure locally during elections. In terms of the real electoral arms race, we all know that, increasingly, certain people will try to squeeze in as much expenditure as possible in the three, four or five months before the period in which election expenditure is capped, to get around the rule. In the absence of a wholesale consensus on how we cap electoral expenditure between elections, we might consider a trigger mechanism. Indeed, as the hon. Member for Gosport (Sir Peter Viggers) said, we should provide the best possible definition of that trigger, so that some of the vagaries that beset the legislation that was in place before 2000 are done away with. Nevertheless, we should have a mechanism that provides a much more straightforward and logical approach to electoral expenditure.

As for the Electoral Commission’s powers to invade one’s bedroom, suggested in proposed new schedule 19 to the 2000 Act, which follows clause 12, I hope that that issue will be considered carefully in Committee. There is indeed a logical disjunction between the Electoral Commission’s power to deliver a rap on the knuckles and its power to refer someone to the police. It is logical and clear that there should be a staging point in between. It is up to Members in Committee, to make sure that the staging point is reasonable, not unreasonable, and that it does not take us beyond the reality, which is that political parties are voluntary organisations that overwhelmingly have the best interests of the public at heart in their activities.

I now come to the regulation of unincorporated bodies and the reporting of donations over a certain size from those bodies. I find the opposition to that proposal rather comical. It is plain that in a properly transparent system, the idea that money could be funnelled into a local campaign through certain unincorporated bodies, whether outside or inside the country, offends against the argument on giving money in the period immediately outside the restricted period of an election. It also offends against the principle to which, as I understand it, we all signed up when we talked about the fact that campaign money should be transparent and its origins fairly straightforward.

Obviously, there is the issue of what the unincorporated body in question is doing. With an unincorporated body such as the Berkshire Supper Club, for example, one might think, “It’s in Berkshire, and people have suppers there and donate money as a result; that seems fairly straightforward.” If an organisation is called the East Surrey Business Club, I guess it would involve business people in Surrey making donations to bodies in Surrey. Similarly, a person might think that the Midlands Industrial Council was a body dealing with industrialists who work in the midlands. Well, they would be wrong. They would find that associations up and down the country, nowhere near the midlands, have benefited from donations from that organisation, and we do not know what the arrangements are. As to whether the body is industrial, we are not sure. If we are to deal with transparency, it is important that it should be proper transparency; there should not be transparency only for some.

Counter-arguments against some measures in the Bill were put forward: it was said that the communications allowance meant that incumbents effectively got a great addition to their campaigning power, whereas their opponents did not. A great deal of effort has been made by the House authorities—the House of Commons Standards and Privileges Committee among them—to ensure that the communications allowance is used for communications purposes and not party political purposes. Indeed, a corpus of case law, as we might call it, is being developed that, say, sets out the acceptable ways in which a Member of Parliament can deliver a newsletter, or what one can and cannot address one’s constituents about and so on. That ensures that the communications allowance is not used for political campaigning.

It is surely undeniable that a communication sent directly to constituents from an incumbent MP, showing their smiling face and describing the work that they are doing in Parliament, must give some sort of advantage. Does the hon. Gentleman agree that that should be incorporated in the cap that he is talking about?

The hon. Gentleman might have a point if no restrictions on the communications allowance existed. In the world of modern political communications there have been substantial differences in what the public expects from their MP and what they expect to receive from their MP. For example, a predecessor of mine many years ago in Southampton, Test remarked on one occasion that he received 29 or 30 letters a week and he could respond to all of them by hand. That is far from the case today, in a world of e-mails, letters and other forms of communication. It is important that we have them, but it is also important to delimit their content.

I agree with the hon. Gentleman that if the communication showing the smiley face of the MP is an attempt to get party political matter over by means of the communications allowance, that is a problem. That is why there have been rulings about smiley faces of MPs, political logos and various other things that have been sent out in communications. In any event, part of the truth that dare not speak its name is the fact that we already have considerable state funding of political parties, although no one mentions it. We have state funding of the Conservative party to a considerable extent, in the form of Short money. I do not object to that. It is a good leaven for the workings of political parties in this place and elsewhere.

