Political Parties and Elections Bill

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The Chairman: Professor Fisher, do you agree with that?
Professor Justin Fisher: Wholeheartedly. The only area where I would differ from Keith is the idea of defining unincorporated associations as linked to political parties. It would be far easier simply to place the same reporting requirements on collective bodies that made donations, and therefore the trigger would be whatever sum was in place for donations to political parties. It is a matter of transparency, rather than of defining the organisation. I would support that; I think it is a good idea.
The Chairman: Mr. Pinto-Duschinsky, in 30 seconds?
Michael Pinto-Duschinsky: This is a very complicated area, which Mr. Lloyd has done well to bring to our attention. At the moment, the triggering for third parties and their donations to political parties under the 2000 Act is very unsatisfactory. The wording is different from the recommendation in the 1998 Neill committee report. The consequence of making that triggering more effective would be to bring vast numbers of bodies under control.
2 pm
The Chairman: We have reached the appropriate time, 2 o’clock. I want to apologise to our very distinguished and helpful witnesses for slightly short-changing them by having points of order at the beginning of this evidence session. I am afraid that I am here merely to try to keep the peace between all parts of the Committee and to achieve progress. I had to take the points of order, which were very valid.
I thank Professor Ewing, Professor Fisher and Mr. Pinto-Duschinsky very much, not only for the articles that they have written, but for the valuable evidence that they have given us this afternoon. On behalf of all members of the Committee, I thank you most warmly.
As we change over to our witnesses from the Conservative party, the Labour party and the Liberal Democrats, I want to say to the Committee that, if it wants, it can carry on sitting after the evidence session ends at 3 o’clock. However, it would continue to be a public sitting to deal with points of order, if that is required. I say that now so that people do not feel inhibited, frustrated or impatient. As I say, we can sit for a short while after the evidence session has ended.
James Duddridge: At this stage, Sir Nicholas, we certainly do not intend troubling you any further today on the issues that have already been raised. I think that you made yourself very clear earlier, and we thank you for that.
The Chairman: I am most grateful that you will not be troubling me further today. Thank you very much indeed. However, I wanted to make those remarks because I try to be as flexible as possible to accommodate the concerns of the Committee.
I now welcome our new witnesses: Ian McIsaac, financial director and registered party treasurer of the Conservative party, whom I know; Roy Kennedy, director of finance and compliance for the Labour party; and Hilary Stephenson, director of campaigns for the Liberal Democrats. I say to you, as I say to all witnesses, that I try to give Her Majesty’s Opposition, the Liberal Democrats and the Government party as much opportunity as possible to put questions, but I always start with the spokesman for Her Majesty’s Opposition, who today is Jonathan Djanogly.
Q 17Mr. Djanogly: Thank you, Sir Nicholas, and good afternoon to you all. I think it would be a fitting start if I asked you, in turn, what you like and do not like about the Bill. Ian McIsaac first, please.
Ian McIsaac: I am relatively new to the political process, so I do not have a lot to say about triggering, which came into existence long before I got involved in politics. I have no idea how it used to work or how it might work, so I have no real opinion on that issue, save to say, obviously, that I was part of the Hayden Phillips discussions and we did not really turn our attention to it at any point. As I say, I have no comment about triggering.
Working backwards, regarding the Electoral Commission, there are some good things in the Bill in terms of the ability to give a proportionate response to potential regulatory error. On the other hand, some things could be considered somewhat draconian by some people. That takes me to one of the main points that I would like to make, about volunteerism. On the question about declarations, I think that is very problematic indeed and I wonder whether it achieves its stated objective.
The Chairman: Any further questions, Mr. Djanogly?
Q 18Mr. Djanogly: I would like to put that question to each of the three panellists.
The Chairman: Witnesses. [Laughter.] They may be candidates in the future.
Mr. Djanogly: Sorry. I said “panellists”.
The Chairman: I will move from left to right and ask Hilary Stephenson to respond.
Hilary Stephenson: I am absolutely not a candidate. I give a cautious welcome to political commissioners in the sense of bringing in some first-hand expertise on how things work and perhaps improving the enforceability and practicality of some decisions. Obviously there is the need for public reassurance in such matters, too. We certainly welcome the discussion of donation and spending caps, which I assume we shall be asked about in more detail later. Our particular concern is the proposal to return to the trigger. It does not address the main issues that need to be dealt with in terms of transparency and a level playing field. It would deal only with candidate spending, not party spending, which is our main concern.
In summary, we welcome the focus on spending caps and donations. We would be worried about a move to reintroduce triggering. That was always uncertain, and it caused many problems for agents and volunteers. It is probably made worse in the current circumstances by the fact that we have almost continuous party campaigning for various elections nowadays—more than we used to have. Making the distinction between where one election ends and another starts is becoming increasingly unrealistic.
Roy Kennedy: I welcome the proposal for political commissioners. I am a member of the political parties panel, so I meet the commission regularly. I heard what was said earlier about how people involved in political life are honourable. I believe that people can become political commissioners and look at things honourably and properly, and give the view of the volunteer. All our parties are volunteer armies. As a political parties panel, in many cases we have had many years of major agreement about how things affect the volunteers and members on the ground. I welcome that very much.
