---

Mr. Redwood: Does the Minister's outline proposal mean that only the last three months before an election would be subject to the controls? When he says that it would apply to the rolling three-month period, would that involve only those candidates who had not been a good judge of when the election was going to be? They could have spent a lot more between six and three months before the election, if they had been right in their judgment as to when the election was to be held. Is that correct?

David Cairns: That is essentially correct. The judgment has been made, however, that money spent
 
11 Jan 2006 : Column 352
 
closer to an election is more efficacious than money spent earlier. One of the proposals was simply to replicate the national system of having a 12-month period in which a rolling cap applied to every month, irrespective of the time of year. I was not attracted to that, however, because it is all very well for political parties to manage such a system given that they have well-paid professional people with great experience of these matters, whose job is to do just that, but it is a different matter for those of us who have voluntary agents, on whom we do not want to place too heavy a burden. We also do not want to create a perverse incentive for parties not to appoint agents until Dissolution, in order to avoid accusations of unauthorised spending. There is a balance to be struck. Before we get into too much detail, however, a lot more consultation and discussion needs to take place.

Rosemary McKenna (Cumbernauld, Kilsyth and Kirkintilloch, East) (Lab): I am happy to hear that from my hon. Friend, because there is clear evidence in at least two constituencies in Scotland of the aspiring MP spending hundreds of thousands of pounds—not just tens of thousands—over a period of two to three years. That is a blatant misuse of funds, because it covers not only the election period and the preceding six months, but the two or three years leading up to that.

David Cairns: I accept my hon. Friend's valid and legitimate concern. We are trying to address the most serious aspect of this fairly recent phenomenon without making the system too bureaucratic or placing too many burdens on voluntary agents. We are trying to strike a balance. Spending during the proximity period is more efficacious than at other times—that is why people do it, of course—and we probably need to be most concerned about that period at this stage.

Mr. Heath: As the hon. Gentleman knows, we are grateful to him for looking again at this issue. His proposal certainly has a basis for agreement. We agree, however, that the reporting process still presents some difficulties. In principle, if we could avoid the reporting, the suggestion made by the right hon. Member for Wokingham (Mr. Redwood) should apply. That is that in any three-month period there should be a cap on expenditure, provided that our agents did not have to report on every three-month period, because that would be too onerous a task. We might look again at that, but I agree with the Minister that the three months before a general election are the crucial period.

David Cairns: I thank the hon. Gentleman for that intervention. It is relatively easy for us to pass these regulations in response to legitimate concerns, but out there in the real world, they have an impact. I suspect that if the 650 agents out there knew what we were cooking up, they would be marching on Parliament to say, "What on earth are you up to? You're making things even more burdensome for us." We are aware of that possibility. On reporting, in regard to submitting electoral expenses, there is no doubt that the three-month/one-month period effectively creates an additional bureaucratic hurdle. As well as merely accounting for the election expenditure, the agent will have to account for the three months prior to that
 
11 Jan 2006 : Column 353
 
period. I hope that we can keep this as simple as possible—perhaps by using just one form, for example, so that the account is simply a continuation of that of the previous period. In reality, I would imagine that this will not be that much of an issue in the vast majority of constituencies, because there will not be a huge amount being spent in any given three months.

Mr. Heald: Obviously, this would not apply to any of the main parties, but one could imagine a situation in which an agent had come in to act on a voluntary basis for a candidate for a badly organised party during an election. He might not know anything about the candidate's spending history. How will the provision be policed, given that it is retrospective?

David Cairns: The hon. Gentleman has highlighted one of the key issues that remain to be resolved. Whether we talk of unintended consequences or of moral hazards, if we write into statute that the agent, once appointed, cannot be held responsible in any way for what was spent in the past, we shall merely create an incentive for no one to appoint an agent until Parliament is prorogued or dissolved before an election. That would lead to anarchy. Everyone would be spending everything and appointing agents the day before the Prime Minister went to the palace, and no one would be accountable for anything.

