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Mr. Heath: I entirely agree with the hon. Gentleman. Having been subject to some of that increased spending, perhaps on a slightly smaller scale, from donors outside my immediate constituency—certainly a large amount of money was spent by central parties and one particular party in trying to wrest the seat from me—I recognise that that is a real difficulty. I said so on Second Reading, in Committee and on Report in this House. He may recall that I tabled amendments to try to regularise the position. To some extent, the Bill
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moves to deal with that issue, but my suspicion is that it does not go far enough and that we need to do more to prevent what is clearly an abuse in terms of large amounts of money being spent in particular constituencies that are identified as marginal. That is out of all proportion to the limits on election spending that are properly applied to those constituencies. However, I would be digressing too far from the Lords amendments if I were to explore that to any great extent.

Mr. Love: Does the hon. Gentleman accept that the only thing worse than having political parties that are dependent on a few rich individuals is having political parties that are dependent on one rich individual? I am not speaking about his party when I say that. Does he also accept that the Government have set up the review that is being undertaken by Sir Hayden Phillips? Many of the concerns that he and others have raised should be dealt with by that review, as should many of the points that party members from the nations and regions continue to press upon us. There should be all-party agreement on the matter, and, hopefully, we can clean up the act.

Mr. Heath: I sincerely hope so, although Sir Hayden Phillips will find it enormously difficult to bring together the different strands.

The problem is that when political parties, at a senior level, accept donations from individuals, the efforts of hon. Members are tarnished. I suspect that not a single Member in the Chamber has anything to do with large donations that are received by our respective parties. Volunteer workers in our parties get tarred with the same brush. The whole political process will be tarnished until we get the system right, which is why we need as much transparency and reporting as possible and, frankly, clear limits on both the donations and expenditure that are appropriate. Donations and expenditure are not divorced from each other. One cannot have limits on donation, yet unlimited expenditure, or vice versa. Clear limits are needed to restore the faith of the British people in our political system.

Mr. Andrew Tyrie (Chichester) (Con): The hon. Gentleman says that we need clear limits and, of course, I agree with his sentiments. Will he tell us when the Liberal party intends to come forward with its package of comprehensive proposals for the reform of party funding?

Mr. Heath: I am not sure that it is entirely right to say that we have not done so already. I accept that we have not put our proposals together as the hon. Gentleman has done, for which I commend him. However, I hope that he acknowledges that his proposal for a £50,000 cap has been our policy for some time. We have been clear about the need for both that and transparent reporting. I have made speeches in which I have made our broad attitude clear. We will be giving evidence and working with others in the context of Sir Hayden Phillips’s review, and I hope that we will be able to reach a consensus. However, I foresee that
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there will be difficulties, owing to the differing perspectives and sources of income of the parties represented in the House. Some difficulties may be reconcilable, but perhaps some will be irreconcilable. We should strive seriously to find a consensus because if we do not, the whole of our political and democratic process will be cheapened by our lack of ability to find a common view.

There is merit in the proposals on the reporting and admissibility of loans. I wish that such provisions had been in place some time ago. It would have been better if we had realised the possibility of adopting them when the Political Parties, Elections and Referendums Act 2000 was passed, but it is easy to be wise after the event and not to realise the ingenuity of those who wish to circumvent any system that is put in place.

I am especially grateful to the Minister for acknowledging the strength of an argument put forward by Lord Goodhart in another place. He made the point that cumulative payments could be part loan and part donation, and that several separate loans, or a mixture of loans and payments, could reach the threshold. The Government tabled appropriate amendments to take account of that. I am also grateful to the Minister for explaining capitalisation in relatively simple terms and outlining her proposals in that respect. I know that her colleague in the other place struggled to make sense of the proposals, but I think that we understand what is being suggested.

7.45 pm

The Minister will know that we disagree with the Government on one aspect of the proposals, although we have not tabled amendments to reflect that at this stage because reaching consensus is more important than getting absolutely everything. However, there is a strange anomaly that if a loan is made before the commencement of the relevant part of the Bill by a donor who proves to be non-permissible, it will be allowed to be maintained as a loan, despite the fact that if it had been made after the commencement, it would be unlawful. In such circumstances, it would be appropriate not to criminalise the loan and retrospectively make unlawful something that was quite lawful, but to require the loan to be repaid after an appropriate period of time so that the situation could be regularised. Such an approach would be logical and consistent with what the Minister said would happen if a loan was taken in good faith after the commencement of the legislation, but it was proved, after further reflection, that the donor was non-permissible. In such circumstances, the loan would have to be returned—there is no suggestion that that should not be the case—so, to put it mildly, there is a certain lack of logic behind the Government’s proposals.