As a rough calculation of the effect of the communications allowance, £10,500 per Member for the Labour party amounts to £3.66 million. For Conservative MPs the figure is £2.06 million, with a further £3.8 million a year in Short money for Conservative MPs. That equates to £19,600 per Conservative MP, rather more than the communications allowance, and of course Conservative MPs get the communications allowance anyway. So where is the inequality, I wonder? The total amounts of money are roughly the same per side.

I say that to try to bring the debate down to a rather less mint sweet-based level. Partisan points can be made on both sides, of course. Instead, we should judge the Bill by what it will do to ensure that the public have a better view of how we conduct our business, how elections are conducted, how valid the results of those elections are, and what confidence people can have about going to vote in the first place. That is the test that we should apply to the Bill.

Before my hon. Friend runs away with the comparison between the communications allowance and Short money, is he aware that non-incumbent Labour candidates at the last election did 1.4 per cent. better than incumbent candidates? Among the Liberal Democrats, non-incumbent candidates did 2.3 per cent. better. Where does that leave the incumbency factor? It does not exist in this country.

I had always understood that what was realised after detailed examination of the incumbency factor was that incumbents tended to get a bounce first time around, but that after that the accretion of things that they had done which were not as good as they should have been tended to drag that factor away. The incumbency factor did not follow for elections after that, communications allowance or no communications allowance.

My point was that if we look at the overall picture of where money goes, from the vote of the House to what might conceivably be regarded as political advantage, we see that the figures are pretty even between the majority and minority parties. That should cause us to concentrate on what is in the Bill, which—although I would like to see some amendments in Committee—I think can overwhelmingly pass the test and make the public think that the processes in which we engage in this House and during elections can be more transparent, better conducted and lead to more confidence in the electoral system. I believe that that can happen, and that is why I support the Bill.

I will not go through a clause-by-clause dismemberment of the Bill, because my right hon. Friend the Member for Horsham (Mr. Maude) has already done that from the Front Bench in one of the best speeches that I have heard on this subject.

I am tempted to take up the remark made by the hon. Member for Battersea (Martin Linton) about the alleged non-existence of the incumbency factor; he is certainly right that it is much smaller than people think.

I am trying to agree with the hon. Gentleman; if he can contain himself for a moment, he will get a measure of support. However, he does not fully realise the implications of his own point. If he thinks that local campaigning, which MPs do a good deal of, has little impact, presumably he must conclude that local campaigning by candidates challenging incumbents also has relatively little impact. There is a huge amount of evidence to suggest that, too. In other words, we may all, Don Quixote-like, be tilting at the wrong issue in worrying so much about the effects of local campaigning.

Furthermore, it is worth pointing out that in the UK there is virtually a blanket prohibition on a key use to which money can be put in this context: access to television. Television has driven the huge increases in expenditure in the United States. On grounds of freedom of speech, the Supreme Court has ruled that there can be no limits to the amount spent on television. The prohibition in this country is the key protection against the alleged huge arms race that has been mentioned, which can never be found in the figures—not in aggregate, at least, and certainly not on the scale alleged by a number of Members this evening.

I should like to address two general, big issues: both have been referred to and one was discussed at length by the hon. Member for Cambridge (David Howarth) in his excellent speech about trust.

As politicians, we have two big challenges. First, we need to restore the electorate’s confidence in how we finance our parties, and there is agreement across the House that that is necessary. Secondly, we need to restore their faith in how elections are conducted.

Despite its title, the Bill does little or nothing to address either of those issues. As a number of Members know, I have argued for a decade that there should be fundamental reform of party finances. To his considerable credit, within weeks of becoming Leader of the Opposition in 2005, my right hon. Friend the Member for Witney (Mr. Cameron) came out in strong support of a radical set of proposals, very similar to those put forward by the Liberal Democrats in 2003 and to those put forward by Matt Taylor, then chief strategist for Tony Blair. Equally to his credit, the then Prime Minister, Tony Blair, more or less agreed that that was the way in which we needed to take policy, and he did that in the teeth of yet another huge funding scandal afflicting his party at the time. It was certainly courageous.

