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Lord Renton: In relation to this amendment and other amendments which follow, we should bear in mind that parties can come into operation, naturally and legitimately, at very short notice before a general election.

I was a Liberal, and, when the Liberal Party split in 1932 on the issue of free trade and protection, I became a National Liberal. If I remember rightly, there was a general election within 18 months--or it may have been a shorter period--and the National Liberal Party had to assert itself as a new political party. It succeeded in doing so. There was no red tape to prevent it. At the following general election, in 1935, it won more seats than the Liberals. So we must remember the need for flexibility in this area. The point that I have made is not the only one that arises, but in relation to this and other amendments it should be borne in mind.

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Lord Phillips of Sudbury: In his reply, will the Minister be so good as to tell the Committee how the total expenditure referred to in subsection (5) is to be calculated with regard to non-financial benefits provided under subsection (2)? The point is not so arcane as it would appear, and it goes to the issue of whether the £100,000 annual figure inserted in the amendment is likely to prove adequate. With regard to non-financial benefits, one could envisage a wide range of possible valuations to be accorded under this clause.

Lord Bassam of Brighton: The debate has been more wide-ranging than I had anticipated. There have been some interesting contributions. I was particularly interested in that of the noble Viscount, Lord Cranborne, which was rather more extensive than the briefing on the amendment, but interesting for all that.

The noble Lord, Lord Mackay, credited me with being candid, which I take as a compliment. Interestingly, coming from the Benches opposite, the noble Lord began to make a case for the extension of state funding--

Lord Mackay of Ardbrecknish: I did not bother to intervene during the remarks of the noble Lord, Lord Rennard, because I am used to such comments coming from that quarter, but I really must intervene in the Minister's reply. I think I made it absolutely clear that that is not what I am asking for. Frankly, if the Bill, and the cumbersome bureaucracy involved in it, had not been brought forward, I should not be talking about this matter at all. It is not a question of asking for help with political activity but of asking for help for political parties with the bureaucracy that is being imposed on them by the Government. There is a difference.

Lord Bassam of Brighton: But I think the noble Lord might accept that it is state funding. If one departs along that road in the way suggested by the amendment--that is certainly how the Liberal Democrat Benches see it--it becomes difficult to see where to draw the line.

The state might help in some instances with start-up costs; indeed, that is what we are doing here. The state does not help charities to conform with the Charities Act or, for that matter, companies to comply with the Companies Act in terms of regulation. What we are establishing through the Bill is a system of regulation for political parties.

Clause 32 simply gives effect to the Neill committee's recommendation that state funds should be made available to political parties for the purpose of meeting start-up costs alone in complying with the new disclosure regulations.

It is worth emphasising that these are merely start-up costs. What the committee had in mind were the possible costs of, for example, computer equipment and software which might be required to handle the aggregation of donations received by the disparate parts of a party's organisation over the reporting cycle.

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Amendments Nos. 108 and 109, however, would make state funds available to meet political parties' continuing compliance costs. That is not what the Neill committee recommended. Political parties, as with other bodies subject to statutory regulation, cannot expect to receive ongoing financial assistance to help them meet the cost of regulation. Moreover, once initial start-up costs have been made it seems reasonable to assume that any subsequent compliance costs will be very much more in proportion to the number of donations received by a political party. It would be difficult in those circumstances to justify any ongoing assistance to political parties from the public purse to relieve them of the administrative burden created by the need to record the receipt of large numbers of donations.

The proposition is a clear departure from the principles of the Neill committee. It would take us further along the road of limited state funding, and further towards funding on a continuing basis. We cannot take that course.

The noble Lord, Lord Phillips, asked a question. The £500,000 figure in Clause 32 includes both cash and non-cash benefits. The Neill committee clearly thought that in terms of compliance with the Companies Act there would be much more of the latter than the former. I hope that that answers the noble Lord's point. If it does not, I shall reflect on it again and see what more can be done to provide additional information.

