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Political Parties and Elections Bill

Political Parties and Elections Bill

The Committee consisted of the following Members:

Chairmen: Mr. Peter Atkinson, Mr. Joe Benton, Frank Cook, Sir Nicholas Winterton
Ainger, Nick (Carmarthen, West and South Pembrokeshire) (Lab)
Djanogly, Mr. Jonathan (Huntingdon) (Con)
Duddridge, James (Rochford and Southend, East) (Con)
Grogan, Mr. John (Selby) (Lab)
Hesford, Stephen (Wirral, West) (Lab)
Howarth, David (Cambridge) (LD)
Kidney, Mr. David (Stafford) (Lab)
Laing, Mrs. Eleanor (Epping Forest) (Con)
Linton, Martin (Battersea) (Lab)
Lloyd, Tony (Manchester, Central) (Lab)
Lucas, Ian (Wrexham) (Lab)
Reid, Mr. Alan (Argyll and Bute) (LD)
Sharma, Mr. Virendra (Ealing, Southall) (Lab)
Turner, Mr. Andrew (Isle of Wight) (Con)
Tyrie, Mr. Andrew (Chichester) (Con)
Whitehead, Dr. Alan (Southampton, Test) (Lab)
Wills, Mr. Michael (Minister of State, Ministry of Justice)
Wishart, Pete (Perth and North Perthshire) (SNP)
Chris Shaw, Chris Stanton, Committee Clerks
† attended the Committee

Public Bill Committee

Thursday 13 November 2008


[Mr. Peter Atkinson in the Chair]