As far as we are aware, from the evidence that we have been given, there would not be a significant quantity of outstanding loans. Of course, a party would be able to make a full repayment before the commencement of the provisions, so even reporting would not be necessary because the matter would become a closed book. Some parties will wish to take advantage of that ability in respect of donations that come from overseas sources, while others will not have such loans to report. Others might take the view that
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they would have to make the identity of the donor public under the requirements of the legislation if the loan was still outstanding, at which point they could maintain the loan, and that would be an equally satisfactory outcome in terms of transparency. However, a difficulty would arise if the identity of a donor became known and it was quite clear that that person should not have made a donation under the terms of the Bill.

I do not understand the Government’s position on the matter. They should have thought again, but I acknowledge that when we made such points in another place, two parties did not agree with our position. They might have had their reasons for that, although I do not think that those reasons were based on logic, but I accept that as we were unlikely to secure a majority in the other place, we were certainly not going to secure a majority here, which is I why I have not tabled amendments on the matter today.

Mr. MacNeil: Am I correct in understanding the hon. Gentleman as saying that the problem would be not the time at which the loan had been made, but the fact that it was still alive and outstanding?

Mr. Heath: That is precisely so. We are talking about a loan made before the relevant time—the commencement of this part of the Bill—which is still outstanding when the Bill becomes law and is from a non-permissible donor who would not have been able to make it after the event. The right and sensible way to deal with that is to require the political party in question to repay the loan not on day one—let us live in the real world—but over a sensible period. In that way, the matter is cleared up and settled, and no one will have benefited from what would subsequently be an unlawful donation in kind.

I do not need to prolong our debate. The proposals are welcome. I do not think anyone is suggesting that they go far enough to deal with the problems of party funding, but they are a welcome first step. What is particularly welcome is that we have managed to achieve a degree of consensus in a relatively short time. I hope that that consensus will be maintained.

Bridget Prentice: I echo the hon. Gentleman’s words. I, too, hope that the consensus continues. I am grateful to him for saying that we have achieved a great deal in a relatively short period. I apologise to the House on behalf of my right hon. Friend the Leader of the House, who cannot be here for this part of the debate because of a previous engagement.

I understand the hon. Gentleman’s position on pre-existing loans. We did not think that it would be appropriate to invalidate arrangements that were lawful when they were made. That is not the purpose of the amendments. We did not intend to wreak havoc in the finances of different political parties. However, he alluded to the fact that any loan that is outstanding when the Bill becomes law will need to be reported, and people will be able to see whether loans were given by those who have become non-permissible. People can make their own judgments as a result. The Labour party has made clear where all its existing loans have come from. I recommend that position to all parties.

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The House will have noted my emphasis throughout on explaining what the new provisions will achieve to bring greater openness to the activities of political parties in relation to loans and similar transactions. They set out a comprehensive regime, benefiting as it does from the precedent of the donations regime. I hope that as a result we will be able to have a fuller debate at a later stage on some of the issues arising from that. As I said, Sir Hayden Phillips will look at other aspects of party political funding. No doubt we will return to the subject in another form at a later stage.

Lords amendment agreed to.

Lords amendments Nos. 62 to 75 agreed to.

Clause 2

Use of CORE information

Lords amendment: No. 1.

Bridget Prentice: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this it will be convenient to discuss Lords amendments Nos. 2 to 5, Lords amendment No. 6 and amendments (a) and (b) thereto, and Lords amendments Nos. 78, 82, 83, 87, 94, 105, 107 to 109 and 124.

Bridget Prentice: The amendments relate to the registration system. Amendments Nos. 1 to 4 relate to the co-ordinated online record of electors. Amendment No. 5 relates to the new duty on registration officers to maximise levels of registration. Given the earlier debate, I do not wish to pursue the arguments on registration further at this stage. The House has reached another consensus on the importance of increasing registration. The amendments will ensure that registration officers do their bit in making sure that the registers are as comprehensive as possible.

Amendment No. 1 was made in response to concerns that the regulations governing the publication and supply of information kept on CORE to bodies such as political parties might differ greatly from those which apply to electoral returning officers at a local level. As Ministers made clear in another place, CORE will not change the information that is held on electoral registers, or the records that EROs are required by law to keep, or the persons and organisations to whom information may be supplied. It simply acts as a central point of access.

Some flexibility is needed, however. For example, the CORE keeper will not be required to keep a copy of the full register available for public inspection. There is also flexibility because the amendment more clearly sets in law the principle that the regulations governing access to information held in CORE will be the same as those that apply to EROs.

