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withdrawn.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withdrawn.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. The
Bill provides the commission with a wide range of sanctions to
enable it to be a more effective and robust regulator. The
January 2007 Committee on Standards in Public Life report picked up on
the problems
of the penalty regime available to the commission, noting that the only
sanctions that the Electoral Commission has if the parties do not
comply with the legislation is to name and shame or, if the offence is
sufficiently serious, to refer it to the Crown Prosecution Service.
Section 147 of PPERA created a civil penalty for failure to deliver
specified documents to the commission. Subsections (3) and (4) are
modelled on the financial penalties to which public companies are
liable for failure to submit accounts, providing for a range of
penalties depending on the length of the period of
non-compliance. 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” within “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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