Political Parties and Elections Bill

Clause 3

Civil sanctions
Amendment proposed [this day]: No. 85, in page 2, line 26, at end insert—
‘(1A) The Secretary of State, after consulting the Electoral Commission, shall make an order that specifies what discretionary requirements may be imposed by the Electoral Commission under Part 2 of Schedule 19B.’.—[Mr. Djanogly.]
1 pm
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are discussing amendment No. 77, in schedule 2, page 22, line 26, leave out from ‘requirement’ to end of line 39 and insert
‘such requirements as specified by virtue of section 147(1A).’.
The Minister of State, Ministry of Justice (Mr. Michael Wills): I welcome you back to the Chair, Mr. Atkinson. At the end of our previous sitting, I was explaining why we needed to give the commission flexibility. I hope that the Committee will be reassured to know that the commission is required to publish guidance on how it will use the civil sanctions before it is given the power to impose them. We expect that guidance to be issued at the same time as the guidance on the investigatory powers in January 2009. Should our expectation of the delivery of that guidance change, we shall, of course, let the Committee know.
The guidance will provide information that will be set out in the order that the amendment would require. That approach would allow the commission the necessary flexibility to operate the civil sanctions regime effectively. It may also give those regulated the sort of discretionary requirement that the commission would impose and in what circumstances. Amendment No. 77 would amend the definition of a discretionary requirement. In practice, it would remove the legal definition of a discretionary requirement and, because discretionary requirements are a key element of the suite of civil sanctions provided to the commission by the Bill, I hope that the hon. Member for Huntingdon will consider withdrawing the amendment.
Mr. Jonathan Djanogly (Huntingdon) (Con): We are happy to hear confirmation from the Minister about the guidance, and a reconfirmation of its importance. As for the discretionary requirements, the purpose of deletion was not because they need to be deleted, but to have a hook on which to hang a debate about what they should be. On the basis of the Minister’s explanation, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Nick Ainger (Carmarthen, West and South Pembrokeshire) (Lab): I beg to move amendment No. 133, in page 2, line 31, column 2, leave out from beginning to end of line 37 and insert ‘A fine of £1,000.’.
The Chairman: With this it will be convenient to discuss the following amendments: No. 82, in page 2, line 33, leave out ‘£20,000’ and insert ‘statutory maximum’.
No. 83, in page 2, line 35, leave out ‘£20,000’ and insert ‘statutory maximum’.
Nick Ainger: I join other members of the Committee in welcoming you to our deliberations, Mr. Atkinson. I am sure that the Minister will be pleased to know that we are about to discuss a probing amendment. It provides an opportunity to deal with the theme that runs through the Bill: the move from civil to criminal sanctions. The penalties under section 147 of the Political Parties, Elections and Referendums Act 2000 are clearly civil, and are calculated on the basis of the period in which a person has failed to comply with the requirement to produce documents. The sanctions range from £500 to, ultimately, £5,000 if the individual fails to comply within 12 months. However, in clause 3(3), which deals with the failure to comply with a stop notice, instead of civil actions and penalties, we have criminal actions. On indictment, an individual could be subject to a fine or imprisonment up to two years.
As I said during an evidence session on the Bill, one of my concerns is that while I understand the need for deterrents for those who hold important positions in respect of the responsibilities that are covered by it, I fear that it contains another element of deterrence: the one that will affect volunteers who could face not only civil but criminal sanctions if they do not comply with the legislation. This is a hook on which we can hang that debate.
I am concerned that in this part of the Bill and elsewhere we may well be introducing penalties and sanctions that are not proportionate. I would be interested to hear what the Minister has to say on that, and also what he has to say generally on how we can ensure that the volunteers who are an essential part of all political parties will not be put off from taking important positions in those parties because they fear that they may be subject not only to a civil penalty but a criminal penalty because of an error, poor advice or whatever it may be.
I think particularly of treasurers of local parties and organisations, and agents for MPs, MSPs and Members of the Welsh Assembly and even elected local government officials. I would be interested to hear what reassurance the Minister can give to members of all political parties that if they do find themselves in a position where they are subject to the regulations set out in the Bill, they will at least face penalties that are proportionate if they are found to be in the wrong.
Mr. Djanogly: Amendment No. 133 seeks to remove the summary conviction and indictment penalty tariffs for an offence under paragraph 14 of proposed new schedule 19B, which deals with failure to comply with a stop notice.
We have considerable concerns about the powers to be given to the commission in respect of stop notices. On a fundamental level, giving the commission the power to prevent people from doing what is a lawful act is unsettling and something that we will wish to explore at a relevant point when discussing the schedule. We do not support the imposition of one-size-fits-all penalties and are concerned that the amendment, while well-intentioned in that it would reduce the maximum penalty, would be arbitrary and, in some cases, disproportionate.
Much was made during the lead-up to the Bill of the role of better regulatory regimes and the use of flexible tariffs. Professor Macrory’s review entitled “Regulatory Justice: Making Sanctions Effective” was published in November 2006. At the Government’s instigation, he reviewed the entire system of regulatory sanctions in law at that date. One of the main findings of the report was the existence of the so-called compliance deficit, which arises where the sanctions available to a regulator are not sufficiently flexible to allow them to respond proportionately to offences, the consequence of which is that regulators are reluctant to take enforcement action. One of the stated aims of schedule 2 is to give effect to the proposals in that report and provide the commission with a wider set of sanctioning powers that would allow it more flexibility and proportionality when sanctioning those committing offences under PPERA.
We are concerned that, under the amendment, we could take a step back from that level of flexibility. Having a range of sanctions will always require there to be a significant option available; it may not be used at all, but its existence acts as a deterrent. I am afraid that the amendment would remove that option and possibly undermine the seriousness of the offence. Having said that, we have more sympathy with the Government on whether this should be an indictable crime in the first place. We will be looking at our position in that regard, leading up to Report. We do not support the amendment as currently proposed.
