Political Parties and Elections Bill

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Q 119Mr. Reid: Existing legislation allows you to recommend increases in the expenses limit. If the Bill is passed, so that expenses limits cover a much longer period, would you recommend an increase in the expenses limit? If so, have you given any thought to what that would be?
Peter Wardle: We would certainly recommend an increase in the expenses limit, in principle. When we recommended that serious consideration should be given to a four-month period, we made such a recommendation. I am afraid that I cannot remember whether we gave a precise figure, but we certainly said, broadly speaking, that, if quadrupling the period, it would be foolish to stay with the existing limit. We would have to acknowledge that this was over a longer period. May I just add to that? It is slightly more difficult to come up with a number if you are talking about an indeterminate period. The beauty of the four-month period was that it was clear.
Q 120Mr. Reid: Finally, in paragraph 25 you raised the problem of transport, and how that could be apportioned for election expenses. To give you an example from my own constituency, as a sitting MP, I fly out to one of the islands to hold a surgery and, while I am there, distribute some leaflets about voting for me at the next general election. The literature itself is clearly election expenses, but how do you apportion the travelling expenses? If my main purpose for going was to hold a surgery but, in addition, while I am there, I incur election expenses, how do you apportion the travel?
Peter Wardle: That is a good question. It is not a question particularly triggered by the Bill’s proposals—the question arises already, if in the regulated period.
Mr. Reid: Only in the regulated period.
Peter Wardle: Yes. We have guidance. It is not easy, and we have attempted to address that question in our existing guidance. I am afraid that I do not have that, chapter and verse, but we can follow that up in a note to the Committee.
Mr. Reid: Thank you.
The Chairman: Two hon. Members wish to come in on this subject, and I want to help the Committee. We have three other important areas to cover: the composition of the commission, donations, and registration. Will hon. Members who wish to ask a brief question under this heading of triggering do so quickly?
Q 121Tony Lloyd: This relates back to ambiguity about the timing of the impact of candidacy. I have been surprised by Peter Wardle’s remarks so far, because clause 10(5) on page 9 states:
“The amendments made by this section do not apply to any expenses incurred before the commencement of this section.”
Is there really any ambiguity in that?
Peter Wardle: As Sir Nicholas noted, I was being invited to give an interpretation of the law. I carefully sought to avoid doing that. What I said was that there is more than one interpretation. I heard what the Secretary of State said, and it seemed clear to me, but some people are unpersuaded and there are one or two issues. The one that Mr. Reid raised about contracts entered into but not discharged—the standard period—may be one on which it would be helpful to have the position clarified. It is a transition issue, and when something is introduced you sometimes need transitional measures, perhaps simply to put something beyond doubt rather than to change something in the original Bill.
Q 122Mrs. Laing: Has the Electoral Commission made any assessment or comparison of the effectiveness of recent general elections when there was a triggering mechanism, and when there was not? In the recent past, we have had general elections when there was triggering, as you mentioned, Mr. Wardle, but during the last two there was not. Has there been an assessment or comparison of the effect of that?
Martin Linton: It was written by Lord Ashcroft and called “Dirty politics, Dirty times”.
The Chairman: Order.
Peter Wardle: The short answer is no.
The Chairman: Thank you. May we now pass on to the commission’s composition? I call, first, David Howarth.
Q 123David Howarth: The commission has expressed concern about the proposal to add to the commissioners some who would be exempt from the normal rule that people involved in politics recently cannot be commissioners. I think there has been some change of emphasis or change in the way that the commission expresses its objections, so will you put on the record your present thoughts on that proposal?
Peter Wardle: The first point is that the commission understands and endorses the underlying aim of the proposals. Its work should be informed by a clear and current understanding of how political parties work. There can be no question about that. We very much welcome in principle the ability to employ staff with more recent involvement in party politics than the current 10-year ban allows, although we think the blanket relaxation to one year, except for the chief executive’s post, may go too far. For example, I am not sure that all political parties would welcome the appointment as director of investigations someone who, 18 months previously, was closely identified with one political party or another. However, if that is understood, the commission can make its own sensible decisions on when it takes advantage of the relaxation on staff and when it does not.
My concern about the proposals for the commissioners is where the proposals in the Bill have departed from the principles set out by the Committee on Standards in Public Life in its report on the commission. First, there have been frequent references to the fact that new commissioners nominated by party leaders will always be in a minority. In that context, neither the CSPL nor anyone else recommended, before the Bill was introduced, that there should be a reduction in the current 10-year ban for the other commissioners who are not party nominees, yet clause 7 reduces the length of that ban from 10 years to five. In principle, that means that, of 10 commissioners, you could have four who were MPs a year ago and six who were MPs five years ago. That seems to be a significant departure from the principle of introducing political experience to the commission that the CSPL set out, and it gives me some concerns about the extent to which the balance between independent commissioners and political nominees will be maintained.
I am sure that people will say that I have painted an extreme scenario, that that would never happen, but it seems that that is the effect of the Bill. I have not yet understood the rationale for the reduction from 10 years to five years for the non-politically nominated commissioners, alongside the introduction of party nominees. That is my first point.
My second concern is that the CSPL clearly said that the process for appointing commissioners with recent political experience should somehow reflect the provisions of the code of practice for public appointments. It is difficult to see how the process set out in the Bill does that. The point to note is that, up till now, the Speaker’s Committee has consistently taken the view and insisted that the process for appointing electoral commissioners should be clearly in line with the code of practice for public appointments. I suppose that I am making a plea on behalf of the Speaker’s Committee, which gets the job of implementing this, for Parliament to be as clear as possible about expectations for the appointment process so that there is no confusion, and so that people do not try to invent a process that is different from what Parliament wanted.
