Political Parties and Elections Bill

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David Howarth: I am grateful for the Minister’s explanation of the clauses. It occurs to me, having heard him, that £20,000 might not be enough. If people are willing to give donations of millions of pounds to political parties—it is worth millions of pounds to them for their party win the election—would £20,000 be a deterrent?
Mr. Wills: That is open to argument, and the hon. Gentleman may have decided to table an amendment to that effect. However, as I say, we have been guided by an Act that is already in force—the House had plenty of time to reflect on it and came to a conclusion, so we thought it appropriate to follow the conclusions in that Act. Of course, as with all such things, the House is always at liberty to revisit the situation in the future. Anyway, on that basis, I hope that the amendment will be withdrawn.
Nick Ainger: Having heard the Minister’s explanations and his assurances about proportionality, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr. Djanogly: I make it clear at the outset of the debate on clause stand part that the Conservative party accepts that there may be cases where the use of civil sanctions may be more appropriate than the heavy-handed use of criminal sanctions under the Political Parties, Elections and Referendums Act 2000. To that extent, we welcome the clause conceptually. However, we wish to ensure that any use of the new sanctions is proportionate, risk-based and fair, which is why we need to review the effects of the clause.
Section 148 created general offences intended to guard against tampering with documents or with information to avoid the provisions of PPERA. The section specifically singles out the alteration or suppression of relevant documents, or the withholding or falsifying of information. Section 150, in schedule 20, set out the penalties for all the criminal offences created by the Act. Those are entirely prescriptive and allow for no variation or flexibility to provide for the penalty to be tailored to the offence.
While sections 151 to 153 were concerned with summary proceedings and offences committed by bodies corporate and unincorporated associations, section 154 required the courts to notify the commission of the conviction of any person under the provisions of the Act, or under any other enactment relating to elections. Such notifications were designed to enable the commission to check whether a person registered as a party’s treasurer, as the treasurer of an accounting unit or as a deputy treasurer was disbarred from holding such office.
In a nutshell, those are the powers and sanctions that the commission enjoys. The Committee on Standards in Public Life summarised them in its report and concluded that the only sanction available to the commission where parties did not comply with the legislation was to name and shame or, if the offence was sufficiently serious, to refer the matter to the Crown Prosecution Service. That has resulted in the commission seeming to be reluctant to refer matters to the CPS, because it may be disproportionate to prosecute such an offence and it would not be taken forward by the CPS on the basis that that was not in the public interest. That is the so-called compliance deficit. We have not yet got to the bottom of the further question, which is whether the unwillingness to prosecute is due the lack of legal powers or the lack of management initiative on the part of the Electoral Commission.
In the eight years since its inception, the commission has prosecuted only 29 people for crimes under the PPERA. Even then, only 23 of those ended with a conviction. The need to fill the perceived gap in sanctioning powers with a more proportionate penalty system was understood and the commission was one of its main advocates from the outset. In his 2006 submission to the Committee on Standards in Public Life, Peter Wardle, the chief executive of the commission, expressed just that idea:
“I think the question of administrative penalties is the other area we would be looking for change in the law.”
That was picked up by the Committee on Standards in Public Life, and it formed the basis of recommendation 7 in its report:
“The Government should consider introducing a system of financial penalties, with an appropriate appeal mechanism, that could be applied by the Electoral Commission for non-compliance with the regulatory requirements. Responsibility for prosecution... should continue to lie with the Crown Prosecution Service.”
The Bill therefore aims to provide the commission with a wider range of sanctions to enable it to be a more effective and robust regulator.
The sanctions are based on those recently set out in the Regulatory Enforcement and Sanctions Act 2008, which made provision for a wider range of administrative sanctions to be available to regulators, thereby giving them more options and greater flexibility. The provisions of clause 3 will give the commission new powers to apply a range of civil sanctions to offences committed under PPERA. The clause will substitute proposed new section 147 for the existing section 147 of PPERA. The new section 147 will insert new schedule 19B to the Act, as set out in schedule 2 of the Bill.
The new schedule makes provision for the range of new civil sanctions available to the commission, which includes fixed monetary penalties, discretionary requirements, stop notices and enforcement undertakings. The new schedule goes on to explain when and how the commission can apply the sanctions and what appeal processes are available. I have reviewed the schedule in the run-up to today’s sitting—all 15 pages of it—and I must confess that it has left me unclear about what someone has to do to ensure that they do not become subject to one of its many sanctions.
When we come to the amendments, we must spare a thought for those volunteers in local party offices who will be the ones to implement these new legislative requirements and bear the full force of any penalty that might be incurred. Will they understand the new schedule? I hope so. It might be helpful if the Minister explains how he will ensure that they can understand it.
The commission, rather unsurprisingly, has welcomed the proposals and notes in its memorandum on the Bill that it believes
“the proposed changes to its investigation and sanctioning powers”
will allow it to take
“proportionate enforcement action”
“a well recognised framework of good regulatory practice.”
We support the general principle behind the new sanctioning powers that are to be given to the commission. It must be hoped that the new sanctions will allow it to fulfil its new role as regulator and monitor of party funding, both effectively and proportionately. I would, however, like to put some questions to the Minister on the provenance of those powers.
House of Commons Library research paper 0874 notes that the sanctions are based on those outlined in the Regulatory Enforcement and Sanctions Act 2008, as the Minister said. That Act has recently been enacted on the back of the Hampton review, which was commissioned by the Government in 2004, and the Macrory review of the following year. The Hampton review looked specifically at how the administrative burden of regulation on businesses could be reduced at the same time as preserving regulatory outcomes. It looked also at the work of 63 national regulators and 468 local authorities. Will the Minister address the question whether the commission was included as one of those who were consulted? I cannot see that it was, but the Minister may put me right.
