Political Parties and Elections Bill
Q 129Tony Lloyd: But to be clear, what you are saying at the moment is that an unincorporated association could have the doubtless unintended consequence of totally disguising the fact that the ultimate source of a donation was one that would not be permitted if that donor gave the money directly to a political party.
Lisa Klein: I am sorry; I did not fully hear the question.
Q 130Tony Lloyd: I am saying that the consequence of the way that the law would stand even if the Bill was passed would be that an unincorporated association could be a channel so that money could go to a political party, which, if given directly by the ultimate donor, would not be permissible under our laws.
Lisa Klein: I do not fully subscribe to that view.
Lisa Klein: If the unincorporated association was used as a device with an intent to channel money that would otherwise be impermissible, it would be in violation of section 61 of the Act. The Bill does some very significant things in terms of improving our ability to investigate such a violation; in fact, such a violation would be subject to the extended investigative powers in the Bill.
Q 132Tony Lloyd: I have a final question, which is almost about the area that Lisa Klein has just taken us into. You said in an earlier answer that the investigative powers that you have are not adequate. On the problem of the unincorporated association and the question of the foreign donorfor example, whether the foreign donor is registered in the UK for tax purposes or for elections, which of course would mean that they were a permissible donorwill you have enough powers after the Bill has been passed properly to investigate allegations of impropriety in both those cases?
Lisa Klein: The short answer is yes. The slightly longer answer is yes, but we will have to work within the untested framework of the definition of carrying on business etc., which is incorporated in the current law.
The Chairman: We have approximately 20 minutes left. On the issue of donations, three other Members have caught my eye and want to ask questions: Andrew Tyrie, whom I will call first; Martin Linton; and Mr. Djanogly.
Q 133Mr. Andrew Tyrie (Chichester) (Con): I think that, perhaps inadvertently, a large part of what I wanted to ask has already been answered in your response to questions from Tony Lloyd. We are at one in wanting to ensure that these intermediaries are not permissible and cannot be used. The question is, what framework of law is most appropriate for dealing with them?
I would like you to summarise your views. What you are saying is that the proposals will not extend the existing legal restrictions and will not add materially to transparency, but they will impose an extra large compliance burden. Is that correct?
Peter Wardle: Yes, I think that summarises what we have said in the written memorandum, which is our view on the clause.
Peter Wardle: That is a decision for Parliament. We are more concerned about its impact on political parties than on the Electoral Commission. Most activity that the clause will require involves a transaction between parties and their donors. I am aware that all three political parties have raised concerns about the burden of complying with the clause as drafted.
Q 135Mr. Tyrie: But it sounds like you would not dissent from the summary that, in a nutshell, the clause is at best a waste of time.
Peter Wardle: Those are your words. Our words are in the written memorandum to the Committee.
Q 136Mr. Tyrie: While I have the floor, may I quickly ask you for a piece of information about an issue mentioned earlier, which I have been thinking about? Perhaps you will send it to us in writing. You said that
Peter Wardle: I will be happy to attempt something like that with the caveat that we look directly only at the impact on the Electoral Commission. As I said earlier, the other factor to consider is the extent of the impact on candidates and agents.
Mr. Tyrie: Sir Nicholas, I have questions on individual registration, but perhaps we shall come to that later.
The Chairman: Mr. Wardle, if you feel that you would like to answer Mr. Tyries questions with a written submission that perhaps gives rather more information than you have been able to provide off the cuff, the Committee would be pleased to receive it.
We now move from Mr. Tyrie to Mr. Linton. We want to get registration in, so I hope that the questions from you, Mr. Linton, and from Mr. Djanogly will be relatively succinct.
Q 137Martin Linton: I want to understand exactly how clause 8 will work and I am not quite there yet. In principle, the purpose of the Bill is that the identity of donors who give over £200 should be disclosed. In some cases, unincorporated associations have been used as a device to transfer money without disclosing the name of individual donors. Is that accepted?
Lisa Klein: Donations of over £200 have to be confirmed and verified, and a donor identified so as to ensure that they are a permissible donor, by the party. Then that first part of your statement would be more accurate. In other words, they are not published. A party has the obligation to ensure that any donations over £200 come from permissible donors, and therefore they have to verify the source of the donation.
Lisa Klein: Yes, the figure is over £5,000 for political parties.
Q 139Martin Linton: Nevertheless, with some unincorporated associations giving well over £1 million, it is likely that there are donors of over £5,000 who use such associations to channel their donations.