We are trying to strike a balance. I have been frank about the fact that we have not resolved all the issues, which is why it would be unwise at this stage to write anything too prescriptive into the Bill. The amendment that we propose to table in another place will be an enabling amendment, allowing us to present subsequent orders through the affirmative procedure. It will give us time to study the Electoral Commission's proposals, examine what happens elsewhere, continue the discussion among ourselves, and return to our constituencies and prepare for the arrangements by consulting our own agents. I have a particularly excellent agent, who I am sure will cope with it all admirably. None the less, we should be aware that we are creating burdens.

Amendment No 20 deals specifically with unauthorised third-party election expenses. Following the case of Bowman v. UK, the Government amended section 75 of the Representation of the People Act 1983 by means of the Political Parties, Elections and Referendums Act 2000 to increase the expenditure limit for unauthorised third parties. However, the relevant section remains ambiguous in relation to precisely what the money can be spent on. Clause 29 clears that up. Expenditure by unauthorised third parties up to the specified level, £500, will be allowed on holding public meetings or organising any public display, on issuing advertisements, circulars or publications, and on other ways of presenting a candidate's views to the electorate.

The purpose of clause 29(6), which amendment No. 20 would delete, is to enable the clarification provided by clause 29 to apply, to minimise the dangers of erroneous prosecution of a third party who has misunderstood the ambiguous legislation and may therefore have contravened it while acting in good faith. Anyone who has been prosecuted—which has already
 
11 Jan 2006 : Column 354
 
happened in one case—will now be able to cite subsection (6) in his or her defence, or in the event of a repeal.

We have taken powers in the Bill to ensure that when there is a list election under one of the various proportional representation systems, the names of all the candidates will not have to appear at the bottom of the documents, on which the imprint is quite large. Someone—I think it was a Conservative Back Bencher—asked about county council and other elections. [Interruption.] In fact, it was the hon. Member for Somerton and Frome. I apologise for calling him a Conservative. [Interruption.] Apparently the hon. Gentleman will see me outside. I spent the new year in his constituency, and this is how he repays me!

A sensible point was made. In next year's London election, one party will put up 60 candidates. Will the names of all 60 have to be listed at the bottom of the leaflets? They would take up half the space, which would obviously be silly. Our amendment No. 63 extends the provisions already applying to other types of election to cover the eventuality described by the hon. Gentleman.

Mr. Heald: I welcome amendment No. 63, because it makes a good deal of sense. It would allow the party name to be used if there were more than one candidate. I am glad that the Minister listened to what was said in Committee. We also welcome new clause 15, which will make life simpler and less confusing for all concerned without reducing sensible control over the transparency and accountability of Members of Parliament.

As I said on Second Reading, I share the concern that has been expressed about the more general issue of holders of elective office being required to report donations to the commission and to the body to which they are elected. I was pleased to hear the Minister's assurance that this issue is being looked at. We should also pay tribute to the commission, which was prepared to suggest sensible proposals and to support them.

4.30 pm

I thank the Minister for the welcome consultation that has taken place on the more difficult issue of a proposed regulated period for election expenses. As we pointed out, if the date of an election is unknown, a regulated period with an expenditure cap can create real problems. If the election date proves to be a surprise or if the election is delayed—as happened following the foot and mouth crisis—the money might be spent before the campaign starts; as a result, it would be impossible to compete effectively in the campaign. So it is good that the Minister has examined this issue and concluded that the election period itself should be ring-fenced, and that the expenses for the period in question should be dealt with according to current practice.

On the proposed taking into account of an earlier period, the Minister is right to say that the power to create such a provision through regulation should be discrete and subject to full consultation. There are some problems with this proposal. If volunteer agents—who may have been appointed as recently as the Dissolution of Parliament, or when an election campaign starts—are to be told, "You will be responsible for what happened in the previous three months", they might prove quite difficult to recruit. Alternatively, we might end up with
 
11 Jan 2006 : Column 355
 
prospective parliamentary agents, just as we used to have prospective parliamentary candidates. So we need to look at this issue, although I accept the more general point that problems can arise if there is very heavy expenditure just before the election period starts.

---