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Lord Mackay of Ardbrecknish moved Amendment No. 188:

("( ) Notwithstanding anything in Schedule 15 or Part IV, a permitted participant shall be prohibited fromaccepting during a referendum period any donation from a permissible donor of the type specified in section 52(2)(c).").

The noble Lord said: My Lords, I have to take cognisance of the last Division and the fact that we now have the rigged expenditure provision in the Bill and are unlikely to be able to take it out. I now want to consider how that works and to tease from the Minister that some twists in it are perhaps less than fair and honest.

In another place at the Second Reading of the Bill the Home Secretary said:

    "The Liberal Democrats are offered generous spending limits in the Bill, but it is a racing certainty that the party will not be able to raise money to the level of the spending limit. So to argue that spending by the Labour and Liberal Democrat parties will be nearly equal because both parties will be able to spend up to a maximum amount fails to take into account the capacity of parties to raise money up to the maximum".--[Official Report, Commons, 10/1/00; col. 38.]

I remind the Liberal Democrats what their friend the Home Secretary thinks about their ability to raise £3 million.

Let us assume that after the next election the Liberal Democrats still have a £3 million limit. Clause 52(2)(c), which I have already tried to delete, allows one political party to donate to another. I assume that the Labour Party would have more than £5 million available to spend on any referendum on the euro. To maximise the pro-euro spending, Labour would be able to give some of its surplus to its Liberal Democrat allies. We all know from Mr Ashdown's diaries about the close relationship between the two parties. The Minister admitted as much on 24th October, when he said:

    "The noble Lord"--

I think that that means me--

    "clearly had in his sights the possibility that in a referendum on the euro the Labour Party, having set aside £5 million for its own campaign, might contribute to the campaign of the Liberal Democrats. I entirely accept that that is a theoretical possibility. ... Such a move would not necessarily be contrary to the letter of the provisions in Part VII".--[Official Report, 24/10/00; col. 185.]

In Committee, I proposed a ban on parties donating to other parties to stop them acting in concert to take advantage of the limits--I was going to call them rigged limits but I shall say that they are slightly out of balance. The Minister had concerns about that, pointing out to me that the Labour and Co-operative parties might want to donate to each other. As we all know, they are pretty well one party. I do not know why money should go from one party to another, but I have conceded that point to the Minister. He has got one up there.

Later on in Committee I proposed a ban on parties using money given by other parties to fund referendum campaigns. The Minister told me that it was difficult, if not impossible, to control the uses to which particular money was put. I therefore concede that point for the purposes of today's debate. The amendment would

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allow the Labour Party to receive as much money as it could from the Co-operative Party--or, indeed, to give as much money to the Liberal Democrats, such is my generosity. It would not even stop them using that money for a referendum campaign. To that extent the amendment is not nearly as watertight as I would like. However, it would stop parties donating to other parties during the period of a referendum. That would be the time when a political party might find that it was going to underspend because it could not raise enough money and would then go cap in hand to its wealthier cousin--in this case the Labour Party--and say, "Help. We thought that we would get enough money to fund the campaign but we are not going to get near our maximum. Can you top us up?" The amendment would stop that.

The amendment meets all the concerns that the Minister raised in earlier debates. He can hardly plead in his defence that it is not watertight because on the previous amendment he said that it did not matter that the Bill was not watertight. He cannot change sides on the issue of watertight provisions.

As the amount of money that a party is allowed to spend is related to its vote at the previous election, it is a bit odd that parties should be able to pool their money when they spend it, as if their separate votes did not matter.

The euro is not the only issue. The problem could arise during a referendum on any issue. If we are to have limits--the Minister has clearly got his way on that--they should be as fair in their operation as possible. The scenario that I have outlined would not be fair. I accept that the amendment would not entirely prevent unfairness, but it would go a long way to prevent it during a referendum campaign. I beg to move.

Lord Richard: My Lords, before the noble Lord sits down--I know that he has, but let us assume that metaphorically he is still on his feet--I should like to put one point to him. I listened to him with great interest. His complaint is not that the Labour Party might donate money to the Liberal Party but that the Liberal Party would not accept money from his party if he wanted to give some. The noble Lord seems to assume that there is a permanent alliance between the Liberals over there and the Labour Party over here and that we should be treated as one party. On the voting record of the past Session, that is not axiomatic.