Cleaning up this area of politics would require bold and radical steps of that type by both the major parties and by the Liberals. For my party, it would mean completely bringing to an end reliance on big individual donations and ending any hope that big business donations could be restored. For the Labour party, it would require ending dependence on big union donations, either directly or indirectly through affiliation fees. Tony Blair and the leader of my party were both prepared to act boldly on those issues. In order to achieve it, they agreed to create the process that led to the Hayden Phillips process. He was asked specifically to make recommendations on donation caps, but his terms of reference make no mention of spending or spending controls.

One of the many proposals that Hayden made during the course of lengthy discussions—I participated in all of them—would have achieved the key objectives set out by the leaders of the major parties. For the first time, each trade union member would have been given a genuine, individual choice on whether to donate to a political party, and if so, which one.

Affiliation fees were the stumbling block. The Justice Secretary, who is now back in his seat, still blocks the publication of that proposal. It is as though admitting to the unions and to the rest of the labour movement that he even held discussions on such an idea might taint him in some way. I can think of no reason why that proposal of Hayden Phillips should not be published. The nub of it and the reason those talks broke down is that the courage that was being exhibited by Tony Blair appeared to evaporate as the discussions went on, as his power waned, and when he was replaced by the current incumbent. That is why the Conservatives eventually concluded that the talks had become pointless.

The Bill is also silent on the second major area where we must act if we are to restore trust in politics. We need to clean up the malpractices and electoral fraud that have come with the Government’s misguided relaxation of postal voter registration, which gave us elections so tainted that a High Court judge was moved to conclude that they

“would disgrace a banana republic”.

It should be a relatively straightforward matter to clean this up through individual registration and voter identifiers. The Electoral Commission supports that; as far as I know, all political parties support it. Even the Government have said, and said again today, that they do not disagree in principle. Why on earth are the Government dragging their feet? We have had a lot of discussion about consensus. Consensus on individual registration exists right now. The Justice Secretary hid behind the need—I virtually quote him—for the details to be sorted out, but the Electoral Commission has already done most of that work. I very much hope that the Government will help us by amending the Bill to include individual registration as quickly as possible. I can see no possible explanation for their current inaction other than partisanship.

So much for what is missing from the Bill—what about what is in it? As I said, my right hon. Friend the Member for Horsham did a pretty good job on that. The Government said that they want to go ahead on the basis of consensus. However, as regards triggering rules for the purpose of calculating a candidate’s election expenses, they have proposed a major change without any consultation at all. Sir Hayden did not opine on this—he was not even asked to consider it.

What is more, the Government have announced that they want it on the statute book so that it can be operative immediately—in other words, so that it can influence the outcome of the forthcoming general election. In fact, they have said that they even want it to come into force before the Electoral Commission’s guidance is published. That would create an extraordinary state of affairs, whereby people would be required to obey a law, on the content and meat of which they would have no information to guide them.

All that sits rather oddly with the high-minded talk about consensus that we have heard from the Justice Secretary. He backtracked a little on that today, but it should not be lost on any of us that he has tried to railroad this proposal through without any consultation. He originally wanted to make implementation retrospective, to the date of Second Reading—in other words to today, before the Bill had even been in Committee.

I have only a few brief remarks left to make, about one or two other issues that require our attention. Clause 2 sets out the Electoral Commission’s investigatory powers. Of course I agree that the commission needs investigatory powers to perform its statutory duties, but the proposals look extremely heavy handed—hon. Members in all parts of the House have made that point in different ways this evening. We cannot possibly implement the proposals in the Bill as drafted, so we must look at them again.

Clause 8 requires political parties to make a written declaration about the original source of any funds over £200. We have had a discussion about that. My right hon. Friend the Member for Horsham has already explained that for practical reasons the Electoral Commission does not support that measure in its current form, and neither do I. I am fully in favour of transparency, but the compliance burden would be huge if the declaration requirement and the verification process were to become meaningful.

That is where the compliance impact assessment is so off beam. It says on page 4 that

“it would take a political party approximately 5 minutes per donation…to process donations…over £200”.

