Mr.
Djanogly: My hon. Friend makes an important point to which
I shall certainly
return. On
Second Reading, the Secretary of State noted that the Government had
received representations from all the main parties and many of the
small ones advocating an increase in the limits, and they said that
they would be willing to consider them in detail. We now have the
Government’s proposals to increase the limit to the relevant
reporting threshold for the declaration, saying that it will be
£5,000 or £1,000. The most recent missive from the
Electoral Commission, issued yesterday in response, states:
“These
changes should reduce the administrative burdens of the new declaration
requirement, while introducing a new procedural reminder of the rules
on agency in respect of reportable donations. The Commission welcomes
the decision to set the declaration threshold at the same level as the
existing donation reporting limits rather than introducing a general
£1,000 threshold, which would have created a new regulatory
threshold for those parties without accounting
units.” To
move on to Government amendments Nos. 153 to 170, the Government have
clearly admitted that they see a good deal of deficiency in the clause.
As the Minister said, the amendments will have twofold effect. First,
they will do away with the previous threshold for declaration of
£200 and replace it with two different
thresholds—£5,000 for donations made nationally and
£1,000 for donations made locally. Secondly, they will remove
the requirement on parties to take all reasonable steps to verify the
veracity of the declaration. While the amendments are welcome, we think
they are too little, too late.
Government
amendments Nos. 158, 163 and 167 will remove the need for anti-money
laundering-style verification processes. The amendments, which have the
support of the Electoral Commission, will go some way towards relieving
the huge administrative strain that would have burdened local party
offices. We were in real danger of exposing the volunteers in those
offices to a crushing administrative load. Mr. McIsaac, the
Conservative treasurer, noted in evidence to the Committee the scale of
the potential
problem: “You
can see the pattern. There is the whole verification area, the
judgmentalism and the lack of staff. A large investment bank that I
dealt with in professional practice had more than 1,000 people in
compliance and legal—not risk. I think of the Conservatives, and
we have a handful.”——[Official
Report, Political Parties and Elections Public Bill Committee, 6
November 2008; c. 80,
Q20.] The
anti-money laundering-style language was dangerous and the
consequential regulatory burden that would be imposed could have
devastated parties at local level. Basically, verification would have
involved something that textbooks have been written on in the context
of other areas such as money laundering. Although we welcome the
Government’s reassessment of the provisions, we are still
cautious about their impact. Placing disclosure requirements on donors
must be carefully thought through so that we do not push people away
from donating to political parties for fear of breaching these complex
and, at times, opaque
rules. The
provisions, while doing away with the need for parties to verify
donations, still impose significant burdens on donors in the
declaration process, and there is real need for clarity. The increased
threshold limits mirror those in the Political Parties, Elections and
Referendums Act 2000 on the reporting of accounts to the commission.
These limits will be applied by Government amendments Nos. 153, and
those following, to the thresholds for donors making declarations.
Given the possible deterrent effect that the declaration requirements
may have, we would like to see these thresholds much increased. The
Government have taken a step in the right direction, but we feel that
they must go much further. From our point of view, this is unfinished
business. We
are pleased to be holding a debate today on our amendments, because
when we last met they were starred due to the little time we had for
tabling them. Amendments Nos. 179 to 181 would insert a test of
reasonableness into clause 8. Amendments Nos. 179 and 180 would insert
into proposed new section 54A(3) of PPERA a reasonableness test for the
opinion of the person making the donation, as required by proposed new
section 54A(2). Given the possible sanctions that attach to
the declarations that must be made—a possible unlimited fine or
one year of imprisonment—we do not think it fair to place too
low a threshold on the opinion that must be held.
