Party Funding Reform

Lord Oates Excerpts

Thursday 3rd November 2016 Lords Chamber

[Lord Oates (LD)]

My Lords, the rules that govern the funding of political parties are a barometer of the health of a democracy. Where lack of transparency and the domination of big-donor funding prevail, politics is undermined and democracy sickens. One only has to look across the Atlantic, as has been alluded to by other noble Lords, at what is going on in the current US election to understand the corrosive dangers of big money distorting democratic ideals and undermining popular faith in what, until recently, has been the remarkable genius of democracy in America.

We have been relatively fortunate in that our party funding rules, the relative transparency of our system and the general practice that has been adhered to compares favourably with many other democracies in Europe and around the world, but we should not be in any way complacent. There is a crisis of democracy around the world and we are not immune from it. Public faith in politicians is at an all-time low, brought about in part by a series of scandals and suspicions around party funding. No party is immune from error in this regard and it would be a brave person who would preach from the mountain top on this subject when, too often, party funding rules have operated in the valleys. Political parties want advantage and money buys advantage, whether through more party staff with greater skills, a bigger budget to deliver direct mail into the homes of constituents or the funds to buy social media advertising. Increasingly, it buys the capacity to crunch bigger data and tailor individual messages.

So it is no surprise that parties want the money to out-compete one another. Nor is it any surprise that the party with the advantage is unlikely to wish to give it up and almost by definition—although not quite—the party with that advantage is most likely to be the party in government, and therefore in a position to make or break party financing reform; which, with honourable exceptions they nearly always break. At each election in recent years the main parties have promised comprehensive party funding reform but almost always it does not happen, although it should be noted here that the Labour Party in power after 1997 did much to make our system more open and transparent and got precious little thanks for it.

In 2010, the Liberal Democrat manifesto promised that we would:

“Get big money out of politics by capping donations at £10,000 and limiting spending throughout the electoral cycle”.

The Conservative Party manifesto boldly proclaimed:

“We will seek an agreement on a comprehensive package of reform that will encourage individual donations and include an across-the-board cap on donations. This will mark the end of the big donor era and the problems it has sometimes entailed”.

Labour’s manifesto stated rather more modestly:

“We will seek to reopen discussions on party funding reform, with a clear understanding that any changes should only be made on the basis of cross-party agreement and widespread public support”.

In doing so, it gave the Conservative Party the perfect let-out during the coalition talks on this subject, which it eagerly took advantage of. Undaunted by the failure to reach any sort of agreement or understanding in the 2010 Parliament, the parties were back at it in their 2015 manifestos, although the Conservative Party, having spent some time in government, had rather more modest promises this time.

Despite all that, nothing has happened and nothing looks likely to happen. The Conservatives currently hold the advantage and, as the rather extraordinary complacency of the speech of the noble Lord, Lord Leigh, suggests, they have absolutely no intention of giving it up. This is worrying because while we may fare better than other countries around the world, we have done so because we have had comparatively tight rules on election funding at constituency level and because the transparency rules and other changes introduced after 1997 helped shine a light into hitherto dark corners.

If a democracy is to function in the interests of the electorate and not of a wealthy few, it is imperative that it cannot be bought by wealthy individuals. Here the funding and expenditure rules drive each other. Back in 1997, when I was first an election agent, the rules on constituency expenditure were pretty tight and were carefully monitored by all the parties. The amount you were allowed to spend was modest and it was possible for anyone who had significant public backing to raise funds for a constituency campaign. Rules on national spending in constituencies were adhered to, so that direct mail funded from party headquarters could not mention anything that would identify it as relating to a particular constituency.

Those rules were largely adhered to in 1997, 2001 and 2005, when I was last involved in running a campaign. But at some point after that, either the rules changed or the parties’ interpretation of them did, because in the 2015 general election there was a deluge of nationally funded literature into marginal constituencies from the Conservative Party. I was deluged with a large number of letters and leaflets from Mr Cameron, telling me that while I might very much like my local Liberal Democrat MP—as it happens, I did; I was his best man—in Kingston and Surbiton I simply could not take the risk of Ed Miliband and Alex Salmond running the country. In case I was in any doubt as to how ghastly a prospect that would be, these letters and leaflets were helpfully illustrated with a picture of Alex Salmond and Ed Miliband standing on the threshold of No. 10. I have never asked my Conservative friends why it was Alex Salmond instead of Nicola Sturgeon but I think I probably know the answer. More pertinently, I am not quite sure why they thought that the Deputy Prime Minister’s chief of staff was a potential swing voter, but that is a whole different matter.

