The
Chairman: Proceed with the clause 8 interrogation.
Mr. Tyrie has already indicated that he wants to come on to
the triggering clause, so we can roll those together later.
Mr.
Straw: I will ask one of my excellent officials to
comment on clause 8 as well. By way of background, there is a consensus
that there has to be greater transparency; that was the whole purpose
of the 2000 Act. As far as I can see, no one is arguing on the issue of
transparency. You can argue about levels of total spending and how it
has happened but these days, subject to the minimum limit which I know
parties have concerns about, there ought to be transparency about who
is giving what. There have been concerns about some of the
unincorporated associations. The leaders of all parties have said that
they want the source to be made clear. That has been the aim of the
parliamentary draftsperson in producing the Bill.
Can I say
with absolutely certainty that it will work as we intend? No, because I
am afraid that Acts are subject to interpretation and sometimes subject
to error—including mine. You can get gaps—as happened
unintentionally in this Act. I do not know whether Mr.
Sweeney or Mr. Smith wishes to add anything.
Mark
Sweeney: Clause 8 is not intended to add any
additional requirements, in terms of who may or may not donate, or the
way in which they may do so. It is intended to amplify the existing
requirements in sections 54(4) and (6) of the Political
Parties, Elections and Referendums Act, which deal with agency, or the
true source of a donation. The new clause requires that somebody has
consciously to consider whether, if they are giving money, those bits
of the original legislation are engaged—that is to say whether
they are acting as an agent for somebody else. The precise
circumstances of whether somebody is acting as an agent will vary from
case to case.
You asked
specifically about unincorporated association, for example. Where
somebody gives money to an unincorporated association and says,
“Here you are. I would like you to give this to x party”
and that is duly handed on, so that the unincorporated association acts
as an intermediary, we would expect that to be “agency”,
under the terms of the existing legislation. A declaration under this
clause would therefore say, “I have acted as an agent.”
The circumstances may not always be as clear cut as that. Somebody may
not give an explicit instruction for what they wish to be done with the
money and a court might then wish to look at contextual factors, such
as the purpose of an unincorporated association and whether the person
giving the money would have reasonably expected that anything else
would be done with it once it was handed over.
In relation
to your specific point about donations by companies that have foreign
ownership, the clause does nothing to change the rules in relation to
donations by those companies. I shall pause at that point. Matthew, do
you want to add to or subtract from anything I have
said? Matthew
Smith: No, just to say that on the companies point,
the Act is clear at the moment that if a company is carrying out
business in the UK and is registered here,
it can give money regardless of ownership, but of course, that takes
effect subject to the agency provision that Mark has
outlined.
Q
28Martin
Linton: If a foreign-owned company gives a large donation
to a political party, is that not regarded as an overseas
donation? Mark
Sweeney: Not if the company is carrying on business
within the United Kingdom, as PPERA currently
requires.
Q
29Martin
Linton: Is that not a loophole in the
legislation? Mark
Sweeney: One could take that view, but that is what
Parliament settled on in 2000, and it is not something that clause 8
seeks to address directly.
Q
30Martin
Linton: But if we were concerned to close the loopholes in
the legislation, we should perhaps close that one as well.
Mark
Sweeney: Certainly, this provision would not deal
with that particular type of donation, so further legislation would be
required.
Matthew
Smith: In that sort of circumstance the question
would come down to whether the UK company was being used purely as a
vehicle through which to channel money, and if that were so, there
would then be a question about whether there was an agency
relationship. If there is an agency relationship, the Act requires that
to be declared, and our provisions will require a declaration to be
made about that.