Throughout,
the rationale behind our amendments has been the need for
proportionality and striking an appropriate balance between the
competing interests at stake. Here, too, we feel that a mere opinion
may not be satisfactory. There should be reasonable grounds for holding
such an opinion. The complexity of the provisions of proposed new
section 54A and the fact that a lay person potentially unsure of what
they are being asked to do might land themselves in hot water as a
result of giving a declaration on something with which they are
unfamiliar or unsure represent a potentially dangerous situation. By
imposing a test of reasonableness, we would allow for the basis of the
opinion to be tested objectively by an external party or a court of
law. That in turn would add to the process a potential judicial
safeguard that would otherwise not exist if an opinion could be held
subjectively. Amendment
No. 181 would apply the same test of objectivity to proposed new
paragraph 1A(1) of schedule 6 to PPERA. In similar vein to
the reasoning just described, we should apply the same test of
reasonableness to the requirement to produce a quarterly or weekly
report and the requirement to say in it whether the details given in a
donor declaration
are “suspected
to be untruthful or
inaccurate”. Otherwise,
we would have no solid foundation on which to impose any liability for
a breach of the provisions. The reporting person or persons would, in
effect, be expected to second-guess what the commission viewed as
suspicious or
not. 9.15
am Amendments
Nos. 185, 186, 200, 190 to 192 and 195 to 197 are consequential on
amendments Nos. 179 and 180, in that they would apply to each of the
donor types set out in schedule 3 of the Bill the same reasonableness
test proposed in relation to proposed new section 54A(3) of
PPERA. Amendments
Nos. 185, 186 and 200 would apply a test of reasonableness to the
opinions expressed by individuals and members’ associations in
declarations made pursuant to proposed new paragraphs 6A(1) and (3) of
amended schedule 7 to PPERA, in respect of declarations by the donor
and an individual acting on behalf of a donor respectively. Likewise,
amendments Nos. 190 to 192 would apply the same test to the
declarations to be given by a third party, pursuant to proposed new
paragraphs 6A(1) and (3) of amended schedule 11 to PPERA, in respect of
declarations by the donor and an individual acting on behalf of a donor
respectively. Amendments
Nos. 195 to 197 would apply the same test to declarations to be given
by permitted participants, pursuant to proposed new paragraphs 6A(1)
and (3) of amended schedule 15 to PPERA, as applies to declarations by
the donor and an individual acting on behalf of a donor
respectively. For
the sake of brevity, I will not rerun in respect of each amendment my
arguments on the need for a test of reasonableness and an objective
yardstick, save to say that without the amendments we would make the
job of donors, party officials, the Electoral Commission and, as a last
resort, the courts, that much
harder. Amendment
No. 189 relates to paragraph 3(6) of schedule 3 to the Bill, which
amends paragraph 11 of schedule 7 to PPERA. It would again insert a
reasonableness requirement on the appearance of the ultimate donor. As
with the other amendments, it would clarify the
process. Amendments
Nos. 188, 194 and 198 would insert new provisions into each new
paragraph 6A to be inserted into schedules 7, 11 and 15 to PPERA, which
apply the requirements for declarations on the source of donations to
individuals and members’ associations, third parties and
permitted participants respectively.
Those
new provisions require the commission to publish guidance notes on the
requirements of clause 8 and schedule 3, which must be attached to any
declaration to be completed by a donor. As a minimum, such guidance
will give examples to assist in understanding how benefits are valued
and in completing declarations, and will give details of the penalties
for non-compliance with time periods and for knowingly or recklessly
making a false declaration, as well as the appropriate details on when
time limits for the submission of declarations commence and
end. Given
the complexity of the new provisions, it is hoped that such guidance
notes will provide valuable assistance to those making declarations,
and allow them to do so in a compliant fashion, thereby reducing the
need for the commission to investigate and possibly penalise
individuals or groups for non-compliance. As with many of our
amendments, our aim here is clarity and ease of
understanding. We
must aim, as legislators, to provide clear signposts and assistance
when compliance issues may involve significant penalties. That is
particularly important in this Bill, given that it is to be interpreted
by individuals who, as my hon. Friend the Member for Isle of Wight
said, volunteer their time out of a sense of civic duty, and who more
often than not will have no legal background or teams of assistants to
aid them in understanding these complex provisions. Therefore, we, as
legislators, and the commission, should do our utmost to guide them
through the tangled web of the
Bill. I
would hope that, in the interests of having a workable system for the
regulation of party funding, the commission will do its best to produce
such guidance in a timely
fashion. Moving
on to the stand part debate, the clause is poorly drafted, poorly
researched and almost entirely negative. To our mind, it stands out in
the legislation like a sore pimple. I am afraid that if the
Minister thinks that he can table a few
amendments and then get away with the clause, he will have
to think again. That is why I now wish to discuss the more
substantive stand part
issues. The
impact of the clause will still be widespread and costly—even if
not as much as beforehand, following the introduction of the Government
amendments—in time and money for parties at the local level,
where such burdens are most heavily felt. Political parties need
sufficient funds to fulfil their democratic functions. There is,
however, a paradox at the heart of party politics in the UK: while on
the one hand there is recognition that political parties are key in
mobilising local political activity and are a central vehicle in
promoting civic engagement, on the other, membership of political
parties, election turnout, and trust and confidence in politicians are
at an all-time low. That has major implications for the financial
management of political
parties. Modern
centralised campaigns have resulted in escalating campaign costs, while
at the same time the financial impact of the decline in party
membership has resulted in increasing reliance on large donations and
loans to fund political parties—a situation that appears to have
eroded public confidence still
further. The
2006 Constitutional Affairs Committee report on party funding
states:
“The
New Policy Network warned that without an accepted system of adequate
funding for political parties ‘we risk the health of our
democratic system’”.
