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.
Q
131Tony
Lloyd: How could that not be the case?
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 donor—for 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 donor—will 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.
Q
134Mr.
Tyrie: Therefore, is the clause worth the
candle?
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
the triggering rules will generate a huge extra administrative burden by
creating 646 bodies that will need to be monitored, as opposed to one.
Can you give the Committee an estimate of the administrative burden
generated by the existing law and let us know, in cost terms, what that
will rise to as a consequence of the implementation of the
proposals?
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. Tyrie’s 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.
Q
138Martin
Linton: The identities and names of donors must be
disclosed— 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
party, and it will be a requirement in order for it to accept that
donation.
Q
141Martin
Linton: And that declaration will then be sent to
you? Lisa
Klein: No, it will be retained by the political
party, but we could obtain it upon
request.
Q
142Martin
Linton: Would you do
so? 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 Sweeney’s
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.
Q
145Martin
Linton: Even though it is through an unincorporated
association. 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.
Q
147Mr.
Djanogly: On clause 8, I am just having a look at your
October 2008 memorandum. You
state: “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
Committee’s 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
parties. You have an opportunity to ask them yourselves later today. I
am simply reporting to you what they have said to us so far, and I
suspect that they may say it again if they are asked the question this
afternoon.
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.
Q
149Mr.
Djanogly: And what did the political parties say to
you? 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 Bill’s
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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