Amendments Nos. 2 to 4 were also made in response to the concern in another place that, as originally drafted, some of the security measures included in the CORE provisions might call legitimate acts into question, rather than focusing on fraudulent activity. An example of that is the potential for large
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households with a number of postal voters, such as student halls, to be flagged up as potentially fraudulent. Amendments Nos. 2 and 4 tighten up the Bill’s drafting so that CORE will instead focus on instances where large numbers of postal votes have been redirected to an alternative address, as that is a circumstance in which fraud may be involved.

There was also a concern that the Bill’s existing provisions would flag up legitimate instances of a person voting as another elector’s proxy—in a sense, the reverse of the earlier concern. Amendment No. 3 responds to that by focusing again on fraudulent acts of double voting.

The new duty on EROs is set out in amendment No. 5. The new duty is to ensure that the electoral register is complete and comprehensive. Clause 9 sets that out as a new duty and includes certain minimum steps that EROs must take to maintain their registers. As drafted, clause 9 includes

Under amendment No. 5, EROs would instead be required to make such inquiries on “one or more occasions”. The purpose of the amendment is to clarify that there is no need for electoral officers to make more than one visit if the first visit gives them the comprehensive information that they need.

Mr. Love: On amendment No. 5, the experience of my electoral staff is that because of a shortage of people to knock on doors, they are knocking only once. They then send a letter directly to the address. As a consequence, there is massive under-registration. Should not the Bill recognise the need for more than one call to be made if the officers fail to find anyone in?

Bridget Prentice: Amendment No. 5 addresses my hon. Friend’s concerns. He is right that one call is often not enough. Giving EROs the duty to ensure that they have a comprehensive register, and taking on board earlier points about the variety of ways in which it is possible to gather that canvass, he is right to say that it may be necessary in some cases for the canvasser to call more than once at a particular household.

Lords amendment No. 6 deals with service registration, which was raised on Second Reading and in subsequent discussions, and we have responded, I hope, to the points that were made in the House and elsewhere. The amendment includes two key provisions. First, it creates an order-making power to allow the Government to extend the duration of registrations made via a service declaration to up to five years. Current rules require declarations to be reconfirmed annually, so the extension would make the registration process more convenient for service personnel, particularly personnel serving overseas. To provide a proper opportunity for parliamentary scrutiny, any order made under the amendment would be subject to the affirmative resolution procedure. If the power were used, it would affect only service personnel and their spouses or civil partners. It would not affect other persons eligible to register through a service qualification, such as Crown servants based overseas. Traditionally, it is much easier for Crown servants to
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register than it is for service personnel to do so, so we want to address the problem experienced by service personnel. In addition, the amendment does not require members of the armed forces to register solely through a service declaration. Servicemen and women can still register as ordinary electors if they choose to do so.

8 pm

Mr. Roger Gale (North Thanet) (Con): Everyone in the House knows that order-making powers merely provide the power to make an order. If, as I expect, the amendment is accepted, is the Minister minded to lay the necessary statutory instrument before the House?

Bridget Prentice: I can assure the hon. Gentleman that we certainly are minded to lay the appropriate measure before the House.

Secondly, the amendment places a duty on the Ministry of Defence to keep a record of the electoral registration details of service personnel that can be used both as a prompt to the individual to update registration details with the local electoral registration officer, particularly the address to which postal votes should be sent, and as a focus for efforts to encourage service personnel to register. The record will provide statistical information that will allow continuous monitoring, and it will facilitate communication between unit registration officers and the local electoral registration officer about the numbers registered, to assist in future registration campaigns.

Dr. Julian Lewis: Will the Minister explain the objection in principle to reverting to the system that was used before the Representation of the People Act 2000? The procedure that she has outlined is extremely complicated, but our forces are far more involved in front-line action now than they were then, so it is strange that they cannot be registered once and for all by their units, as used to be the case.

Bridget Prentice: I do not accept the premise that this is a complicated measure—it is a practical and straightforward method of ensuring that service personnel have the opportunity to register. The previous regime was changed because it did not work effectively. The all-party group that looked at the system concluded that it was characterised by low registration. There are concerns in the House about relatively low registration among service personnel, so I am pleased that the Under-Secretary of State for Defence, my hon. Friend the Member for West Bromwich, East (Mr. Watson), is in the Chamber, as he has worked closely to find a way forward. The all-party group pointed out that it was difficult for EROs to identify and communicate with service personnel. The amendment makes that process much easier and clearer, so I hope that the hon. Gentleman welcomes it.

Dr. Lewis: I thank the Minister for her generosity in giving way. She said that the previous system did not work well, but does she accept that, by comparison, the new system has led to a massive reduction in registration?

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