Five minutes to verify a donation is no more than a brief phone call or even the time that it would take to find out what number to ring. However, the reputational risk to a political party would be huge if that were not done more thoroughly. That is because—this point has not been explained thoroughly enough this evening—the Bill fundamentally changes the relationship between the Electoral Commission and political parties, by providing civil sanctions and by the increase in investigatory powers.

The real compliance burden on political parties from that £200 trigger would therefore be large. The provisions are not acceptable in their current form. There are a number of solutions, one of which may be to raise the £200 limit. However, we cannot leave any political party as exposed as the Bill currently recommends. I completely agree with the point made earlier that nor can we allow vehicles to be created especially for the purpose of concealment. However, clause 8 is not designed to prevent that.

With respect to the issue of consensus, let me add in passing that neither the Electoral Commission’s proposed investigatory powers nor the verification changes were subject to Green Paper consultation. There has been no serious consultation on those issues, still less the establishment of a consensus.

This is a tiny Bill that is designed to deal with major problems, but it does not address them. Even the relatively small measures in the Bill can be described as partisan and ill conceived. I am confident that it will not survive scrutiny in the other place. I hope very much that the Government will have the good sense to withdraw the most controversial measures and to amend the rough edges of a number of the others before they allow it to get there.

I have learned, over the years, to be extremely suspicious of the word “consensus”. Whenever it is used by party politicians in this country, it usually means that they are about to disagree about something. We learn that it is nice to say that we believe in consensus, but I have never seen it endure when serious matters arise. We had an outburst of it recently over the financial crisis. It lasted for about 48 hours. Some countries do consensus; the Nordic countries do consensus, including on party funding. We do not do consensus, however.

We know that we ought to do consensus, which is why we talk about it so often, but we also know that it will break down at the first touch of party advantage. Notwithstanding what the hon. Member for Chichester (Mr. Tyrie) has just said, when the Conservatives thought that there might be some party advantage in triggering the trade union issue, they collapsed the Hayden Phillips talks. That was a great pity. We ought to pay tribute to Sir Hayden Phillips, who, with the Constitutional Affairs Committee, produced an excellent set of proposals that provided the basis for some progress on the issue.

We do consensus only in the most exceptional circumstances. That was the context of the Political Parties, Elections and Referendums Act 2000. We had a newly elected Government with a huge majority. The Opposition were disoriented, unbalanced and on the back foot. They were rather ashamed of themselves, and knew that they had to come on side. In those circumstances, it was relatively easy to get consensus around the 2000 legislation.

In normal times, we think that consensus is a good idea, but we just do not do it. It is rather like an alcoholic who keeps saying that he is attached to the virtues of sobriety. Yes, he knows what he has to say, but somehow he can never quite do it.

We need to take a step back before we take the step forwards. We need to take a step back and remind ourselves of where we have come from. I remember coming into the House in the early 1990s. There were party funding scandals, and they were all about where the Tories were getting their money from. Private organisations had to go to Companies House to try to find out where those great Tory funders came from. Then they did the matching up of the funders and the people getting peerages, and said, “There you are, this shows that these big funders get their pay-off in the House of Lords.” But it was a completely covert system.

When the new Committee on Standards in Public Life was established, I remember saying, along with other people in the House at that time, that we should ask it to look into party funding, so that it could help us to sort out some of these issues. The Conservative Government of the day refused to give the issue of party funding to the committee. That shows where we have come from, and where we have now got to.

Looking back at those days, it is worth remembering that party funding was entirely unregulated at that time. Parties were seen essentially as voluntary organisations that could do as they liked with their money. They could do as they liked in regard to how they got it and how they spent it. It was only when that seemed to be causing difficulties and embarrassment of the kind that I have just described that the Committee on Standards in Public Life produced the comprehensive report on party funding that led to the 2000 Act. The watchword of that Act—which we thought, at the time, would be the piece of legislation that would deal with this issue once and for all—was “transparency”. The problem was identified as one of secrecy, because we did not know where donations came from. We thought that, if we had proper transparency and people could see where donations came from, that would solve the problem. The parties would have to be accountable for what happened after that.