Thirdly, a more technical point: it seems that there is no provision in the Bill to deal with the possibility that one party or another might fail to nominate. That does happen from time to time when parties have the right to nominate to organisations. If that were the case, there is a risk that the Speaker’s Committee could find itself in quite a dilemma, because, without a nomination from a party, or from more than one party in some cases, it cannot get on with the next stage of the process. That is a procedural point, but it would be good to consider it.
Those are my main concerns. It is important that Parliament thinks about them rather than simply sending the measure through on the nod, because your colleagues on the Speaker’s Committee will be given the job of implementing it.
Q 124David Howarth: On the first concern, which is the reduction from 10 to five years for the non-political commissioners, the response that has been put to me is that since those appointments will still be Nolan appointments—we are talking about the code of practice for public appointments—the situation is not as dangerous or as risky as you are saying. That will be taken into account in the appointment procedure, and it will not involve the new rather awkward process that you described for the appointment of political commissioners through the Speaker’s Committee. How do you respond to that?
Peter Wardle: Yes, provided all of that happens, but there is nothing in the Bill to ensure that it does. As I understand it, the decision to follow the Nolan process is a decision that the Speaker’s Committee has consistently insisted on, and that is absolutely right, but I am not sure that the Bill mandates that for the other appointments. What it does is reduce the disqualification that currently applies on the basis of party political involvement from 10 years to five years.
Q 125Tony Lloyd: I would like to turn specifically to clauses 8 and 9, which deal with the source of donation. For the record, may I ask a simple question? Does the commission consider that it has a primary duty to encourage and insist on transparency of the ultimate donor?
Peter Wardle: Yes.
The Chairman: By the way, we have moved on to donations.
Tony Lloyd: Yes, I did say that, Sir Nicholas.
The Chairman: But I was under the impression that you wanted to come in under composition of the commission. So, for the information of members of the Committee, we are on donations.
Peter Wardle: If I may just add to my answer, yes, so far as the law requires it. We cannot insist on transparency or disclosure of identity beyond what the law requires. That is self-evident.
Q 126Tony Lloyd: Indeed. The commission in its paper to the Committee states:
“We welcome the Government’s decision to look beyond unincorporated associations”,
but you go on to say that
“the benefits of these proposals may be quite limited, since the law already prohibits concealing the source of a donation by channelling the money through others.”
You then say that they are effectively restricted because
“the new declarations which donors are to be obliged to provide to donees will not be sent to the Commission or made public”.
With unincorporated associations, such as dinner clubs, it is difficult or impossible for the commission to bring transparency forward. You are saying that, as drafted, the Bill does not do enough to allow you take away the veil that restricts public knowledge of the ultimate donor. What powers do you seek that would allow you to strip away the veil provided by incorporation or the dinner club structure?
Peter Wardle: It is not a question of the commission’s powers, but of changing the framework that we regulate. Currently, whatever my powers, I can only require and investigate allegations of non-compliance with the law as it stands. As everyone knows, the purpose of clause 8 is to underline what the law currently requires and ensure that, in the transaction between donor and recipient, that point is specifically addressed, but it is only the point that is currently in the law. If Parliament wanted to go beyond it and change the law, we would be getting into the much bigger area of how wide the net of transparency is cast, and that goes back to the debates that the House had on Second Reading and in some of the evidence sessions involving the Secretary of State on Tuesday about the extent to which Parliament wants to change the underlying framework that we regulate. Whatever powers we have will make no difference if the underlying law stays the same.
Q 127Tony Lloyd: But there is a question of power. At the moment, if an agent operates on behalf of a unincorporated association, he has a duty under the law to say that the donations comply with the law. There is no ambiguity in the law about that. You are saying that we need to change the nature of the total structure to require an agent to declare, for example, that the donations are legitimate and within the law, such as that the donors are UK nationals and comply with the donation limits. What would you need to pursue that matter?
Lisa Klein: Currently, with unincorporated associations, the law of agency applies if the donor is a friend of party x and is saying to the unincorporated association, “Please give this donation to party x or to candidate y.” It is set out in legislation that the agent is required to disclose to the recipient party or candidate the identity and details of the source of the donation. That is then reported by the party in reports and returns filed to the Electoral Commission.
However, under the law of agency as set out in the Bill, there is a spectrum and, at the other end of the spectrum, a lot of broad discretion might rest within the unincorporated association for deciding to whom the donation is made and the amount of the donation. In that case, under those basic principles, there would not be an obligation because the unincorporated association is making the decision about the disposition of the funds. We could envision a framework that changed that to the extent that it required greater transparency of funds received by the unincorporated association, but that is not how the law is set up under the Bill.
Q 128Tony Lloyd: Specifically, would the Electoral Commission seek that change in the law to strip away the scale of unincorporation?
Peter Wardle: The commission has not expressed a view that the law should change. That is because, until very recently, all those issues were effectively up for grabs, in the context of the inter-party talks on party funding. Frankly, we did not think that the commission would necessarily be listened to terribly hard, although we were consulted by Sir Hayden Phillips to see whether we would pick out particular issues.
To the extent that a wider solution has not emerged from those talks, clearly there is a range of areas—you have mentioned a couple of them—where there is a case for changing the rules. However, I acknowledge that this is a difficult issue, about which the Secretary of State for Justice and Lord Chancellor, as well as the Front-Bench spokesmen of the other parties, have all expressed a wish in principle to proceed by consensus.
On the particular issue of the unincorporated associations, as Lisa Klein has explained, the difficult element is where there is a grey area about who took the decision on where the money would go. There have been suggestions mooted that there should be some concept of where the controlling mind of the unincorporated association is, which takes the decision on where the money goes. In principle, that would lead to greater transparency in the area that you are talking about, but it is not without its pitfalls.
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Prepared 7 November 2008