George Osborne wades into AV vote row

Chancellor George Osborne has waded into the increasingly bitter voting reform referendum battle with a claim that the pro-AV camp was using "dodgy" funding.

With less than month until the May 5 poll on whether to switch to the alternative vote system for electing MPs, he made an outspoken attack on the Yes camp's reliance on cash from the Electoral Reform Society (ERS).

Mr Osborne said there were "very serious questions to be answered" about the arrangement amid a furious row over claims that the body's commercial arm stood to benefit financially from a positive result.

Solicitors acting for Electoral Reform Services Ltd (ERSL), the business arm of the ERS, dismissed that suggestion as "wholly untrue" and firmly rejected suggestions it was using taxpayers' cash to fund the pro-reform group.

The Conservatives agreed to hold the referendum to secure the coalition deal with the Liberal Democrats but are vehemently opposed to abandoning the existing first-past-the-post system and are campaigning against their coalition partners.

Questions about the heavy involvement of the Society in the Yes camp were revived when their opponents produced research showing ERSL earned £15 million from public sector contracts over the past three years.

The firm, which supplies ballot and election services including electronic counting machines, has contracts with most local authorities in the UK and also works with NHS bodies and central government.

Part of its post-tax profit is passed to the Society, which has provided more than £1 million to the pro-AV referendum campaign - sparking the complaints from rivals.

In a newspaper interview, Mr Osborne said the arrangement "really stinks".

"The Electoral Reform Society - which is running some of the referendum ballots - stands to benefit if AV comes in because it could be one of the people who provide these electronic voting machines.

"That is exactly the sort of dodgy, behind-the-scenes shenanigans that people don't like about politics and politicians.

"The No campaign have asked for it to be investigated by the Electoral Commission. I certainly think there are some very serious questions to be answered."

A No to AV spokesman said voters would be "outraged by the huge amounts of taxpayers' money that is being channelled straight back into the Yes campaign".

"We urge them to come clean and promise that their backers will not earn a penny from a Yes vote."

The latest salvo provoked a furious response from the pro-AV camp, which described it as "desperate rubbish" and returned fire with a claim that its rivals were covering up the fact it was funded by wealthy Tory donors.

"We have declared every penny we have received from the moment we were formed - they haven't. We have declared who have donated staff and resources to us - they haven't," a spokesman said.

"What do they have to hide?"

The solicitors acting for ERSL said it was "practically certain that every one of the Tory businessmen financially backing the No2AV campaign has earned money from the public sector" and that most firms benefited in some way from the sector.

Which electoral system was used was "entirely irrelevant" to the money ERSL would make from services such as printing ballot papers and election software, they insisted.

The chairwoman of the Electoral Commission, Jenny Watson, who is chief counting officer for the referendum, said: "We have put in place detailed and comprehensive arrangements for monitoring the performance of counting officers and their suppliers, and I have no reason to believe that there is any risk to the integrity of the administration of the postal voting process.

"Suppliers, including Electoral Reform Services Ltd, provide support to many counting officers. This is no different from the statutory elections and local referendums which have taken place for many years.

"As is always the case for elections, only staff working for the independent statutory officer - counting officers - will handle returned postal votes for the referendum.

"Any organisation which supplies counting officers with ballot papers, postal voting packs or IT support is subject to normal public procurement, contractual and legal confidentiality requirements. There is no suggestion that these have been breached."

The Commission said it did not comment on the "financial or other interests of donors".