The Minister of State, Northern Ireland Office (Paul Goggins): I beg to move,

I begin by welcoming you to the Chair, Miss Begg. In April, a Committee of the House approved the Electoral Administration Act 2006 (Regulation of Loans etc: Northern Ireland) Order 2008. That order, which has since been made, sets out the legislative framework for the regulation and verification of loans to political parties in Northern Ireland by the Electoral Commission from 1 July 2008. The order before us today sets out the detail of those arrangements and, in particular, the conditions that Irish citizens and bodies must meet in order to make loans to Northern Ireland political parties and the steps to be taken by the commission to verify such loans.

During the debate in April, members of that Committee questioned the need for two separate orders. I made it clear that I, too, had initially questioned the need for two orders, but as I explained at the time, we consulted the Joint Committee on Statutory Instruments during the drafting process, which made it clear that two orders made in sequence were required.

The new scheme to regulate political donations in Northern Ireland began operating in November 2007 and has been operating effectively since. Neither the Electoral Commission, nor the Northern Ireland political parties have advised us of any significant difficulties with the scheme. The order will apply a similar scheme for the regulation of loans.

Part II of the order sets out the conditions that an Irish citizen must meet before making a loan to a Northern Ireland participant, namely eligibility to obtain certain documents, such as a passport, that provides evidence of their nationality. It also lists the Irish bodies that may make a loan to a Northern Ireland political party. Schedule 1 sets out the information that must be provided to the Electoral Commission in transaction reports relating to Irish lenders.

Part III of the order sets out the steps that the Electoral Commission must take to verify the information contained in the reports on loans that it receives. The commission is required to verify 50 per cent. of the loans made by individuals and all loans made by bodies. The commission can take steps to verify the information provided, including contacting any of the bodies listed in article 11 of the order. The commission may not release information contained in transaction reports received from Northern Ireland participants during the prescribed confidential reporting period, although the commission is required, under article 10, to publish certain information if it believes on reasonable grounds that the loan was made by an unauthorised participant. That simply mirrors the provisions for donations.

During the debate in April, I agreed to confirm some points of detail on how the scheme would operate in practice. The hon. Member for Tewkesbury asked whether Irish companies must record donations to Northern Ireland political parties in their company accounts in the same way that UK companies must do. Clearly, Parliament cannot place accounting requirements on Irish bodies, but Irish companies law places accountability requirements on Irish companies, although the precise detail is a matter for the Irish Government. As with donations, the order places a requirement on Northern Ireland political parties to provide details of the source of all reported transactions.

The hon. Member for Argyll and Bute asked what would happen to loans made before the end of the prescribed confidentiality period but which have not been paid off entirely when that period expires. I can inform him that if there is a reportable change after the end of the prescribed period, such as the loan being repaid, that change will appear on the public register. He also asked whether the Electoral Commission could publish some form of summary report on the amount given or loaned to each political party in Northern Ireland. The Government, of course, have no power to compel them to do so, and the commission has indicated that it has no plans to publish such a report at this time. Were the commission to decide to publish information of that nature, it would have to observe the disclosure requirements set out in the legislation.

Members of the Committee will be aware that the legislation provides for the confidentiality period to expire in 2010, unless a further order extending it is made by the Secretary of State following debate and approval by Parliament. However, as I made clear in the debate in April, it is my firm hope that the confidentiality period will not have to be extended beyond 2010. The order will ensure the successful extension of the political donations scheme to cover loans. In doing so, it represents an important step forward in increasing accountability in the funding of political parties in Northern Ireland. For that reason, I commend the order to the Committee.

Mr. Laurence Robertson (Tewkesbury) (Con): Welcome to the Committee, Miss Begg. I believe that this is the first time that I have served under your chairmanship. It is a pleasure to do so.

As the Minister said, this is the second of two related orders. We felt it rather odd to be asked to approve an order without knowing much of the detail involved. As they say, the devil is in the detail. However, here we are. I spoke for a while when we discussed the last order and asked a number of questions that were ably answered by the Minister. I am grateful to him for coming back today on whether Irish companies have to put it in their accounts that they have made donations or loans to political parties. I do not intend to ask the same questions as that would be a waste of the Committee’s time. We also discussed this matter when passing the primary legislation in July 2006 so there is no need to go over the same issues.

One aspect of the order concerns me. Article 4(2)(g) states that one group of permitted donors is

The other permitted donors are quite tightly controlled, but that definition seems to be rather loose. Anybody can get together to form an unincorporated association. For example, the political associations in our constituencies are unincorporated associations. They make up their own rules that are challengeable in the civil courts, but I understand that they are not subject to criminal law. What does it mean to say that the association “carries on business”? A very small transaction could be deemed to be business. What does it mean to have a main office in the Republic? In many cases, a room above a shop qualifies as an office. I am therefore a little concerned about what appears to be a catch-all for organisations not mentioned in the rest of the list under article 4(2).

That concern relates to our main historical concern, which I raised before. How can the Government be sure that the money given in donations or loans does not originate in the United States, for example? The Committee knows what I am referring to. We had a difficult time when money was coming from Noraid in the United States to fund terrorist violence in Northern Ireland. We do not want to end up in that situation again so I am concerned about how the Government will ensure that money comes from genuine bodies in the Republic. For that reason, article 4(2)(g) concerns me. I hope that the Minister will address that point when he responds.