The serious point here is that the volume of direct constituency-focused mail is significantly distorting the political process. We have recognised the principle of limiting constituency spending in law but that principle is no longer adhered to in practice, and the impact is to make national funding of political parties a much more significant factor in the election of our local representatives. Therefore, the need for funding reform is even more acute. It is not just the funding of political parties we should be concerned about. As my noble friend Lord Wallace of Saltaire has outlined, the funding of the recent referendum campaign is a cause of very serious concern. As he said, popular sovereignty it certainly was not.

We have the basic building blocks of a fair and equitable funding system via the 2011 Committee on Standards in Public Life report, although we believe that additional state funding is not required and the redistribution of existing funding could work. We need to act now; if we do not, our system will increasingly be distorted by big money. As the governing party, the Conservative Party needs to live up to its 2010 manifesto commitment to end “the big donor era”.

Trade Union Bill

Lord Oates Excerpts

Tuesday 19th April 2016 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I believe that the Government have got it wrong on the proposals for a new role for the Certification Officer. The Government are creating legislation affecting our legal rights in inverse proportion to the need for it. Thousands of people are deprived of access to justice because of the Government’s cuts to legal aid and slamming costs on to employment tribunal applications, yet here we have no complaints, no build-up of steam, no demand whatever and the Government decide that something is up. They create a complex and expensive role for the new-look Certification Officer when there is no evidence that it is necessary.

This is supposed to be a deregulating Government; however, they are setting up this bureaucratic role for the Certification Officer and making the trade unions pay for it. This will politicise the role, and there is still much confusion of roles. Will the CO be judge, jury or executioner? How will the Government clarify this to avoid judicial review? The sheer amount of information that trade unions will be asked to give is disproportionate and will tie up resources which should be used to protect members.

The cost to the trade unions is unreasonable. If, as the Government say, there is a need to ratchet up the role, then it should be paid for from the public purse. I believe firmly that the Certification Officer should be able to initiate investigations only when a union member has made a complaint. Failing this, there must be additional safeguards to protect members’ right to privacy and the right of trade unions to organise their internal democratic affairs without unjustified interference.

The Government are putting out mixed signals to justify the proposed ban on check-off, which we thought we were facing today, on the basis that employers should not be involved in what should be a direct relationship between unions and their members. In contrast, in the same Bill employers are invited to play a direct and active role in influencing enforcement action taken by the CO on key democratic decisions within unions.

The new role could damage employment relations—for instance, if an employer attempts to interfere in the election of a general secretary, or in challenging proposed strike action, and union members will be less likely to trust the Certification Officer to handle complaints fairly. It is important that the new Certification Officer should be required to consult interested parties, including the TUC and unions, on future enforcement strategies. That would be consistent with good practice and transparency. It might even be advisable to require the CO to establish consultative committees for trade unions and employers’ associations. Their views would be sought before issuing guidance or setting enforcement strategies. Where the CO disagrees with the views of the consultative committee or committees, he should be required to provide a written response explaining and justifying the difference of opinion. This might seem to be too much detail but this is a quasi-judicial post and proposed changes should have been much more carefully thought through than this.

We have seen a succession of these Bills which, as the noble Lord, Lord Tyler, said, have a skeletal element. I argue they are so naked that even the Windmill Theatre would have been embarrassed. I understand that the Select Committee, under the excellent chairmanship of the noble Lord, Lord Burns, was very impressed by the current Certification Officer, David Cockburn. He embodies all that is good about public service. The fact that there was no headline news does not mean that a problem was buried; it means that the role was performed in an exemplary manner. We should thank him for all he has done, not impose this Eton mess of a package.

[Lord Oates (LD)]

My Lords, I welcome the Government’s recognition that, as drafted, the Bill could give rise to vexatious complaints which the Certification Officer would be required to investigate. Government Amendment 23A will give greater discretion to the Certification Officer so that he or she needs to investigate only where they have reasonable grounds to suspect a breach. I hope this will not be the only concession today with regard to the Certification Officer because, notwithstanding the concessions the Minister has set out, the Bill’s clauses and schedules relating to the Certification Officer remain obnoxious. They represent an unwarranted interference in the activities of free trade unions and make trade unions pay for the privilege of having this unnecessary regulation.