The traditional practice
of secrecy surrounding the source and amount of donations received has
been one of the causes of increasing disquiet about party funding. On
the back of that, the Labour party 1987 election manifesto included a
commitment to require parties to declare the sources of their donations
and to ban foreign donations. That commitment manifested itself in the
Committee on Standards in Public Life inquiry entitled “The
Funding of Political Parties in the United Kingdom”, under the
chairmanship of Lord Neill. The Neill report was published
in October 1998 and it suggested a greater transparency of
donations, among several other
things. In
the Home Office submission to the committee dated 6 March 1998, the
Government had sought the committee’s advice on specific topics,
including: “What
should be the mechanics for disclosure of donations? Should there be a
separate threshold for the acceptance or rejection
of anonymous donations? What should be the timing of
disclosure?” There
were already statutory requirements on trade unions and companies with
regard to the disclosure of information on political donations,
although some had argued that those rules did not go far enough.
Despite all the evidence of submissions made to it, the Neill committee
did not uncover any wrongdoing. It did, however, acknowledge the
potential for speculation and rumour about improper motives and tacit
obligations where details of donors are unknown.
The
advantages of greater transparency are summarised by the Neill
committee and apply as much to this debate as they did eight years ago.
The main drive of these arguments is that greater transparency provides
the opportunity for public and media scrutiny, which makes the system
less opaque and means that not only do rumour and suspicion wither, but
public confidence in the system is increased. Further, there was no
evidence that donations have been used to influence Ministers or
policy, where such sums would be recorded on a publicly accessible
register.
On the
reverse, the principal arguments against disclosure and transparency
centre around an individual’s right to privacy. The Neill
committee report cited various issues in this context. Its conclusions,
while recognising the strength of the arguments in favour of privacy,
advocated a disclosure regime on the grounds that there was a public
interest in knowing when a donation is made to a political
party,
“which is
significant enough to prompt questions or to raise suspicion about its
purpose”. On
the back of this, the committee made two recommendations, which formed
much of the basis for the disclosure requirements in PPERA. First, it
said that opinion will differ on what constitutes a significant
donation, but it recommended disclosure of donations to national party
organisations of £5,000 or more per annum from one source, as
supported by the two main parties and others. Secondly, it recommended
that donations to constituency associations or regional organisations
from one source, which total £1,000 or more per annum, should
also be publicly disclosed.
Of course
this is important in the context of this debate because these figures
were issued in 1998 and yet even the Government, in their revised
position in their amendments, use the figures from 10 years ago.
However, despite this emphasis on disclosure when it came to the
subject of where responsibility for making the disclosure should lie,
the Neill committee felt that it was “wholly
unreasonable” to place the obligation on the donor. A decade
later, here we are doing exactly that. The Minister has yet to make the
case for this change of approach. I hope that he will do so in his
later
remarks. The
Neill committee concluded that the obligation should rest with the
political party’s central office not only to report on donations
received by the national party, but to ensure that the party’s
organisational structure was adequately set up to deal with all
disclosable donations received by sub-units of the party. It would be
up to each party to ensure that each sub-unit supplied the required
information to a designated officer at the central office. Only
donations to candidates or election agents would be an
individual’s
responsibility. The
Government agreed with the general approach of the Neill committee and
enshrined the main elements of the proposed reporting regime
in part IV, chapter III of PPERA. Under this, the treasurer of a
registered political party is required to make a quarterly donations
report to the Electoral Commission, recording any donations of
£5,000 or more to the national party, or £1,000 or more
to local associations or regional organisations, which are called
accounting units of a national party. To ensure that multiple donations
from the same source are properly accounted for, the party must also
record any further donations of £1,000 or more from a source
already recorded during the same reporting year.
In PPERA, all
donations must be from named permissible donors who are defined as an
individual on the electoral register, or a company that is registered
under the Companies Act 1985 or incorporated in the UK. All such
companies must carry on business in the UK. Other legitimate donors,
with various caveats, are trade unions, building societies, limited
liability partnerships, friendly societies and various other
unincorporated associations. PPERA requires registered political
parties to submit an annual statement of accounts to the Electoral
Commission, by a particular date and in a specified format.