Amendments Nos. 82 and 83, tabled in my name, deal with the level of penalties involved in breaches of stop notices. Paragraph 10 of part 3 of schedule 2 proposes to give the commission the power to impose stop notices on people to prevent them from carrying on an activity that the commission reasonably believes is likely to involve committing an offence or contravention under PPERA. Furthermore, the commission may impose such a notice where it believes that a person’s activity is likely to lead them to commit an offence or contravention. In both situations, the commission must also reasonably believe that such activities are damaging to public confidence in the PPERA controls on income and expenditure.
Amendments Nos. 82 and 83, which are probing amendments, would amend clause 3(3). They were tabled to discover why the Government feel it necessary to increase the penalty for failure to comply with a stop notice to £20,000—far more than the statutory maximum and the usual penalty throughout the rest of this Bill. We will discuss our objections to stop notices more generally later on.
David Howarth (Cambridge) (LD): I am sympathetic to the remarks of the hon. Member for Carmarthen, West and South Pembrokeshire, who moved the amendment, about the difference between criminal and civil sanctions. One might add regulatory sanctions, as well. It is important that proportionality be maintained in looking at what consequences there should be in respect of failures to comply with the requirements of such a law.
With regard to the stop notice, I have more sympathy with the Government’s position, because the stop notice is the equivalent in civil law of an injunction; it is saying to the person concerned, “You must stop doing this now.” The only way in which such a notice should be complied with is by those concerned stopping doing the thing itself. We should not be in a position where, effectively, a person not in compliance with a stop notice—not in compliance with the law—can buy themselves out of compliance by paying the fine. It is not right that, when someone faces the equivalent of an injunction, they can simply pay a small amount of money and carry on doing what they were doing before.
The important question is not the size of the fine or penalty, which is also crucial—if someone disobeys an injunction in ordinary law the penalties are at large and they can go to jail until they comply—but the conditions under which the stop notice can be issued. That is the crucial question. Are the conditions under which stop notices can be issued serious enough to justify an equivalence with a civil injunction? I should like the Minister to explore that in his reply.
The present draft of the schedule talks about serious damage to public confidence. In the Electoral Commission’s view, serious damage to public confidence is enough to justify a stop notice. I want the Minister to say whether that is enough. What circumstances are imagined as leading to serious damage to public confidence? Will it be relevant, for example, that non-compliance happens during an election? Will that make the issuance of a stop notice more or less likely? I am perfectly willing to accept that there are conditions in which a stop notice will be justified. We will get to that point later, but I am not yet entirely clear about exactly what is envisaged as serious damage.
1.15 pm
Mr. Wills: Again, the Government clearly recognise all the concerns that have been expressed. I am glad that all the members of the Committee who have spoken on the matter have recognised the need for flexibility and proportionality. That is exactly what the Bill is designed to introduce. One reason why we introduced it was to deal with the inflexibilities that have transpired in the 2000 Act. We have been guided throughout by our desire to introduce greater flexibility and proportionality into the system.
We all agree that the sanction is serious, and it will be used only in the most serious circumstances. The hon. Member for Cambridge asked what those circumstances might be. In the end, of course, that will be a matter for the Electoral Commission’s judgment. However, we cannot allow the sanctions that might follow serious transgressions to be considered an occupational hazard by someone who is absolutely determined to break donation rules, for example, on a large scale. Such activity during an election could have a decisive outcome on the result. We simply must give the commission the ability to stop such activity, which could decisively turn the outcome of an election. It is important to realise that the power is to be used only in such extreme circumstances, although we can talk about the nature of the penalty.
I shall address the amendments in some detail, because I recognise that concern was raised about the sanction on Second Reading. It is important that I put on the record a detailed account of how we have come to our view. The figure of £20,000 was imported from the Regulatory Enforcement and Sanctions Act 2008, and we saw no reason to vary it. It is worth pointing out that the court will have discretion in imposing a fine for the breach of a stop notice. It does not follow that fines of £20,000 will be automatic or customary for a breach of a stop notice.
It is important to put on record the circumstances in which a stop notice may be served. The commission must reasonably believe that
“the activity as carried on by the person is seriously damaging public confidence in the effectiveness of the controls in this Act on the income and expenditure of registered parties and others, or presents significant risk of doing so”.
Of course, public law principles of reasonableness will require the commission to consider whether its other sanctions would be appropriate first. Only having considered all the other sanctions available to it and decided that they were not appropriate in the circumstances could it consider using this sanction. That is intentionally a very hard test. As with the use of stop notices under the Regulatory Enforcement and Sanctions Act, the person or party concerned will of course retain the right of appeal to a county court, or in Scotland to a sheriff, against the imposition of a stop notice. To support the use of stop notices, sanctions for non-compliance must be available, and they are provided for in clause 3(3).
We have significant reservations about the alternative sanctions suggested in the amendments. I take it that they are probing amendments, but it is important for me to put on record why we are concerned about them. I do not believe that the sanction proposed in amendment No. 133 would take into account the potential scale of an offence or provide for the flexibility that may be required when a sanction is applied for on indictment. We have deliberately ensured the possibility of a weighty financial sanction, because the sanction ought to be serious.
Another significant concern that I have with all three amendments is that they would be making quite an exception to the framework laid down in the Regulatory Enforcement and Sanctions Act, which sets out penalties for a breach of the stop notice in identical terms to the Bill. Again going back to the strictures laid down by the hon. Member for Cambridge at the start of the Committee’s proceedings, we have to be careful about how the public perceive us as proceeding in the Bill. We must be careful about seeking to make exceptions for ourselves—politicians—from other people who are regulated by public bodies, unless there is a genuine distinction to be made. In these circumstances, I find it hard to make such a distinction.
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Prepared 14 November 2008