Lord Harris of Greenwich: I wonder whether the noble Lord would like to think again about this matter between now and Report. I can see the case for the legislation. The noble Viscount, Lord Cranborne, professes not to understand the case for legislating--which is rather surprising, given that one of the reasons for it is the large-scale abuse by political parties in terms of fund-raising. The noble Viscount, Lord Cranborne, will recall the discussions that he and I had when he was Leader of the House. I asked about Mr Asil Nadir, a fugitive from justice in northern Cyprus, who stole over £400,000 from those who had shares in his company. The stolen money, having been passed to Conservative Central Office, should have been repaid. It has not been repaid, and that is, no doubt, one of the reasons why there has been so much public disquiet about the way in which political parties in this country have been funded.

A great deal of humbug is talked about state funding. There is state funding: a substantial proportion of the funding of the Conservative Party's research department comes from Short money. So when people place their hand on their heart and say that they are wholly opposed to state funding, they should consider for a moment how their own party is being financed.

Notwithstanding that, there is a serious problem which has been identified by the noble Lord, Lord Beaumont of Whitley. I refer to the problem relating to smaller political parties such as the Green Party. It would be right for the Government to consider this matter carefully. One does not want to be oppressive

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in the way in which legislation is implemented so far as it concerns the smaller parties. It would be most unfair were that to be an unintended result of the Bill.

As I said, I hope that the noble Lord will reflect on this matter between now and Report. Otherwise, an unfair view will be created that there are reasons for the rigidity of the Government's position other than the merits of the argument.

Lord Mackay of Ardbrecknish: Before the noble Lord, Lord Beaumont, sums up the debate, I asked the Minister whether any assessment had been made of the likely ongoing costs to small parties. I noted that he did not answer that question. The Green Party springs to mind, as does Mr Tommy Sheridan's Scottish Socialist Party. It may be that the Government would quite like to squeeze out Mr Tommy Sheridan's party and to see it go bankrupt or be unable to fulfil its obligations. Much as I disagree with Mr Sheridan, he brings a certain sparkle into politics and I do not think that he ought to be squeezed out by means of this Bill. So I wonder whether the Minister can say whether any assessment has been made. Or perhaps he can assure me that, if we return to this matter on Report, he will be in a position to give an assessment of the likely costs to the smaller parties.

Lord Bassam of Brighton: I am grateful to the noble Lord for prompting me again on this matter. I understand that there have been a number of discussions with the smaller parties on start-up costs. But unfortunately--regrettably, one might say--for reasons that I do not understand, and perhaps officials do not understand either, the discussions never managed to get beyond start-up costs. It is a reasonable question to ask. I shall take the matter away and see whether there can be further discussions on it. Looking at the amendment, the noble Lord, Lord Beaumont, seeks £100,000 in subsequent years. I should be most interested to know on what basis that calculation was made.

I understand the point behind the amendment; namely, that we do not want to squeeze out the "choice and diversity", as the noble Lord, Lord Mackay, put it, of smaller political organisations. That is not the intent of the legislation. Indeed, I rather welcomed the noble Lord's contribution in that respect, coming, as he does, from one of the major political parties in the country--in other words, that they, too, see diversity and pluralism as being extremely important. However, I cannot undertake to do any more than I have already stated at this stage. When the commission is established, it will no doubt take a view about on-going compliance costs. But that is not a matter for us to judge.

4 p.m.

Lord Beaumont of Whitley: I am extremely grateful to all noble Lords who have taken part in this mini-debate, not least because everyone, except the Minister, supported the amendment that I put forward. I am obviously disappointed with the Minister's response, but I am delighted to know that

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he will reconsider one or two points that I mentioned. If I were to return to the matter on Report--which I can assure the Minister I shall, if the Government do not produce an amendment of their own--I should modify the amendment so that it would be quite clear that the extra money was to be spread over the earlier part of the implementation, so that, in a way, it would be part of implementation for the first few years.

Unlike other noble Lords, I shall not embark now on the whole question of state funding. However, I should not like it to be said that this particular amendment was just about that; it is not. This is about learning to comply and the extra costs that are put on small parties in particular under the provisions of this Bill. I beg leave to withdraw my amendment, but, as I said, I shall be returning to the matter.

Amendment, by leave, withdrawn.

[Amendment No. 109 not moved.]

[Amendment No. 110 had been withdrawn from the Marshalled List.]

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