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Lord Mackay of Ardbrecknish: These issues were touched on in another place as long ago as

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25th January. On that day the Minister, Mr Tipping, commented in relation to the sum of £500,000 towards the start-up costs that:

    "It remains to be seen whether the sum in the Bill is sufficient".--[Official Report, Commons Standing Committee G, 25/1/00; col. 63.]

The noble Lord, Lord Beaumont of Whitley, has raised an important point with his amendments which relate not to capital costs but to ongoing costs. The noble Lord has touched on an issue which the Government should certainly examine afresh, if they are not doing so already.

On Tuesday, the noble Lord, Lord Bassam, admitted to what we on this side of the Committee, and I believe certain noble Lords on his side, have been saying for some time. In one of his more candid moments, at col. 272 the noble Lord referred to the Bill as, "cumbersome and bureaucratic". It is unusual to encounter such refreshing honesty from this Government, but it is always a pleasure when we get it.

The Bill is indeed bureaucratic and cumbersome and I am happy to agree with the Minister. I believe that the clear effect of complying with the provisions of the Bill is that the three main political parties will each incur additional annual costs running into at least six figures. The Conservative Party will certainly have to employ some additional staff on a permanent basis who will be dedicated to policing the new bureaucracy laid down in the Bill. I do not believe that any of the parties--not even the Labour Party--would claim to be so awash with cash at the present time that they could easily meet the costs now being imposed by the Government.

As we heard on Tuesday, as the Bill progresses a number of government amendments are now imposing even more bureaucratic burdens than perhaps we had anticipated at the beginning. That bureaucratic burden has now reached right inside the door of No. 10 Downing Street, where the Prime Minister will be bothered on almost a daily basis to sign papers regarding changes in treasurerships for constituency Labour parties.

As we said in another place, at present we do not believe that there should be blanket state funding of political parties--I know that we disagree with the Liberal Democrats on that point. However, the provision of assistance to all political parties to ensure that they can comply with the provisions of this Bill is essential. That would not count as "funding a political activity". The costs imposed by the Bill will be significant; as I said earlier, the Conservative Party, for one, will need to employ additional staff on a permanent basis. No doubt the problem faced by the smaller parties will be even more acute.

For that reason, I can see merit in the approach of the noble Lord, Lord Beaumont. It may be that, after the Bill is enacted, it proves to be even more burdensome than we had thought. After all, given the number of government amendments to the Bill that have been brought forward over the past few months, it is clear the Government themselves have had plenty of second thoughts about it. No doubt the Minister

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will be delighted to know that I shall expand on the point that the Bill will be even more cumbersome than we thought when we reach later groupings in the Marshalled List.

It may certainly be the case that some of the smaller political parties will be placed in a position of real difficulty when they try to comply with the provisions of the Bill. The majority of registered parties are not represented in this place or in the other place and therefore cannot make known their views directly. I shall be interested to know if any assessment has been made about the recurring compliance costs for those smaller parties. I should have thought that the last thing we would want to see as a result of the Bill is the stifling or even bankrupting of political parties, in particular the smaller ones which are not represented here.

I could rehearse the arguments I made on open lists during the passage of the European Parliamentary Elections Act which, sadly, were rejected by the Government. However, I think that noble Lords and in particular the Government Front Bench will be pleased to hear that I shall not do so. However, I will say this: diversity and choice are good for the political process, whether that is achieved through the number of political parties or through an open list for the European elections. I do not say that the Government are imposing impossible burdens on small parties in order to shut them down. I am sure that is not their intention, but that may well be the law of unintended consequences as a result of this Bill.

I hope that the Minister will be able to respond in a positive way. The noble Lord, Lord Beaumont, has chosen a figure of £100,000. Perhaps it should be higher; perhaps--although I think that it is unlikely--it should be lower. Perhaps the commission should be given the power to make grants on the basis of financial need. In any event, the figures we are talking about are relatively small in the grand scheme of things--although they may be very large when it comes to the funding of an individual political party.

I am not calling for huge amounts of money to be poured into political parties; I am asking the Government to consider the ongoing costs of this burdensome Bill. They already accept in this clause that there are capital costs which the public purse will meet. The Government should turn their mind to the question of ongoing costs as well.