1.30 pm
The Macrory review was far more wide-ranging, with the Government asking Professor Macrory to review the entire system of regulatory functions. The major theme of the recommendations in the Hampton review was to call for a risk-based approach to regulatory enforcement, involving greater and more consistent use of risk assessment techniques. Risk assessment is an essential means of directing regulatory resources where they can have maximum impact and outcome. Will the Minister tell hon. Members whether a risk assessment was undertaken when reviewing the proposed new powers of the commission? If it was, will he give details of how the assessment was made and what the results were?
We in the Conservative party feel that a far riskier area is that of electoral malpractice and fraud, which is not dealt with under the Bill or covered by the commission’s new powers. Our admittedly non-scientific risk assessment is that the Government have made a glaring error in not including such provisions in the Bill. Will the Minister explain how that was not picked up in the Government’s risk assessment? If it was, why did the Government choose not to include those powers in the Bill?
Professor Macrory’s findings were published in November 2006 and were aimed at balancing the needs of workers, consumers, the environment and compliant businesses with the need to take effective action against those businesses that intentionally and knowingly fail to comply with regulatory obligations on time.
The Government were quick to accept the conclusions of the review which at its heart had two key concepts. The first is the concept of restorative justice, which seeks to change behaviour and redress the harm caused, as much as simply to punish wrongdoing. The second is the so-called compliance deficit, which arises where the sanctions available to a regulator are not sufficiently flexible to allow it to respond proportionately to offences. The consequence of that is that regulators are reluctant to take enforcement action.
These ideas manifested themselves in what Professor Macrory called the six penalties principles. A sanction should first aim to change the behaviour of the offender. Secondly, it should aim to eliminate any financial gain or benefit from non-compliance. Thirdly, it should be responsive and consider what is appropriate for the particular offender and the regulatory issue, which can include punishment and the public stigma that should be associated with a criminal conviction. Fourthly, it should be proportionate to the nature of the offence and the harm caused. Fifthly, it should aim to restore the harm caused by regulatory non-compliance where appropriate. It should sixthly aim to deter future non-compliance. The better regulation section of the Department for Business, Enterprise and Regulatory Reform website summarises the review’s recommendations and the implementing measures in the 2008 Act.
The Government accepted the report’s recommendations in full and without question by taking them forward as the central core of the 2008 Act. They have taken the same approach in the Bill. From what I can see, they have simply provided for the wholesale inclusion of those recommendations, without specific regard to the unique position of the commission. Will the Minister address that important issue?
Will the Minister tell us what consultation process was undertaken as a precursor to the inclusion of these powers in the Bill? How have they been tailored to fit the remit of the commission? Were equivalent systems in other countries looked at as part of that process?
Finally, I want to touch on the question of safeguards and proportionality. We are being asked to grant the commission what it asks for: a package of flexible sanctions that provides them with an arsenal of wide-ranging enforcement powers. However, what have we had from the commission to show that it knows how to use such powers? What safeguards are in place to stop the powers being abused further down the line by commissions of the future?
We wish to investigate that through our amendments to schedule 2. How often can we expect to see stop notices falling through the letter box of party donors up and down the UK? Will the commission continue to show the same unwillingness it showed with its sanctioning powers under the PPERA? Will the Minister give hon. Members any research that has been done on the need for these news powers?
The commission’s memorandum on the Bill stated that it was able to use these powers only when satisfied beyond reasonable doubt that an offence or contravention of PPERA had occurred. It went on to state that the commission need have only reasonable belief to issue stop notices, with the added element that the action they are stopping poses significant risk of undermining public confidence in the effectiveness of the law on party and election funding.
Does the Minister agree with the assertion that the Bill
“rightly applies high thresholds to our use of these sanctions”?
We are not entirely convinced. Given our debates on the amendments, I am not sure that the assertion is correct. I would like to know the Minister’s position on the matter.
David Howarth: I suspect that it will not be popular to say so, but I support the clause on the basis of what I said earlier. As referred to several times by the Minister, politicians must not give themselves arbitrary exemptions from regimes of the kind that they impose on others. It is perfectly possible to object on principle to the idea of administrative fines and regulatory sanctions of this sort. An objection could be made on the grounds that it is wrong for a regulatory body to be the judge in its own cause. For example, the regulatory body is effectively the investigator, the prosecutor and the imposer of fines, which are subject to appeal. However, on many occasions, that principle has been given away in other legislation with regard to other members of the public. That goes to back to the Inland Revenue, which is the original governmental organisation that was given the power to impose such administrative fines on citizens.
It seems to me that the clause must be right in principle. It sets up a regime for politics that is the same as that used generally in regulatory enforcement. The hon. Member for Huntingdon is quite right that the principles in the 2008 Act have been applied to the areas covered by the Electoral Commission. That is absolutely the right thing to do in the clause, although there is room for debate about details and specific applicability.
I did not understand what the hon. Gentleman was getting at when he suggested that there was a commission enforcement deficit because of management failure to invoke criminal sanctions via the CPS, as opposed to the commission’s argument that it did not have proper flexibility in the range of sanctions available to it. If that is his position, he is advocating the greater criminalisation of political activity, which is quite the opposite of what we both want in this field.
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Prepared 14 November 2008