It is surprising, to say the least, that a Government who purport to champion deregulation are so ready to reverse their position when it comes to trade unions. What happened to the Government’s one-in, one-out rule on regulations, which I think later became the one-in, two-out rule? I hope the Minister will tell us which regulations are being removed from trade unions to meet that commitment. However, I doubt that will happen because we have asked the Minister repeatedly for an answer to that question throughout the passage of this Bill. I hope I am wrong, but I suspect that I will get no answer again today, not through any fault of the Minister but for the simple reason that there is none.

Not content with imposing yet more regulation on trade unions, the Government have also determined that the trade unions must pay for it. The imposition of the levy is just one regrettable clause in a highly regrettable and unnecessary Bill. However, it is a particularly symbolic one as it demonstrates the Government’s lack of awareness of the role of trade unions. As the noble Lord, Lord Balfe, rightly pointed out, trade unions are not composed of people who go to work every day plotting revolution, but rather of people who come together to protect their rights in the workforce and ensure proper representation. However, the Government do not seem to see it that way.

We have repeatedly asked the Minister to explain which comparable organisations are subject to a levy to pay for this sort of regulation by the state. The examples which we were given at earlier stages in the progress of the Bill, such as the Financial Conduct Authority, are just not comparable. The FCA regulates profit-making organisations, many of which pose systemic risks to our economy, many of which have routinely flouted the spirit—and sometimes the letter—of the law, and some of which have been bailed out by taxpayers to the tune of billions of pounds. By contrast, trade unions are representative, democratic organisations, already tightly regulated by law, which play a critical role in our democracy.

However, the Government do not seem to see trade unions in that light. They do not see them as contributors to our democracy or as defenders of the rights of people with less power than themselves; they see them simply as opponents of their party’s interest and as organisations to be regulated, levied and constrained. There is no other explanation for the decision to impose a levy in this way. No such levy exists for the only really comparable organisation, which is the Electoral Commission. The Conservative Party does not fund investigations by the Electoral Commission into the manner in which it operates, but the trade unions must pay for the partisan regulation that the Conservatives impose on them. It is unjustifiable.

Amendment 31A, which the noble Lord, Lord Collins, will speak to, would at least help ameliorate the impact of the levy. It would prevent a partisan direction being given by the Secretary of State to the Certification Officer and ensure that the officer would only have to investigate complaints made by non-trade unionists if they could demonstrate that they had suffered detriment. That seems to be a very sensible change to Schedule 2. Together, those changes would help ensure that the Certification Officer, who has operated effectively as a regulator to date, is not turned into an overbearing regulator subject to political direction. I very much hope that, in her response, the Minister will be able to address the points made in that amendment and give some more concessions on the Bill.

[Lord Collins of Highbury (Lab)]

My Lords, I, too, thank the Minister for introducing her amendments at this stage. They are critical, in the light of some of our debates in Committee. I repeat what my noble friend Lady Donaghy said: where is the evidence for the requirement for this change of role? I repeat what I said in Committee: the Certification Officer has played a vital role in securing and ensuring that the rights of trade union members are upheld in their union. As the noble Lord, Lord Bridges, said, it is—or should be—about the rights of those individual members. The sad fact is that the proposals in the Bill in relation to the powers of the Certification Officer are changing that role from a quasi-judicial officer who adjudicates on disputes between unions and their members to a full enforcement agency, with wide-ranging powers to intervene in the internal, democratic decisions of trade unions. This would not be at the behest of individual members but, possibly, at the behest of employers and other campaign groups, even though no union member has complained. This completely changes the role of the Certification Officer.

We have repeatedly spoken about evidence. This brings me to another point, about the sanctions or fines which the Government intend to allow the Certification Officer to impose. In my 35 years of dealing with the Certification Officer, and having read every single annual report over the past 35 years, I have not seen one case where the Certification Office has given an order that has not been complied with. Of course, that related to union rules, but what we are now seeing is this role moving into industrial relations, because it will deal with industrial action. It is moving into membership registers and the details of membership information, which, again, could be subject to complaints from others rather than just simply members querying their own records.