Q
31Martin
Linton: The company may be carrying on legitimate
business, but a foreign shareholder might phone up the chief executive
and say, “Will you please make a donation of £50,000 to
this party?” and the chief executive would be in a poor position
to say
no. Mark
Sweeney: Subject to anything that Matthew wants to
say, without speculating on what would happen in an individual case,
the greater the degree to which somebody’s wishes are being
followed through by an entity, the more there might be a case for
saying that there is agency. In the example you gave, if somebody who
wholly owns a company that carries on business in the United Kingdom
rings up the chief executive and says, “I command you to give
£X,000 to a political party,” it might be the case that
that is agency, although it has not been tested in the courts since
2000. Is that
fair? Matthew
Smith: I would say that is
fair.
Q
32Martin
Linton: Who has to make the judgment about whether an
unincorporated association is a conduit for money to political parties
or a legitimate organisation? For instance, the East Surrey Business
Club, the Billericay Westminster dining club and the Midlands
Industrial Council just happen to have addresses that are the same as
local Conservative associations, but apart from that, nothing in their
titles specifically suggests that they are acting as conduits. However,
it is well established that they are. Who makes that decision about
whether they are conduits?
Mark
Sweeney: Ultimately, it would be the courts. The
Electoral Commission is empowered—and would have further powers
that we may come on to—to investigate in individual
circumstances where there might be cause
to believe that an agency relationship existed and had not been
correctly declared. I am sorry to fall back on this phrase, but it
would depend on the circumstances of the case. In my earlier remarks I
suggested that where an organisation is not named in a way that
necessarily suggests it is affiliated to a particular party, it could
still be acting as an agent, but that would depend on the
circumstances.
I do not want
to use one of the organisations that you mentioned, but if there was an
unincorporated association that was, for the sake of argument, just
called “The Committee”, and some money was given to it by
an individual, if the individual said “I want you to pass this
to x political party,” that would be agency. If all that the
committee did was collect donations and give them to a political party,
and that was the only thing on which it spent money, but there was no
spoken transaction or contract between it and an individual giving it
money stating that that would happen, that would potentially be agency
as well. The further that you move away from a direct instruction and
an unincorporated association having that as its sole purpose, the less
likely it is that a court will find that that is an agency
relationship. Matthew
Smith: We have to stress that at the moment the
precise confines of agency as given in the 2000 Act—whether
something is
given “by
or on behalf
of” the
donor, for example by an unincorporated association—has yet to
be tested by the courts, so it is inherently quite
uncertain.
Q
33Martin
Linton: But they would have to make a declaration
under clause 8 of the
Bill. Matthew
Smith: Absolutely. You talk about who is responsible,
and in fact in the first instance it is for the person giving money
over to declare whether they are the donor or whether they are giving
it on behalf of someone else. The clause is designed to focus the minds
of both the person handing the money to the political party and the
recipient political party, so that they must consider whether there is
agency and so that there is a dialogue between those two individuals or
organisations about that very
point.
Q
34Martin
Linton: And the declaration would have to give a list of
all donations of more than £200, and who they came
from. Matthew
Smith: They would have to declare whether anyone had
given them £200 with a view to the making of the eventual
donation to a political party. So if the money has been handed over on
the understanding that it will be passed on, under the new provisions
one would expect someone to make a declaration about that. The
declaration has to say whether there is an agency relationship, and if
there is not, it has to explain why
not.
Q
35Martin
Linton: Would the declaration be just to the donor, or
would it be a public
document? Mark
Sweeney: It would be made to the donor. It is not
required to be published, although the Electoral Commission would be
able to access it using its
powers.
Martin
Linton: But not publish it?
Mark
Sweeney: Currently, it is not required for either the
donor or the Electoral Commission to publish the
declaration. Matthew
Smith: To fill in on that point, as part of its
donation report, when the political party records the donation it has
to pass on to the Electoral Commission the fact that a declaration has
been made. That will form part of its donation report, which will
itself be a public
document.
