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? Ian
McIsaac: Think about a party such as ours. We have
600 and something constituency associations, of which about 350 put in
financial statements, which means that they have income in excess of
£25,000 a
year. Only a very small number of them have professional staff, and the
rest are run by volunteers. Typically, the constituency chairman, who
is the registered treasurer for the purposes of our constitution, would
tend to be someone who is probably retired, possibly elderly and not
necessarily with a background in financial services—they are not
forensic accountants or anything of that sort, but teachers,
councillors and so on. At the moment, it is a very mechanical process;
it is very easy. Are they on the electoral register or not? There is a
help desk in central office, so we can help them with
that. 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? Hilary
Stephenson: Yes. I wholeheartedly endorse a great
deal of that. It was all very true to me. Finding treasurers, even
under the past decade of legislation, has become more difficult. We are
changing a culture
with those people—in the way that election agents are quite used
to some of those compliance-type things, while treasurers traditionally
have not been. To add something else on top, another burden at this
stage, would make quite a difficulty, although in practice I think that
the outcomes of this could be laudable—where we are trying to
go. If the amount at which this was triggered was higher, the problems
might be
minimised. 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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