Political Parties and Elections Bill

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Mr. Wills: I may just have glimpsed a shadowy ghost of the consensus that I have been so avidly seeking throughout today. Apart from the occasional moment when the hon. Gentleman strayed into some general partisan comments about the overall nature of the Bill, there is a large measure of agreement on a lot of the substantive issues. Before I set out answers to some of his questions and our case for the clause, I point out that it was remiss of me not to address a couple of the important questions that he asked earlier.
On the difference between “necessary” and “sufficient”, although the hon. Member for Cambridge had a good go at it, I try never to avoid anything and I can tell the Committee that “necessary” will detail what is required in cases where the Bill requires clear steps to be taken, while “sufficient” will provide what needs to be done as a bare minimum when the nature of the obligation may be less clear. I hope that that clarifies that important point. Let me clarify a further point. In the hon. Gentleman’s previous remarks, he seemed to suggest that my comments about “complex” and “various” in relation to the previous group of amendments referred to the Bill. In fact, they referred to the 2000 Act, which has been in effect for eight years, so that was the point that I was making.
Clause 1 is an important part of the Bill for a lot of the reasons that the hon. Member for Huntingdon has set out. It emphasises that the commission has a role in monitoring compliance with the controls, but it also goes further and sets out the commission’s role in securing compliance. That will make it clear that a key part of the commission’s monitoring role is to investigate allegations or suspicions of regulatory failure, and to consider whether to take further action.
The clause also enables the commission to prepare and publish guidance setting out its opinion of what is required under the legislation referred to—section 145(1) of PPERA. The clause clarifies the commission’s role by making it clear that it has the responsibility not only to check whether relevant restrictions and requirements are being complied with, but to take the steps it considers necessary to ensure that the rules are complied with, and to deter non-compliance. The clarification of the commission’s role is intended to address a recommendation of the Committee on Standards in Public Life.
The 2007 report on the Electoral Commission drew on evidence received by the committee that suggested the commission’s interpretation of its regulatory mandate in the 2000 Act had led it to take a passive approach. In turn, that made it a less effective regulator and led to less public trust and confidence. The committee therefore recommended that the 2000 Act should be amended to make it clear that the commission has a duty proactively to investigate allegations or suspicions of failures to comply with the regulatory framework.
In particular, the committee recommended that the word “monitor” in section 145 of the 2000 Act should be replaced by the word “regulate”. However, we believe that such an amendment would not sufficiently achieve the underlying intention of the committee’s recommendation, which is to place greater emphasis on the active steps that the commission may take in order to perform its role. The wording of the clause will bolster the commission in performing its role and will place the correct emphasis on the importance of an active approach to regulation. We believe that that will result in a strengthened regulator. It is essential that the commission and those whom it regulates be in no doubt about the extent of the commission’s role as a regulator of party funding and campaign expenditure.
The second aspect of the clause relates to the commission’s ability to publish guidance, and is necessary to ensure that regulated individuals and political parties fully understand what they are required to do, or avoid doing, to comply with party funding legislation. We recognise that party funding rules are complex and that those charged with compliance are often volunteers who may lack financial skills. The clause is intended to reflect that. Such guidance might cover frequently asked questions, or it might set out some scenarios on novel circumstances and steps that the commission would expect a regulated individual to take to comply with regulatory requirements in those circumstances. The clause also allows the commission to produce best practice guidance or pro formas that parties or regulated donees might like to use to submit returns to the commission. The intention of this part of the clause is to ensure that the commission takes an active role in helping those whom it regulates to comply and avoid inadvertent breaches of the rules.
The hon. Member for Huntingdon asked various questions about the budget and was interested to know whether the commission would have sufficient funding to enable it to discharge these new duties. He will be aware that the commission is funded directly from the consolidated fund, after the Speaker’s Committee, about which the Committee has now been much enlightened, has approved its estimates. I am happy to write to him with the details of that budget. Indeed, I am sure the commission will be happy to let him know directly what its views are about the adequacy of its funding.