Lord Mackay of Ardbrecknish: My Lords, I think that I probably now have to interrupt the noble Lord's speech before he sits down. If the Liberal Party and the Conservative Party were on the same side in a referendum and the Labour Party were on the opposite side, the Bill would allow the same scenario. Even in those circumstances, it would not be fair.

Lord McNally: My Lords, when I attended school dances, I used to look enviously at the prettiest girl in

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the room, who sat there smugly knowing full well that all the boys wanted to dance with her. I am beginning to feel like that girl this evening.

Lord Monson: My Lords, will the Minister confirm that, as the Bill stands, the Labour Party could give money to parties with which it is normally at loggerheads, such as the Scottish nationalists and the Welsh nationalists, for the specific purpose of winning a referendum vote on the euro?

Lord Bassam of Brighton: My Lords, the noble Lord, Lord Mackay, has described his amendment perfectly, so I shall not repeat its intent. His particular concern is that, in addition to spending up to its own limit, the Labour Party might contribute to another political party's campaign. I have been in the Labour Party for 20 years or so. I do not have the longest membership of the Labour Party, but 20 years is not a short time. I have been involved in some pretty hairy debates in that time. I remember the ghastly years when we had the militant tendency in our midst. I also remember some rather more halcyon years. I cannot remember any Labour Party general management committee or branch meeting debating the merest possibility that we mightwant to make a donation to another political party. I have heard some pretty weird debates in the Labour Party during that time, as well as some interesting and exciting ones, but I have never heard anyone argue that we might want to give money to the Liberals. That would have been a very strange argument. I am puzzled by the noble Lord's attempt to tie us in with our friends on the Liberal Democrat Benches at this stage in our development as a political party. Technically the noble Lord, Lord Monson, is right, but practically what he suggests is a non-runner.

I do not like to say so, but the noble Lord, Lord Mackay, seems to be having some good fun with his amendment and making a slightly mischievous point. The amendment emerged because he did not seem to understand earlier in our debates that some of us in the Labour Party could also be members of the Co-operative Party. I have two party cards. One tells me that I am a member of the Co-operative Party and the other tells me that I am a member of the Labour Party. That is the eventuality that the Bill permits. It is not about trying to top up another party with extra resources in the event of a referendum on the euro. The noble Lord needs to be disabused of that.

We have had the argument before. I am not convinced that the noble Lord is being entirely serious. Technicallyhe is right that there is a possibility, but in reality it will not happen.

7 p.m.

Lord Mackay of Ardbrecknish: My Lords, I was interested to see the Minister brandish membership

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cards for the Labour Party and the Co-operative Party. This is the Minister who, about 30 minutes ago, accused me of being schizophrenic.

Lord Bassam of Brighton: My Lords, the two are entirely compatible.

Lord Mackay of Ardbrecknish: My Lords, I am glad about that.

This has been an interesting debate. The noble Lord has often said at the end of debates that the point that I have made is right but that it is so theoretical that it would not happen. In my view, to say, "Yes, there is a loophole; yes, there is a way round it; yes, there is a way through it. But don't worry, it is only theoretical", is an extraordinarily unsatisfactory way to leave legislation. Perhaps I may suggest to the noble Lord that he talks to some of his colleagues on the Treasury team. They will tell him that they spend most of their waking hours trying to ensure that even the most theoretical loophole in finance legislation has been closed; otherwise, a whole army of accountants will lead a whole army of people through that loophole. That is true in relation to finance legislation and it is also true in relation to all other legislation.

This is not a satisfactory position. However, I shall not divide the House on this amendment. I say simply that I shall take it as a statement on behalf of the Labour Party that there is no circumstance under which it would pass money to the Liberal Democrat Party. That is what the Minister has just said. I shall rest my case on that if at any time in the future an attempt is made to do what I have theoretically suggested is possible. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 189 not moved.]

Schedule 15 [Control of donations to permitted participants]:

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