Furthermore,
under PPERA, donations to parties in excess of £5,000 nationally
or £1,000 locally must be publicly declared with the details of
the donor and the amount. That includes donations in kind as well as
cash donations. Contributions may only be from permissible donors;
foreign donations are banned and anonymous gifts in excess of
£200 are also prohibited.
Part IV of
PPERA is concerned with the control of donations to registered parties.
It imposes restrictions on the sources of donations, so as to prohibit
foreign and anonymous donations to political parties and make
registered parties subject to reporting requirements in respect of
donations above a certain value. Section 50 of PPERA defines a
“donation” as
“any
gift...any sponsorship provided in relation to the
party...any subscription or other fee paid for affiliation to, or
membership of, the
party”— or— “any
money spent...in paying expenses incurred directly or indirectly
by the party”.
Section 52
goes on to specify certain payments that are not to be regarded as
donations, while section 53 sets out how the value of donations in
kind, such as property, is to be calculated. Further, section 54
specifies who or what is to be considered a permissible donor
and the list is comprehensive, sections 55 and 56 deal with the
acceptance or return of donations that fall foul of those sections, and
section 61 specifies offences regarding evasion of restrictions on
donations. The
provisions relating to the reporting requirements placed on political
parties are no less extensive. Section 62 and schedule 6 require the
treasurer of a registered party to make quarterly donation reports to
the Electoral Commission and the details to be included in such
reports. Sections 65 and 66 give further details on the process to be
followed when submitting a report to the commission and the details to
be set out in each submission, including the need for a declaration by
the treasurer that he has recorded all known
donations. That
scene setting gives some idea of the provenance of the clause. In its
short history, it has not been without its problems. The Constitutional
Affairs Committee, in its 2006-07 report, expressed significant
concerns about the disclosure system under PPERA. It
said: “We
believe that there are problems, both actual and perceived, with the
current arrangements for party funding in the UK...While the PPERA
2000 introduced closer regulation and some improved transparency, it
has not finally resolved problems with the system; if anything
increased transparency, by revealing the extent of and dependency on
donations from a few rich individuals, corporations and trade unions,
has increased the negative impact on public
confidence.” We
must be careful that we do not paint ourselves into a corner with this
new provision and rather than increasing public confidence, engineer
the reverse effect. That point was picked up on by the Constitutional
Affairs Committee, which
said: “While
we endorse a transparent system, transparency does not solve problems,
but draws attention to them. It also invites ‘sniping’
between opponents. It must be based on readily identifiable risks so
that audit functions have a clear overall
purpose.” At
an evidence session, the Secretary of State
said: “By
way of background, there is a consensus that there has to be greater
transparency; that was the whole purpose of the 2000 Act. As
far as I can see, no one is arguing on the issue of
transparency.”——[Official Report,
Political Parties and Elections Public Bill Committee, 4 November
2008; c. 14,
Q27.] That is
true, but, that statement implies that the clause is about
transparency, which, given its non-public procedures, is simply not the
case. More specifically, I cannot see how it will deal with
identifiable risks that would give it the clear purpose demanded by the
Constitutional Affairs Committee. Perhaps too, we should be mindful of
the comments in the evidence session last week of the Conservative
party’s Mr. McIsaac, who
said: “I
have noticed that innocent mistakes have a habit of being magnified in
the press, on the blogs and the rest of it, as if they were some sort
of scandal. People make mistakes, even in the best regulated
organisations. To open up the possibility of mistakes, and thereby the
whiff of scandal, could be very
counter-productive.”——[Official Report,
Political Parties and Elections Public Bill Committee, 6 November
2008; c. 91,
Q47.] What
then do we have in clause 8? How does it attempt to remedy the problems
faced by political parties in raising finances in an open and
transparent manner, against a background of growing public scepticism
at donations to parties? The clause amends section 54 of
PPERA—the clause dealing with who is considered as a permissible
donor. It inserts a new subsection that requires a party to have a
declaration from a donor where the party wishes to accept any donation.
