Political Parties and Elections Bill

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Q 32Mrs. Laing: Somebody might already have triggered by now.
Roy Kennedy: If it is not retrospective, they would not have done, would they?
Q 33Mrs. Laing: It is not fair to take you further on that because it is a question that we spoke about on Tuesday to the lawyers on the Bill .
The Chairman: Mr. McIsaac, you are the only one who has not commented on this.
Ian McIsaac: Obviously, I do not have the detailed knowledge of my colleagues. While, as finance director, I would welcome anything that prevents people from spending money, I can see that, on this occasion, that could give rise to a lot of inequity.
Picking up your point, at the end of the day there will presumably be a judge who decides, if push comes to shove. No amount of guidance can necessarily determine that outcome. Unless someone’s liberty or membership of the House of Commons is concerned, I would have thought that leaving any uncertainty where a judge might come to a different conclusion would be very damaging.
The Chairman: I have to be entirely impartial in the Chair, but it seems to me, with the Minister sitting on my right, that this is perhaps a matter to which he may well direct his attention during the debate in Committee.
Q 34Martin Linton: I was fascinated to discover that Mr. McIsaac has experience from a previous job of money-laundering.
Ian McIsaac: Anti-money-laundering.
Q 35Martin Linton: I am not suggesting for a moment that that is relevant to your current job, but it might help you to explain to us the complexities of some of these issues to do with companies.
I have two particular problems with the Bill. One concerns these unincorporated associations and private companies, which are effectively excluded. Some of them, such as Midlands Industrial Council and Bearwood, have made donations of well over £1 million, so it is fair to assume that within that there might be donations well over the £5,000 declarable level.
I would like to hear your opinion of the idea of having declarations of the true individual source of donations over £5,000, even though they might be given through an unincorporated association or private company.
My second question relates to donations that a person or his party might receive, which are intended for a particular donee. I know that donations have been canvassed, for instance, for members of staff of George Osborne, the shadow Chancellor, which is perfectly legal and above board. As I understand it, these are declared in the Electoral Commission accounts, as opposed to the House of Commons register, as donations to the Conservative party, so there is no indication there that they are given for the shadow Chancellor’s staff. That raises all sorts of issues about shadow Ministers and their accountability. I wonder whether he would welcome a change in the law that would make that more explicit. I know that he wrote to the Electoral Commission saying that this money is, at the moment, commingled with other funds, not segregated. These people are employed by the Conservative party, so all the money goes into the same pot.
The Chairman: Order. I am extremely patient. I did ask for succinct questions to our witnesses.
Martin Linton: I have asked some questions.
The Chairman: This appears to be a speech. I am speaking not to you, Mr. McIsaac, but to Mr. Linton.
Ian McIsaac: Shall I answer your three questions? The first concerned companies. Obviously, we go through the process that I have mentioned to you. If a company is an agent for another donor, the company already has a legal obligation to declare that to me. If it does not, it commits an offence. We draw the attention of our donors to that, where we believe it to be relevant.
You mentioned also an unincorporated association—a particular one—and again the law is quite clear: where the unincorporated association is acting as an agent for one of its members, it is the member who has made the donation, not the unincorporated association. In fact, the particular entity you mentioned has been reviewed by the Electoral Commission. Those suggestions were made, and were signed off by the commission.
Q 36Martin Linton: I am asking not whether it obeys the letter of the current law—I am taking it for granted that it does—but about possible changes to the law that would make it more explicit.
Ian McIsaac: The issue really is whether a piece of paper saying, “By the way, you know that that is the law really, don’t you?” is sufficient. I think that, by and large, people know that it is the law, but a large organisation could deal with that. I would be surprised if anything changed, and if they suddenly said, “Oh, now that I must sign a declaration, let me come clean. It wasn’t my money at all; it was someone else’s.”
Q 37Martin Linton: Clearly, if the money was not sent in that way, it would have to be declared, and the individual’s identity would have to be declared.
Ian McIsaac: That happens already in the case of the association you mentioned. Individuals request it to be passed to the Conservative party. We record that as being a donation from the individual, not the association. It is clear that that is happening.
On the final point you mention, it would be useful to have clarity when money has been given to the party with a wish attached to it that it be used to support a member of staff working in someone’s office. The Electoral Commission guidance seems to suggest that if it is supporting the role of an MP—his party role as a shadow Minister—the party should declare it to the Electoral Commission. When it is supporting the MP as a constituency MP, it is the regulated donee, the MP, who should report it to the commission. It is, interestingly, whoever receives the money.
That seems to be the guidance on the Electoral Commission website, and that is the guidance on which we base our actions. It is slightly unsatisfactory, because there could be a situation in which an MP receives money, but the party has the obligation to report it, or the party may receive money and the MP may have the obligation to report it. That is separate from the Register of Members’ Interests to which the MP, as a matter of good sense and good dealing with the House, will report it, whoever received it.
Q 38Martin Linton: But you would not have any objection if it was made clear in law that when a donation was made for a particular donee, that should be made clear in the party accounts.
Ian McIsaac: You say the party accounts. I—
Q 39Martin Linton: In the party declaration of donations, in the register of donations.
