Political Parties and Elections Bill

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David Howarth: May I come back with just one more question?
The Chairman: Order. I ask colleagues to ask brief, succinct questions. Martin Linton caught my eye first, then Eleanor Laing, the Minister and, when he comes back, Mr. Tyrie. I see that David Howarth wants to come in again, but we must move on.
Q 8Martin Linton (Battersea) (Lab): Thank you, Sir Nicholas. I have some specific questions, but I shall try to be brief.
No one pretends that triggering is a 100 per cent. foolproof method, or even necessarily the long-term solution to the problem, but I cannot quite agree with Professor Fisher. On the one hand, he says that it is impossible to police but, on the other, points out that there has been only one case in living memory. My specific question is, if we do not have triggering, what solution would Professor Fisher advocate? He mentioned four months, which I supported in the Electoral Administration Bill, but which the Lords did not like. What about 365 days, as with national expenditure? What about a solution advocated in the past by the Neill committee of a Canadian-style system, lumping local and national spending together and dividing it by the number of constituencies, so that, effectively, you have a single limit for local and national spending?
I have another couple of quick questions, mainly addressed to Professor Ewing. I agree with him that, just as taxation legislation has to be renewed every year to deal with the accountants’ loopholes, this legislation has to be updated on a regular basis. I would be interested if he could elaborate a little on what he sees as a solution to two specific points he made. One concerns the unincorporated associations and private companies that have become a conduit for undeclared donations. Would it be possible to bring these bodies into the legislation, so that whatever applies to political party donations also applies to them? In many cases, they have just become a conduit for non-disclosed donations.
The Chairman: Order. May I ask Mr. Linton to come to a conclusion? We have less than 20 minutes and there are a lot of people who want to come in. I apologise to our witnesses if they feel that things are being hurried, but unfortunately these are the procedures under which we operate. The Committee agreed with timings proposed by the Programming Sub-Committee, and I am in the Chair as an adjudicator.
Martin Linton: I have only four more words—what about private companies?
Professor Justin Fisher: It is not just me who has concerns about triggering. In February 2000 in the House, Mr. Linton said:
“Candidates can have a real problem in not knowing when their candidacy starts and perhaps inadvertently forgetting to use the word ‘prospective’.”—[Official Report, Standing Committee G, 10 February 2000; c. 365.]
It is a common problem.
In response to your other two points and whether to use four months or 365 days, my concern with 365 days is that it would make legislative sense in some sense to unify the times, but there is a great problem in over-regulating local party activity. We do not want to strangle the communications between parties and electors in advance of the election. Electors respond to that—where campaigns are more intense, there is higher turn-out.
In terms of aggregating the spend, in one sense again that would make for a convenient solution. The problem is that all that would happen is that the money would be spent in about 150 seats, and the other parliamentary seats would simply be ignored, so while it would be convenient in legislative terms, it would produce adverse consequences. My proposal of four months is a compromise; it is the most workable solution in an imperfect world.
Professor Keith Ewing: The answer to the question is in paragraph 10 of my submission. What has happened is that a number of satellite organisations have emerged around political parties. The best way to deal with that is to say that we need to extend the scope of the regulations, so that they apply not only to political parties, but to what I call related entities and what the Australians call associated entities. That way, bodies such as unincorporated corporations and, in some cases, private companies, which exist principally to fund, raise money for, or provide services to parties, would be subject to the same financial accountability as political parties. That means annual filing of income and expenditure and better regulation of the transparency of donations.
In terms of private companies, there is an issue there too. I would deal with it by going back to the Neill committee recommendation and saying that private companies can give money to political parties only from trading income that is generated from activity in this country. I would go further still, and say that only private companies that are owned wholly or mainly by a permissible donor should be allowed to give to a political party. We need to tighten up on that in order to be faithful to the Neill committee position, and I would do it in the ways that I have set out.
Q 9Mrs. Eleanor Laing (Epping Forest) (Con): We have had in recent times two general elections that have been fought with triggering, and others still in recent memory that were fought without it, such as the one in 2000 that Mr. Linton referred to in the quote that Professor Fisher gave. As distinguished academics, are any of you aware of an assessment or a comparison having been made of the effects of one type of election or another?
Professor Justin Fisher: It is difficult to make that assessment because it is only since the introduction of the current rules, under which candidate expenses begin at the point of dissolution, that we have had an electoral commission taking a broad overview. To be honest, the system prior to the 2000 Act was slapdash and subject to minimal oversight, which is almost certainly why there has been only one case in living memory—the case in Newark. I would stress that my point is not that the current system is perfect. The Bill is correct to assert that there is a problem with significant pre-campaign spend. My point is that triggering is the wrong way to go about it, because it would create more uncertainty and potentially less transparency, and therefore a lack of confidence in the system.
Mrs. Laing: For clarity, what is the right way to go about it?
Professor Justin Fisher: In my view there is no perfect option, but the least bad option is the proposal originally included in the Electoral Administration Act 2006. That assumes that general elections tend to be in the first week of May, and that therefore 1 January is the start date, giving a period of four months. That is the least bad option, but on balance it is probably the best of the options on the table.
Q 10Mr. Wills: I have brief points of clarification for Professor Ewing and Professor Fisher, but I would like to offer a summary assurance to Dr. Pinto-Duschinsky, who raised a valuable point about the legislative process. We should be clear that our discussion today relates only to amendments that arise out of the evidence that we have heard, out of this relatively new process. There will be plenty of time for amendments to be tabled on Report, for example. The Government have made it clear that as long as other members of the Committee come forward with proposals that are consonant with the overall objectives of the Bill, we will be flexible and accommodating as far as we can be.