We have
been debating what the level of that donation should be. It creates a
new responsibility for donors—not political parties—to
clarify the source of
donations. 9.30am Overall,
the Government have started to make some sense of the clause with the
amendments that they have tabled, which do away with the provisions
requiring parties to take all reasonable steps to verify those
declarations. Bodies such as companies and associations that make
donations under the threshold will be expected to identify the
responsible person who will make a declaration. The Bill will insert a
subsection, as set out in proposed section 54A(5), making it a criminal
offence for a person knowingly or recklessly to make a false statement
about a donation, with a maximum penalty of one year’s
imprisonment or a fine on indictment. I appreciate that certain hon.
Members will move an amendment on that aspect, so I shall not talk
about that here.
On Second
Reading, the Secretary of State summarised the effect of clause 8. In
his remarks, he noted:
“Those
provisions supplement the existing requirements of the 2000 Act by
making it clear that the identities of the true donor, on whose behalf
the donation is made, must be given to the recipient of the donation.
If a donor declares that those sections of the 2000 Act do not apply,
they must explain why.”—[Official Report, 20
October 2008; Vol. 481, c. 51.]
We fear, though, that
in practice, it would be far from that simple for the receiving party
official or the donor. Under the clause, political parties and
regulated donees will be required to confirm that they have received
these declarations and retain them for the future review by the
commission. We remain concerned about the potential impact
of this if the clause were to come into force. We would like to see the
thresholds increased much further to ensure that these new reporting
burdens do not weigh too heavily on those concerned. We hope that the
Government will be reviewing these thresholds again.
The assertion
of Mark Sweeney of the Ministry of Justice, in the first evidence
session before this Committee, has done little to soothe our concerns.
He
said: “Clause
8 is not intended to add any additional requirements, in terms of who
may or may not donate, or the way in which they may do
so.”——[Official Report, Political
Parties and Elections Public Bill Committee, 4 November 2008; c.
14, Q27.] That
simply turns the situation on its head by saying, “Because there
is no substantive change to the law, there is no problem.”
There, to us, speaks the bureaucrat who has not given thought to the
difficulty of the process in real life. We have concerns about the
practical applications in real life and we think that the Electoral
Commission is on our side. In its October briefing, it
said: “We
believe that the benefits of these changes will be quite limited, since
all they do is place additional procedural requirements on donors and
recipients. They will not extend the current restrictions on concealing
donations, nor will they add materially to the transparency of party
funding as the new declarations will not be sent to the Commission or
made public. However, they will impose potentially substantial new
regulatory burdens on parties and donors. It is not presently clear
whether the benefits of these provisions will be sufficient to justify
those new
burdens.” The
Conservative party is concerned that this is a disproportionate and
excessive regulatory burden. Rather than helping parties broaden their
fundraising, clause 8 could put off donors and discourage volunteerism.
Sections 54 and 61 of PPERA already prohibit donors from concealing the
source of donations by channelling money through others. The use of
proxy donations is also illegal. Moreover, if an unincorporated
association is used as an agency to channel a donation from a
particular donor, that original donor must be declared. I shall not
speak further on that aspect as I appreciate that we shall be debating
it on later amendments. The
commission, through its chief executive, Peter Wardle, has also backed
these concerns. As mentioned in the evidence session to the Committee,
his memorandum
states: “On
the other hand, the changes will impose potentially substantial new
administrative burdens on parties and donors. Political parties have
expressed reservations to us about the impact of these compliance
requirements, particularly on their volunteer
officers.” Furthermore,
when pushed by the Minister some time later on
the benefits of the Bill, Peter Wardle
responded: “In
terms of what is in the Bill, we are concerned that the potential
disbenefits in practical terms may outweigh the benefits; we are not
saying that the whole idea is completely unworkable, but that it is not
desirable as it currently
stands.”——[Official Report, Political
Parties and Elections Public Bill Committee, 6 November
2008; c. 57-58, Q147,
Q151.] Given
such a damning assessment by the commission, have the Government
reviewed this clause in light of what he said? If not, why not?