Ian McIsaac: My difficulty is that when someone pays money to the party, and I bank it and commingle it with party funds, that money ceases to exist. I may be able to follow that wish, or I may not. It is rather like a charity when someone says, “Here is some money; I want it to be used for building a certain dam, and for no other purpose.” If the project is cancelled, the money must be sent back. Or someone may say, “I would like it to be used for a purpose similar to that, following your normal charitable objectives.” One is trust money, which is very specific, and the other is general support with a wish that it support a particular objective.
The matter is slightly more complicated than that, but I see where you are coming from. By and large, MPs do report donations to the Register of Members’ Interests, so there is transparency and clarity.
Q 40Martin Linton: Are you satisfied that the money from Bearwood is from a legal donor?
Ian McIsaac: If I was not satisfied, I would not be here; I would be in Wormwood Scrubs.
The Chairman: A very good answer.
Hilary Stephenson, have you anything to say to Mr. Linton on behalf of the Liberal Democrats?
Hilary Stephenson: There are essentially two things: the source of the money and the application of it. On sourcing, we are very much of the view that the purpose of legislation and the requirement for public reassurance are about ensuring that we have law that gets us back to the source of the money. That clarification would be welcome.
On particular donations for particular purposes, at the moment I cannot think of an example in which that applies. I can see that there might be some difficulties in some cases, but in principle it is a good thing that it should be clear whether such conditions are made.
Roy Kennedy: My view is similar. I obviously welcome transparency, and it is important to be clear about where money comes from. A declaration of assets will help with that. It will determine where the money has come from. There will be particular uses. If that is the case, it should be stipulated as well.
The Chairman: Three people have caught my eye; the first is David Howarth.
David Howarth: My question has been answered.
Q 41Tony Lloyd: I have a specific question for Ian McIsaac, which is the stem of a general question for everybody. Mr. McIsaac said to us a few moments ago that where there was no unincorporated association, one would seek to know who the individuals who made a contribution through that association were. Do you make a public declaration on who those people are?
Ian McIsaac: I did not intend to say that. I intended to say, and I think that I did say, that when an individual instructs or requests the unincorporated association to pay the money over to my party, it is recorded as an amount coming from that donor, not from the unincorporated association.
Tony Lloyd: And is registered with the—
Ian McIsaac: And is registered by me with the Electoral Commission as coming from that donor. If the unincorporated association is a members’ association, that association itself has the obligation to declare all amounts over £5,000 directly to the Electoral Commission.
Q 42Tony Lloyd: In fact, that moves us on to a more general question. In the previous sitting, Professor Ewing suggested that all associations and equivalent bodies ought to have a statutory duty to act, so that they police the donations going through those bodies in the first instance. Mr. McIsaac, you indicated that unincorporated associations do that, but I am not clear that that is the case. I would be grateful for your view on whether they already have that legal obligation.
Ian McIsaac: They have the obligation, because it is in the law. I can only assume that they discharge their obligation. I have no reason to believe that they do not. The association that your colleague mentioned earlier is well aware of that, and the Electoral Commission has reviewed that issue with it and has satisfied itself that that is what happens.
Q 43Tony Lloyd: That it is a regulated donee?
Ian McIsaac: No, it would be a regulated donee if it was a members’ association. That particular one is not a members’ association, but others are. “Unincorporated association” is the umbrella term and the members’ association is a subset of that.
Q 44Tony Lloyd: That is helpful in clarifying the position. Professor Ewing suggested that for those bodies that do not have a legal obligation to declare the sources of their income, there is inevitable concern about whether the ultimate sources of the donations are compatible with the law, even though they may have a legal structure. Should we force all such unincorporated associations to register and provide details of their donations, so that they have the duty to police the situation? Would the various parties support that?
Ian McIsaac: I heard that. I assume therefore that there would also be obligations to file financial statements. The Electoral Commission now wishes to standardise those and incorporate them into regulations, with regulatory sanctions. Baring in mind that when I went on to the Electoral Commission website this morning and looked up unincorporated associations, I found that even my colleagues to my left accept donations from unincorporated associations. One of them accepted £1,072 and the other £754. That is apart from my party.
Q 45Tony Lloyd: It is a common question, I agree.
Ian McIsaac: I can see regulatory overload killing the golden goose. Many associations are small—dinner clubs and this, that and the other. I think that trying to generate volunteerism and political engagement is, by and large, a good thing.
The Chairman: I call Andrew Tyrie.
Tony Lloyd: Sir Nicholas, this is a general question.
The Chairman: You addressed it to Mr. McIsaac, but if you want the other witnesses to answer, please go on.
Q 46Tony Lloyd: To clarify, the first specific question was to Mr. McIsaac and the more general question was to all the witnesses.
Hilary Stephenson: I think that there is a clear difference between organisations that donate a few hundred pounds, which are primarily volunteer organisations, and much larger organisations and donations. In going along this line, the way to do it would be to have a kind of cap on where that imposition came in. In principle, it would seem quite sensible, although, as I said, I do not have hands-on expertise to whether there are further complications with it.
Roy Kennedy: In principle, it would be a good thing. You have to get the figures right. Perhaps we could follow the model of the £200 that is recordable by the association with the report at another level. Yes, we should be clear where the money is coming from.
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Prepared 7 November 2008