We have concerns about the transparency of donations. We welcome the idea of having a certificate in respect of donations. The sum of £200 is too small and we should be looking at increasing it. As you probably know, £200 is the recordable amount in making donations. There are then the sums of £1,000 and £5,000 reportable locally and nationally. It might be more sensible to move to those figures, rather than £200, again on the basis of getting volunteers involved. I have some reservations about what are the reasonable steps to take to verify when the certificate has been handed to us. How do we deal with that?
As for the trigger, it cannot be right that, outside the period when the election is called, we have an unregulated period in which candidates can spend money. We have the national limit, which is about £19 million. The candidate spending limit is roughly £12,000 in their constituency. The trigger is one option. It was in place before the 2000 Act. Okay, there might be other options. I heard about the option of a year, or possibly one of four months. They might be explored, but some proposal to control that spending must be right.
Q 19Mr. Djanogly: Each of you has, in different ways, mentioned the importance of the volunteer element of what you do. I should like to think that we all respect that. Looking specifically at clause 8, entitled
“Declaration as to source of donation”,
comments were made that there are problems with that in respect of motivational issues. It might be helpful to put on the record what actually happens in procedural terms when someone wants to make a donation at the current time. What mechanics do you go through that we should be worried about or have to think about?
Ian McIsaac: Are you asking about now?
Mr. Djanogly: At the moment.
Ian McIsaac: Any donation in excess of £200 can be accepted only if it is from a permissible donor, so we have to ask what a permissible donor is. The law requires us to verify the identity of that person—we do that through the electoral register or, if it is a company, through Companies House. They are not necessarily a perfect way of identifying, and we would not necessarily find someone who was determined to pass themselves off, but that is what we do. The electoral register is a finite thing, which exists, albeit that it needs to be updated. It is somewhere we can go to verify that a person exists. If the amount is more than £200, it needs to be recorded, with the cheques banked and so on. It is a simple process really. An individual, if on the electoral register, is entitled to make a donation. We encourage them to do so and, indeed, many thousands of donations of more than £200 are made each year.
Q 20Mr. Djanogly: What are your problems with this clause?
Once you start getting into areas of judgment it gets more difficult. This legislation has words such as
“think that the declaration was untruthful...suspected to be untruthful”.
That is anti-money laundering language—I am afraid that my professional practice unfortunately got me involved in anti-money laundering stuff, quite a lot. I checked out the joint money laundering steering group guidance notes—here they are, 159 pages long, including things such as customer due diligence, how to identify your customer or how to identify their money. All these things are highly judgmental and very difficult. You can imagine yourself, or your parents, being asked to become chairman of the local constituency association—not necessarily mine, but Lib Dem or Labour as well—and then being told, “By the way, there is a bit of a snag. There is the compliance manual. And, by the way, you ought to be aware that if you make a mistake, albeit an innocent one, it could be looked at through the eyes of someone who is very suspicious. Also, be aware that the Electoral Commission has all sorts of powers to gain access to your home and to look at your records. By the way, you do want to be the chairman of the association, don’t you?”
That is the sort of problem; it is not easy. Then that comes up to me. I had a line with Sir Hayden Phillips, that if that were required, I am not sure that Mrs. McIsaac would allow me to carry on with the job. I mean that very sincerely, because the way that the legislation—the Political Parties, Elections and Referendums Act 2000—is written, the registered treasurer takes responsibility for the compliance of all the associations. You can see the picture—slightly elderly chairman, no professional staff, people who come in three days a week, and so on and so forth—but every quarter I have to sign off the donation report. I have to rely on these people. I can do that now, basically because the electoral register exists. It is a mechanical thing to check it. If, on the other hand, I want to rely on the quick-wittedness of those in the associations to spot something that they suspect to be untruthful, or ought to suspect to be untruthful, I am starting to get into serious difficulty.
You can see the pattern. There is the whole verification area, the judgmentalism and the lack of staff. A large investment bank that I dealt with when in professional practice had more than 1,000 people in compliance and legal—not risk. I think of the Conservative party, and we have a handful.
Q 21Mr. Djanogly: Thank you. Would either of the other two witnesses like to add to that?
Roy Kennedy: My experiences are similar. Getting treasurers to do this work is always difficult and getting a constituency officer is obviously difficult. We have local constituency Labour parties that send all their reports to our head office, either online or on paper, for donations of £200 and above. We collate loads of stuff and then the checks are made: are they on the register? If it is a company, is it registered? Are they registered through a trade union? We can find those things, they are there and can easily be found. Going beyond that, the question of reasonable steps and so on is a much more unclear area for us, so we have some concerns there and that area needs to be thought through further. On the raising of earnings, as I said in my earlier submission, it should be raised at least to £1,000 or £5,000 at both local and national levels.
Q 22David Howarth: May I come back to something that Hilary Stephenson said on the spending side? It was very striking, and I would like to have your reaction to it. She said that campaigning is now all the time, not just at elections, and that it is difficult to tell the difference between campaigning for one election and another. My experience is similar to that. If that is so, does not that mean that the idea of controlling election spending through candidate spending near the time of the poll is a 19th-century approach to a 21st-century problem, and that what we should be looking at is something like the Hayden Phillips global spending cap approach, throughout the electoral cycle? Taking into account what you have just said about the problems of compliance and volunteerism, there should be some way of dividing that up into a local cap too, so that it is comprehensive and does not depend on the accidents of when a general election might occur.
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Prepared 7 November 2008