I expressed a number of concerns when the primary legislation passed through the House, but we did not vote against it. We did not vote against the first order and it is not my intention to divide the Committee today. That said, I want to place it on the record that we are concerned about the origin of the money. We are also concerned about the disproportionate assistance that the legislation could give to the nationalist or republican parties in Northern Ireland at the expense of the Unionists. We consider it extremely unlikely that money will go from the Republic to the Unionist parties in Northern Ireland.

We remain concerned about the secret nature of the donations. Anonymity means that not one elected Member in this Room will have the right or the ability to look in detail at the workings of the order, apart from the Minister—and I am not sure that he will be able to view it officially. I consider that rather undemocratic. We know the background to politics in Northern Ireland but things have moved on considerably—to the point where the Government want to press ahead with the devolution of policing and justice for example—so the restriction seems unnecessary, especially when we are bending the general laws of the UK with regards to donations to political parties.

We will revisit the issue in government and make all donations transparent, if we are fortunate enough to be in government in two years or fewer—[Laughter.] Labour Members are laughing at that but we will see how it goes. We have no intention of opposing the order in Committee today, but we want to keep a very close watch on it, as far as we are able. We intend to revisit it on election to government.

Mr. Alan Reid (Argyll and Bute) (LD): Thank you, Miss Begg. I, too, welcome you to the chair. We debated the principle behind the order at the earlier stage, and the provisions and detail mirror the provisions included on detail for donations, so I do not propose to go over old ground again. I thank the Minister for responding to the issues that I raised at the previous Committee.

I am disappointed that a breakdown of where the loans come from is not going to be published. It is about getting the balance right between allowing people or companies to make loans or give donations while remaining free from intimidation on the one hand, and ensuring that we have an idea of where the money funding political parties comes from on the other hand. I am disappointed that the Electoral Commission is not going to give us breakdown. If where the loans come from, broken down into the categories of individuals, companies, political parties, trade unions, building societies, limited liability partnerships, friendly societies or unincorporated associations as specified in articles 3 and 4, are published, I do not think that there is any way that they could be traced back to individuals.

If the procedure today had allowed us to move amendments, I would certainly have moved one requiring the Electoral Commission to give that breakdown. I will not divide the Committee today, but I hope that the Electoral Commission reads the Hansard of the proceedings and thinks again, because a published breakdown would at least give us a rough idea of where funding for political parties in Northern Ireland was coming from, and there would be no risk that any individual could be identified.

Paul Goggins: I thank the hon. Gentlemen for their largely supportive comments this afternoon. In relation to the first point made by the hon. Member for Tewkesbury, “unincorporated bodies” sounds like a looser expression than some of the categories that appear in the order, but it is a technical term that is well understood in UK law. The provisions for incorporated bodies are reflected elsewhere in terms of donations from organisations UK-wide. There is nothing different in the provision. We want to ensure that all categories of organisation are able to make donations where appropriate.

We rely on the Electoral Commission to investigate organisations and to ensure that those making donations are not a front. That is why the order makes clear that the main activities and main offices must be in the Republic of Ireland, and the Electoral Commission must take steps to verify that. It is a technical term, but the Electoral Commission will be investigating thoroughly and ensuring that donations and loans—it is loans that we are debating this afternoon—are properly scrutinised in the way that Parliament has set out.

Mr. Robertson: An unincorporated association could be two or more persons. Will such an association have a 100 per cent. audit or a 50 per cent. audit?

Paul Goggins: It will be a 100 per cent. audit. Every donation made by a body will be properly investigated by the Electoral Commission. I hope that that gives the hon. Gentleman some comfort. He makes the point that that might disadvantage Unionist parties as opposed to republican parties. What we have in the order, and also in the legislation governing donations, is a reflection of the settlement in the Good Friday agreement. That is reflected in a range of legislation.

I am glad that the hon. Gentleman makes the point about anonymity because it gives me the opportunity again to say that we hope that from 2010—when the anonymity rule would be up for renewal—the special provisions will not be necessary. He will be aware, because of his close interest in Northern Ireland, that there is still a risk, particularly from dissident republicans. In the recent past we have seen police officers being targeted. While there is still an atmosphere of threat and therefore potential intimidation, the anonymity provisions are important. I am hopeful that as we move through the completion of devolution, hand over policing and justice powers to locally accountable Ministers and see further progress in sustaining a peaceful settlement, we will get to the point, in 2010, where the special arrangements are no longer required.

While we have held our current positions, the hon. Gentleman and I have agreed to agree more than to disagree. He tempts me to stray from that consensus with his remarks about the outcome of the next general election. What I can say is that I will pay close attention to the outworking of the legislation. It is important that Ministers do that, to ensure that what is intended to happen, happens. The Electoral Commission will have to report as well.

I am sorry that I cannot satisfy—as I could not last time—the hon. Member for Argyll and Bute regarding his remarks. However, I promise that I will draw them to the attention of the Electoral Commission so that it is aware of his views. With that, I conclude my remarks and urge the Committee to support the order.