I want to pick up two points. Professor Fisher, your remarks about minority parties and what you assume to be their reaction to proposals by party leaders suggest that you expect such commissioners to operate on a partisan basis. Do you agree that those with recent political experience could contribute to the work of the commission in an impartial and non-partisan way?
Professor Justin Fisher: In an ideal world, that would be the case. Unfortunately, the basis on which the parties are selected suggests that the Government do not believe that that could be the case. It would be guaranteeing a place for the three principal parties. If I may say so, Minister, your reference to the parties as minor parties says everything about what is wrong with the proposals.
Q 11Mr. Wills: Minority.
Professor Justin Fisher: But, within their respective countries, they are not minority parties. I need hardly remind you that the Scottish National party is in power in Scotland.
Q 12Mr. Wills: Thank you very much. I am sure that we shall return to that point later in Committee.
Professor Justin Fisher: I shall clarify matters. If you are to have political commissioners, you need to recognise that the world exists beyond Westminster.
Q 13Mr. Wills: As I say, we shall return to the matter. I am grateful for your contribution. I am conscious of the time and the fact that others still want to come in.
Professor Ewing, you made a good point about regulators regulating themselves. Aside from the fact that only four out of the 10 commissioners would be appointed in the proposed way and the rest of them would not have had political experience, do you agree that, if a person had recent political experience and is not currently an elected politician or seeking election, that would not be a case of the regulators regulating themselves?
Professor Keith Ewing: No, I do not agree. I do not know who you have in mind to make the appointments and, in a sense, that is another problem. The idea was that those who would be appointed would have experience in running national elections or perhaps raising money for political parties. If you intend to appoint people with that level of expertise—people who have committed their whole professional life to the work of a political party—it is difficult to expect them to put their experience and that commitment behind them when taking on such work. From being close to politicians and people who are active in the political process, I know that political commitment runs deep in the individuals concerned. It is unrealistic to expect people in such positions to put such interests behind them, when operating in those situations.
To come back to the point that Michael made earlier, the Federal Election Commission in the United States consists exclusively of members of political parties. That would not be a good model for us to follow. There are problems with the American system because the regulator community is regulated by itself. A group of four people out of 10 is quite a lot.
Mr. Wills: We are not following the American model, but thank you very much.
Q 14Mrs. Laing: On that very point, are you suggesting, Professor Ewing, that people who have stood for election, been elected or taken part in elections—the only people who, by definition, have gone through the unique experience of the election process—are, by nature of their belief in a political ideal, in some way untrustworthy and incapable of behaving in an impartial manner? It seems that that is what you are suggesting.
Professor Keith Ewing: With great respect, I cannot see how you can possibly construe that from what I said. It is unrealistic to expect people who have spent their lives in politics in a partisan capacity to put all that behind them when they move to the post of commissioner. However, your point is a good one in that it would be helpful to the commission to have the kind of experience to which you refer. Provision was made for that in the Act by the creation of the parliamentary parties panel. That was designed to create a dialogue between an independent commission and people who have partisan political experience on behalf of the political parties. The question that you might want to ask the commission and the parties is, why has that system failed? It was designed to fill the knowledge gap that is now said to exist.
Q 15Mrs. Laing: I wonder whether the other gentlemen agree with that point of view.
Michael Pinto-Duschinsky: I have been less exercised by this question of political commissioners than others. To me, it is partly a matter of the political stance of the commission itself. If the commission were truly independent, it would be ideal not to have political commissioners, but I have had the feeling that at certain times—indeed, I have been informed of this by members of the commission—that its budget has relied to a considerable extent on Government favour, and that it therefore needs to accommodate itself to Government views.
That danger exists in many commissions in relation to ensuring that they are independent. If we could be quite confident that there were no pressures on an electoral commission, it would be ideal to have it as totally an expert commission. If, however, there are political elements involved, having a cross-party element becomes useful, as is the case with the Committee on Standards in Public Life.
Q 16Tony Lloyd (Manchester, Central) (Lab): Briefly, if I understood Professor Ewing correctly, he was suggesting that unincorporated associations, dinner clubs and so on should have a duty to report just as a political party has a duty to report, so that they would have to account for their donors in the same way. Obviously, that is to avoid the loophole that we cannot trace the original donor. What would be the trigger for a company or a dinner club to be considered reportable? Have Professor Ewing or other members of the panel given any thought to that?
Professor Keith Ewing: The legislation should apply, as I said earlier, not just to political parties, but to entities that are in some way related to a political party and that are not currently regulated.
Tony Lloyd: May I make it clear what I am asking? It is about avoiding a loophole within the loophole. Obviously, if I had an unincorporated association and I said that 27 per cent. of its activities were commercial trading activities, it would be clear that it was substantially a donating body, but there must come a point at which—
Professor Keith Ewing: Well, it would depend on the circumstances. What we are trying to do here, which people have lost sight of, is create a workable system, not a perfect system. Too many people are looking for perfection in an area where, frankly, it is impossible.
What I would say as a starting point is that any entity whose principal purposes included raising funds for or providing services to a political party, whether on commercial terms or not, should be subject to the same forms of transparency obligation as a political party. Basically, that would prevent a political party from offshoring some of those activities, as it can do currently.
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Prepared 7 November 2008