Lord Rennard: I support the amendment and the arguments advanced by the noble Lord, Lord Beaumont of Whitley. In particular, I welcome the apparent conversion of the Conservative Party to the cause of at least limited state funding for political parties and their operations.

This legislation imposes a considerable burden on parties. The legislation recognises that there are considerable start-up costs and justifies the payment of up to £500,000 to the parties for these start-up costs. But the burdens are ongoing.

Wearing another hat, I recently met some of the Minister's civil servants dealing with this issue. They made it plain that they would expect the political

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parties to check each and every one of the contributions they receive to make sure that that contribution is made by a permissible donor--that is, someone on the electoral register. Checking each and every donation in this way will involve a considerable amount of work for parties, whether it is done by computer or, in the first instance, by making a telephone call to the electoral registration officer in each case to check that the person making the donation is on the electoral register.

I discussed this issue some time ago with Margaret McDonagh, the General Secretary of the Labour Party. She felt that this legislation might require her party, for example, to hire 10 more officials to deal with the accountancy procedures required. Political parties are not profit-making organisations; they do not have the resources to deal with this legislation at present. Expecting them to do so would mean that they would have less money available to make their democratic case. That would not be in the best interests of our democracy.

3.45 p.m.

Viscount Cranborne: I support the amendment. I always find it difficult to support amendments brought forward by even former members of the Liberal Party, but, in this particular case, the logic of what the Government are proposing in this legislation rather dictates that we should listen to the arguments of the noble Lord, Lord Beaumont, with a great deal of sympathy.

Perhaps I may ask the noble Lord who is to reply on behalf of the Government to cast his mind back into the dim recesses of history and to think about how the Labour Party came into being. Noble Lords opposite will, I am sure, be the first to recall that in those days the dominant opposition party against my party was the Liberal Party. During the course of the famous--indeed dramatic--political events in the first half of the 20th century, the Labour Party came to be transmogrified from a small sectarian group of people into the principal opposition party to the Conservatives. The fact that this happened was largely facilitated--apart from the support of the trade unions--by the extremely ill defined rules governing party regulation. That is something which this legislation seeks to restrict very dramatically.

One of the great difficulties in the constitutional arrangements of our country is that there is an ill defined relationship between parties, which are an essential part of our system, and the more carefully defined constitutional elements of our system. We agree that parties are necessary to make the system work and yet, up until now, parties have not been clearly constitutionally defined. One of the effects of the Bill is that parties will be much more clearly defined as part of the constitutional arrangements of this country.

Although that may be an inevitable consequence of a number of things which have occurred, particularly in the past three years, what is also happening is that the flexibility which allowed the Labour Party to come

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into being as the dominating party against the Conservatives in the last century will become a thing of the past. In a curious way, the Labour Party, having taken advantage of that flexibility, is, perhaps rather belatedly in its view, beginning to pull the ladder up behind it.

I suggest that if the result of this legislation is to make it more difficult for the long-term shift in the main parties to occur, the long-term flexibility which has been one of the advantages of our system will be reduced. It is important that we should mitigate these effects by at least ensuring that other parties are not inhibited from developing and challenging the main parties over a period of time.

The noble Lord, Lord Beaumont, has put his finger on an important point. Looking at the matter in the long term, it would be a great inhibitor if the government of the day were to impose rules on parties which made it much more difficult for them eventually, over a period of years, to challenge the dominating position of one or other of the two main parties.

Although I deplore a great deal of what is contained in the Bill, if we are to accept the main thrust of it--I fear that we must in view of the present position in another place--we would be wise at least to take the logic of the Bill and to ensure that we retain as much as possible of the ability for long-term shifts in the relative balance of power between parties over a number of years. We should not begin to incorporate the position of the two dominant parties into the constitution in the way in which they have across the Atlantic with the Democrats and Republicans.

The noble Lord, Lord Beaumont, is putting forward an amendment which may seem rather modest in terms of what he proposes but, in terms of the logic of the Bill, if parties are to preserve a certain internal dynamic within the body politic, it would be wise to excise the word "initially". That would give lesser parties at least an element of freedom, which I suspect the Bill would deny them if the word "initially" were to be left in.

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