The hon. Gentleman spent a reasonable amount of time asking how we got to this position. I do not want to exhaust the Committee’s patience by providing a blow-by- blow account, but it is not surprising that in an area as complex and important as this, the legislation needs to be constantly revisited to ensure that it is appropriate to the circumstances. I do not need to remind the Committee of the various issues that have arisen from all parts of the House in recent years, which have suggested that we needed to take a fresh look at this subject. I have no doubt that, no matter how important and useful the Bill is in achieving its objectives, we will revisit these issues in legislation.
Incidentally, it has always been clear that, since the 2000 Act, the role of the commission should be that of a regulator. Section 145 of that Act makes it clear that the commission’s role is to monitor compliance—clearly, that is a regulatory role—and that it should do so by taking “appropriate steps.” That is a clear nod towards investigation and possible sanctions. That is not a new role, but it does need refocusing, as the hon. Gentleman clearly stated.
The clause is an important part of an important Bill and I hope that the Committee will support its inclusion.
Question put and agreed to.
Clause 1 ordered to stand part of the Bill.

Clause 2

Investigatory powers of Commission
Question proposed, That the clause stand part of the Bill.
Mr. Djanogly: We move on to clause 2, which deals with the new investigatory powers of the commission. PPERA created the commission and, at the same time, provided it with supervisory powers. Section 145 set out the general function of the commission as the regulator and monitor of compliance with part III, on
“Accounting requirements for registered parties”,
and part IV, on
“Control of donations to registered parties and their members etc.”
To complement that, section 146 empowered the commission to require a predefined group of entities to provide it with information relating to their financial affairs. That predefined group included registered political parties, recognised third parties, permitted participants in a referendum campaign, regulated donees and candidates at an election.
A person authorised by the commission may also enter the premises of a registered party, a recognised third party or a permitted participant to inspect their financial records. However, according to the Secretary of State for Justice, those powers have been used only once. On Second Reading, he said:
“In any event, the existing powers have been used only once since the Electoral Commission was established nearly eight years ago”—[Official Report, 20 October 2008; Vol. 481, c. 50.]
The first question to ask is, why have they not been used more frequently?
The scope of proposed new section 146 goes well beyond that, and the Minister must show some evidence of the need for such an extension. In particular, it would interesting to know what formed the catalyst for the Government to give those powers to the commission, what format the consultation process took and who was consulted. Can the Minister provide figures for the number of instances in which the commission has failed in its duty as a regulator on the basis of a lack of those proposed powers? In other words, have the Government reviewed to what extent the failure to regulate has so far been as a result of inaction by the commission, or of a lack of appropriate legislation? When does the commission feel that there could be a need to go into the homes of individual donors? How frequently is that likely to happen and on what basis?
Clause 2 seeks to replace section 146 of PPERA, thereby providing the commission with increased powers of investigation. Subsections (1) and (2) would insert and give effect to what is now schedule 1 of the Bill, while subsection (3) makes provision for penalties for offences under the new schedule. Among other things, schedule 1 would enable the commission to require access to financial records and information, and to enter premises to inspect and make copies of relevant documents.
Paragraph 1(1) of schedule 1 is particularly concerning. It would extend the power under section 146 of PPERA to enter premises that had previously been restricted to registered parties, permitted participants and candidates at elections. Paragraph 3 of schedule 1 would include other bodies or individuals such as donors. Those investigatory powers can be exercised in cases where the commission has “reasonable grounds” to suspect that an offence or contravention has been committed. Will the Minister give an early indication of what he thinks would constitute “reasonable grounds”?
This provision has the potential to erode the willingness of law-abiding citizens to donate to political parties—a point that has been made by many people. It would take only one heavy-handed and well-advertised use of those powers in someone’s home or office for other legitimate donors to take fright at the prospect of giving money to political parties. Giving money to political parties is, for the vast majority of contributors, done for the noble and civic intention of wishing to promote a better society for all. To destroy or hinder that instinct would be inexcusable, let alone anti-democratic. That is why we have tabled a number of amendments to schedule 1. The stakes are high and we must thoroughly justify the need for these new, sometimes severe powers.