Lisa Klein: That is possible. If presented with a factual scenario in evidence of that, or that something had been circumvented, or that the proper information had not been given, or that the donation was working as an agency donation, that is something we should look at.
Q 140Martin Linton: But the amendment that clause 8 will make is simply that the secretary or chairman of that unincorporated association will have to write a declaration with the names of donors of over £200 and give it to the donee. Is that right?
Lisa Klein: My understanding of the operation of the provision is that for any donation of over £200, the donor will be requested by the recipient to fill out a declaration form that states the identity of the source of the funds. That will then be sent back to the political
Lisa Klein: No, it will be retained by the political party, but we could obtain it upon request.
Lisa Klein: Given the number of donations that might be affected, probably not on a routine basis, but on a for-cause basis, yes.
Q 143Martin Linton: Do you not think it would be better if all donations of more than £5,000 were disclosed publicly?
Lisa Klein: I have no problem with that, no.
Q 144Martin Linton: If you receive a declaration from a party showing that there are many donations of more than £5,000 through unincorporated associations, which have not been declared publicly, would you not think it a good thing if you were able to publish the names?
Lisa Klein: Yes. I would go back to Mark Sweeneys evidence to the Committee on Tuesday. The question of agency is factual. If it determined as fact that donations resulted from agency, with the donor donating more than £5,000, that should be disclosed, yes.
Lisa Klein: Under the law, if the unincorporated association is being used as an agent for the actual donor, the publication of donors of more than £5,000 would be required, yes.
Q 146Martin Linton: Would it not be simpler if, as we amend the Political Parties, Elections and Referendums Act 2000, we wrote that in for all donations of more than £5,000? You would have it within your power to publish the names of such donors, but there could be an amendment so that it was automatic that donors of more than £5,000, even through unincorporated associations, should be identified.
Lisa Klein: There certainly could be ways to extend it. I have left my drafting pen at home, but there are definitely ways that one could extend it if Parliament chose to do so.
On the other hand, the changes will impose potentially substantial new administrative burdens on parties and donors. Political parties have expressed reservations to us about the impact of these compliance requirements, particularly on their volunteer officers.
Do you think that the implication of clause 8 could be to dissuade people from wanting to be donors because of the administrative and bureaucratic implications?
Peter Wardle: What we are doing here is bringing to the Committees attention the concerns that have been expressed by the political parties. I am not sure whether I would want to speak beyond that for the political
Q 148Mr. Djanogly: I was moving beyond what you have heard from political parties. I was asking whether you have a view on what donors to political parties might think of the proposals.
Peter Wardle: I do not have a direct view on that, because I have not surveyed donors. What the political parties have represented to us reflects conversations that they have had and their views on the likely reaction of their donors, as well as of the parties themselves. I would not seek to interpret beyond what we have reported to you, which is what the political parties have said to us.
Peter Wardle: The political parties have said to us what is in our note, which is that there are general concerns about the impact of the compliance requirements. The particular issue that they have raised with us is about their own volunteer officers. We have not had any detailed evidence from the political parties about their view on what their donors might or might not think about the clause.
Q 150The Minister of State, Ministry of Justice (Mr. Michael Wills): I, too, want to dwell on that point, and perhaps return you to the briefing that you helpfully provided for the Committee. May I first check that you are aware, of course, that the Government have indicated that we are willing to be flexible about the limits? We absolutely accept the need not to overburden volunteers who, in the overwhelming majority of cases, are engaged in a noble voluntary activity.
Peter Wardle: Absolutely. The Secretary of State has made that clear on a number of occasions, and you, Minister, have also made that clear to us. The briefing was written at a point of time, and I acknowledge that things have moved on since then and that they show signs of moving further in the process of the Bills development.
Q 151Mr. Wills: Thank you. May I direct you to the words in your briefing? Under the heading Sources of donations you say that you believe the benefits of these changes will be quite limited. That is not to say that they will have no advantage at all, is it?
Peter Wardle: No, it is not. We would not dissent, being an organisation that has been set up to encourage transparency, from any attempt to underline the requirements on transparency, which is what the clauses are trying to do. What we are saying in the briefing is that you have to set against that the potential disbenefits. In terms of what is in the Bill, we are concerned that the potential disbenefits in practical terms may outweigh the benefits; we are not saying that the whole idea is completely unworkable, but that it is not desirable as it currently stands.
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