As it turned out, however, that did not solve the problem. There were a number of reasons for that. One was that, when people saw what was happening, they did not like it. Also, the pattern of party funding was changing. Let us look back at what seemed offensive at the time. The Labour party was, on the whole, funded by the trade unions, and the Conservative party was funded by business donations. That looks like an age of lost innocence compared with what we have now, because it was all open and regulated—albeit on its own terms, and if one could find out the information.

Now, of course, it is clear that those sources of donations fell away and we saw the rise of the big individual donor. We reached a position in which parties were increasingly funded by those rich individuals and party effort had to be devoted to going out and finding them. That, of course, raised questions in turn about what those rich individuals were going to get for their money. What would they receive in the way of changes in party or Government policy? What would they get in the way of honours, peerages and rewards? We moved from a position in which it was thought to be enough simply to have transparency to one in which it was thought necessary to address the new funding environment.

As we deal with present circumstances, we should remember at least some of the logic of those former days. The logic was, I believe, this. Let us be sure, it ran, that we identify the problems before we invent the solutions. That may sound trivial, but I hope not. It is possible to get so intricately involved in the nuances of funding regimes that we lose sight of why we are looking into them in the first place. I presume that we are doing it to stop money ruling in politics, to stop politics being driven by financial considerations and to stop certain people being able to buy influence through privileged access and privileged benefits.

As always, I am listening with great interest to my hon. Friend. He is absolutely right that money must not be able to buy politics or politicians, but his focus on funding avoids what many of us believe is the problem—expenditure. Tight and rigid controls ensuring low expenditure would solve all the problems, provided that those controls were policed. Does he not accept that point?

That is consistent with my argument; we do not want our politics to be driven by money, as it would be if we simply had unlimited spending. The whole pressure of our politics would be to do with raising and spending money. That is the logic for having overall spending controls. To return to the Bill, the logic of that argument is that because we now have what is often described as a permanent election campaign—we no longer have a campaign confined to the three weeks or so of the formal election—driven from the centre by the party machines, which spend a great deal of money and deliver it locally where they can, we should control spending not just nationally, but locally, because that is what a permanent election campaign means.

We get into some difficulties here and I want to be as honest as I can about them. It is inevitable in a first-past-the-post electoral system that the parties will concentrate their energies on marginal seats. That is what they do, and their financial energies are also focused on those seats. I want to stop Ashcroft as much as anybody else, because I find it offensive that an individual can, as it were, buy parliamentary seats. The research evidence is very clear that it is effective—[Interruption.] The research evidence is absolutely clear on that. I have to tell myself, however, that if Lord Ashcroft and his organisations were not doing this, but a political party was doing the same thing directly, it would of course be entirely logical and rational to spend a large amount of money on a marginal seat. If it is rational for a party to do it, what is the problem with an individual doing it on behalf of a party? That raises difficult issues.

I come back to a point that has surfaced once or twice: this wretched communications allowance. I do not agree with my hon. Friend the Member for Southampton, Test (Dr. Whitehead) on that, and I speak as someone who had grave reservations about the measure when it was proposed. Indeed, I voted against it because I thought that it would come back to haunt us. It is not true to say that the publications we put out are benign and nothing to do with party politics and elections. I am as guilty as anyone else; I am not talking just about other people. We put these things out, paid for by substantial amounts of public money—£40,000 to £50,000 during a Parliament—and we tell people, quite legitimately, that we are working night and day on their behalf, as we probably are. We include a picture with a policeman, a picture with some schoolchildren and a picture with a nurse, and we build up a picture of a person working night and day on our constituents’ behalf. The subliminal message being pumped out from every page is, “Vote for me!” Let us at least be honest in this debate. If we have decided that we would like to spend £40,000 or £50,000 in public money over the course of a Parliament to say, “Vote for me”, all I would say to colleagues with whom I share the desire to stop Ashcroft is that that makes the argument more difficult than it should be.

The hon. Gentleman has been rather unfair in his criticisms by lumping in such mundane things as advertising the times and locations of surgeries in local newspapers. That is now a very expensive activity, which one is required to fund through the communications allowance.