In so doing, the Minister should bear in mind the comments of Peter Wardle, chief executive of the commission. Giving evidence to the Committee on the extension of the commission’s powers to cover regulated donees, he expressed reservations over the extension and said:
“We feel that the current powers are adequate to do the job we need to do regarding inspection. One can see why, for completeness, the powers have been extended, but we are not convinced that we need these powers.”——[Official Report, Political Parties and Elections Public Bill Committee, 6 November 2008; c. 43, Q104.]
I read with interest the White Paper published by the Ministry of Justice in the run-up to the Bill. I note in particular the sections entitled, “The case for change”, through to, “The Government’s proposals for reform.” However, in the section entitled, “The case for change”, I was left somewhat bewildered by the fact that there was no mention of the need for the commission to have the power to demand documents from individuals. That does not appear until the proposals on page 27:
“To provide the Commission with a widened range of sanctions and investigatory powers to enable it to become a more robust regulator. The Commission’s powers to obtain information would be extended to allow it to require the production of information from relevant individuals not currently covered by the PPERA powers where it is appropriate to do so...This would need to be accompanied by appropriate safeguards.”
5.45 pm
Furthermore, there is no recommendation that the commission should be able to enter the homes of individuals. Will the Minister tell us from whom that recommendation first came?
The commission states that the power of entry is consistent with that used by other regulators. Will the Minister tell us what circumstances have necessitated the use of such powers? How often does he or the commission envisage the powers being used? Is the Minister also aware of the commission’s own concerns that the safeguards for access to premises occupied by regulated donees—including individual MPs and other holders of elective office—may not be robust enough? Has the Minister taken up the commission’s offer to consider further how to safeguard such powers effectively? Does the Minister not find it concerning that the very organisation that they seek to empower shies away from the arbitrary power being handed to it?
According to a press release issued by the Home Office in July there are now 1,043 separate laws that allow state inspectors to enter people’s homes and premises. On 15 July, the operational policing section of the Home Office slipped out a new detailed survey of powers of entry by state officials. There was no press release, no comment and no fanfare.
Of those 1,043 state powers of entry, 753 are exercisable under primary legislation and 290 through secondary legislation. In total, an estimated 430 new powers of entry have been created by this Government. Despite the Prime Minister’s pledge last year to curtail those rights, a further 16 new laws are being pushed through Parliament that entrench or extend powers of entry.
In a speech last year, the Prime Minister pledged to curtail powers of entry with a new liberty test. He said that any change to entry powers would be accompanied by new guidance on using such powers and on the rights of members of the public to prevent their abuse. To paraphrase his speech, he made three points. He said that any change will be accompanied by guidance on how it is to be exercised; that individuals have the right to take action if that guidance is not complied with; and that we should consider whether we need to do more to offer redress for the individual against disproportionate use of those powers by the state.
From my reading of the Bill so far, not one of those limbs of the test has been complied with. Will the Minister explain why not, and when and how they will be, or is it simply that, given what I hope is not going to become the partisan nature of the Bill, the Government want to rush through the measures in time for the next general election?
We support the general need to empower the commission and to provide it with tools to be an effective regulator. However, unless we are careful, the effect of the measures will be to push people further away from the political process. As my right hon. Friend the Member for Horsham (Mr. Maude) rightly pointed out on Second Reading:
“We all agree that the Commission must have appropriate powers to enable it to carry out its duties, but there is a real concern about the proliferation of search and entry powers.”—[Official Report, 20 October 2008; Vol. 481, c. 58.]
Donations to political parties are a way of volunteering assistance to the political process, and the last thing that we wish to do is discourage it. We must be careful to ensure that we do not introduce knee-jerk legislation when we have not fully considered its long-term impact. Given the rushed nature of the timetable for the Bill, I fear that we may be in danger of doing just that. It seems that the old saying “more haste, less speed” could be applied to the Government. In their desire to push through the Bill, I trust that they will not breach their own code of practice on guidance—or the Government’s guidance on guidance—which states that guidance should be issued at least three months before any regulation comes into effect.
I want to finish by saying that there is a twist to this. In answering a written question from my hon. Friend the Member for Chichester, the Minister noted that the consultation on clause 10 will be that of the Electoral Commission and not the Government. Will the Minister explain the position relating to clause 2 and schedule 1 and confirm that that full consultation will occur, whichever body undertakes it?
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