Q
36Pete
Wishart: May I gently remind the Secretary of State that
there are more than three parties in the UK political process? In fact,
some of those political parties are now the Government of some nations,
and one of them is also looking to increase its number by a quarter in
the course of the next few
days. I
have been very disappointed by the way in which the Secretary of State,
and probably all the other political parties in the House, have tried
to engage the minority parties in the House. Our involvement has been
pretty woeful, and the failure to invite us to the discussions with
Hayden Phillips was a big omission. However, we will leave that aside
just now, especially given our particular role. I am sure that the
Secretary of State is eternally grateful to the Scottish National party
for highlighting the practice of people being ennobled to the House of
Lords for making donations to political parties. I am sure that he is
grateful also for the robust and thorough police investigations to
challenge whether that was
legal. May
I ask the Secretary of State where in the Bill there is any indication
that that type of practice could be dealt with efficiently and
effectively, and will never be allowed to happen
again? Mr.
Straw: I appreciate your concern and your perception
of the way that smaller parties in the Westminster Parliament have been
treated. Let me say that no offence was intended at
all. I
know that you are to hear from Sir Hayden Phillips later,
Mr. Cook, but may I say on his behalf that I am absolutely
certain that no offence was meant by him
either? Mr.
Wishart, you will probably find what I am about to say offensive, too,
but there is a practical problem in trying to reach agreement with a
very large number of parties. I am not thinking about the Scottish
National party in that respect, but I shall leave that point
there. As
far as allegations of favours are concerned, you will note that no
prosecutions took place notwithstanding what, as you say, was a very
thorough and proper inquiry. I hope that no false conclusions are being
drawn from that process. I have had no representations that the basic
law on the matter—which goes back to the Honours (Prevention of
Abuses) Act 1925, as well as much wider law—needs to be changed,
although if it does, I am happy to consider
it.
Q
37Pete
Wishart: There was a recent issue in the Scottish
Parliament when one of Mr. Straw’s party colleagues
was found guilty of securing a foreign donation for part of a
leadership campaign. A number of us in Scotland believe that foreign
donations—or outside donations, if we want to term them as
such—should be included in the Bill to cover Scottish elections.
Surely it is right and proper that elections fought and contested in
Scotland should be contested only with Scottish money. Why should money
from London and Westminster, for example, be used to contest Scottish
elections?
Mr.
Straw: The proposition now is this: if I had a
relative living in Scotland, and as it happens I do, who was
married—sadly, the person has now passed away—to someone
as truly Scottish as you, Mr. Wishart, and they were
standing in an election, because I happen to be domiciled in England, I
would be banned from making a donation to that person’s
campaign. That is an interesting idea, but it is not one that I
share.
Q
38Pete
Wishart: The same applies in European elections, so the
same criteria could be applied, too. It would be easy to resolve. If
you were registered to vote in Scotland, that would be the defining
rule that allowed contributions to be
made. Mr.
Straw: I understand entirely. Your approach to the
future of the United Kingdom and mine—indeed, that of all the
other parties represented around this table—are different. We
have no such
proposals. Mr.
Cook, Mr. Djanogly asked me a factual question earlier, to
which I now have the answer thanks to my excellent officials. Would it
be appropriate to read it to the Committee? It is short. It gives the
number of
convictions.
The
Chairman: As long as it is pertinent, Secretary of
State. Mr.
Straw: It is pertinent to Mr.
Djanogly’s question. The answer is that, as at 16 June 2008, 29
people had been prosecuted under the 2000 Act, resulting in
23 convictions. That was shown at paragraph 2.8 of the White
Paper. I apologise to Mr. Djanogly for not remembering that,
although it was my White
Paper.
Q
39Mr.
Djanogly: The point that I wanted to make, which I think
you have made for me, Secretary of State, was that, compared with the
relevant prosecutions for electoral fraud, this is a relatively small
issue, yet electoral fraud is ignored by the Bill. You say 29, which
compares with 450 for electoral fraud.
Mr.
Straw: I do not recognise those figures, but I note
that the Electoral Commission evaluation reports on the 2007-08 local
elections show that allegations of electoral fraud are decreasing. That
is certainly my own
perception.
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