Further, will the Minister give the Committee some idea of the
consultation process that was gone through to end up with what we see
as a pretty dreadful
clause? To
reiterate the concerns raised by my right hon. Friend the Member for
Horsham on Second Reading, and which remain despite the
Government’s amendments, the compliance burden on a central
party and the registered treasurer will be considerable given the
number of transactions and accounting units involved, the lack of
professional staff in most accounting units, the small number of
compliance staff employed by the central party and the threat of the
new regulatory sanctions available to the Electoral Commission. On 29
October, my hon. Friend the Member for Chichester tabled a question for
the Secretary of State. In reference to the Bill, he asked
“what the
evidential basis was for the estimate of five minutes processing time
per donation for the processing of a donation declaration; and what
estimate his Department has made of the average time taken to verify
the source of a
donation.” On
6 November, the Minister replied:
“The
estimates in the impact assessment—both for processing
declarations and carrying out further verification checks in
exceptional cases—were based on an assumption that the
additional requirements on the parties to process declarations would be
embedded to a degree within checks that they already carry out to
ensure that the donations they accept are permissible under the
Political Parties Elections and Referendums Act
2000. The
Government accept that a number of political parties are concerned that
the impact assessment underestimates the compliance burden that the
requirements of clause 8 might impose on political parties, and that
the impact assessment understates the potential burden. As my right
hon. Friend the Secretary of State and Lord Chancellor (Jack Straw)
indicated before the Public Bill Committee on 4 November, while we are
clear that greater transparency is essential, it should not be achieved
at the cost of overburdening political parties, and I am ready to
consider raising the thresholds at which declarations are
required.”—[Official Report, 6 November 2008; Vol.
482, c. 753W.]
Perhaps the
Minister can clarify that answer, or tell hon. Members what the
rationale was behind the Government’s sudden change of heart. It
hardly points to proper preparation and research on the Bill by his
Department. The impact assessment’s estimated costs of the rules
to all political parties are between £7,000 to £10,500
per year. In our view, that grossly underestimates the volume of small
donations from £200 to £5,000 and wrongly assumes that it
will take only five minutes for parties to verify each
donation.
Given the
recent amendments, can the Minister revise the impact assessment and
the costs that parties will be forced to accept? How will that change
once the Government have reviewed the thresholds? We are concerned
about the thresholds and believe that a higher figure would do away
with any potential confusion and would be more proportionate and
risk-based when the provisions commence.
The
Government must review the thresholds again and increase the limit so
as not to place burdensome obligations on donors and volunteers. Given
the difficulties, it is essential that the Electoral Commission issues
guidance—hopefully light-touch guidance—on the operation
of the new
rules. The
money laundering-style language and the high tests proposed, in which
all reasonable steps had to be taken forthwith by or on behalf of the
party for verification, have thankfully now been removed. However, the
Government were in danger of imposing anti-money laundering-style
regulations on parties and donors. The consequential regulatory burden
that would have been imposed could have been devastating, and for what
purpose?
The
requirement for declarations and the need to retain them on file could
place a significant burden on the party-financing system. For instance,
what format must they be stored in? How long must they be stored and
what notice will be given of the commission’s desire to review
them? How frequently does the commission expect to review
them—as a matter of course or in exceptional circumstances?
Those are a few of the questions that remain with the
provisions.
Mr.
McIsaac, the Conservative party treasurer, gave some idea of the scale
of the potential problem in his responses to the Committee during the
evidence taking session:
“Think
about a party such as ours. We have 600 and something constituency
associations, of which about 350 put in financial statements, which
means that they have income in excess of £25,000 a year. Only a
very small number of them have professional staff, and the rest are run
by
volunteers.” He
went on to note the acute problem of requiring party officials to make
judgment calls as required by clause 8 and
said: “Once
you start getting into areas of judgment it gets more
difficult...All these things are highly judgmental and very
difficult. You can imagine yourself, or your parents, being asked to
become chairman of the local constituency association... and then
being told, ‘By the way, there is a bit of a snag. There is the
compliance manual. And, by the way, you ought to be aware that if you
make a mistake, albeit an innocent one, it could be looked at through
the eyes of someone who is very suspicious. Also, be aware that the
Electoral Commission has all sorts of powers to gain access to your
home and to look at your records. By the way, you do want to be the
chairman of the association, don’t
you?’”
That typifies the sort
of problem that will face every local party office across the country
in the wake of the Bill. As the system stands, the registered
party
treasurer takes responsibility for the compliance of all associations.
With the insertion of a test of objectivity and reasonableness, as
proposed in amendment No. 179 and those following, we could do away
with the need to rely so heavily on such subjective opinions. I also note
that Hilary Stephenson, who holds the equivalent position in the
Liberal Democrat party, in reply to Mr. McIsaac’s
contribution
said: “I
wholeheartedly endorse a great deal of
that.”———[Official Report,
Political Parties and Elections Public Bill Committee, 6
November 2008; c. 79-80, Q20,
Q21.] The
removal of the verification process is a step in the right direction,
but the Government must consider what they are trying to achieve with
clause 8. The cost of the clause as it stands might be a high price to
pay as volunteers and donors turn their backs on political parties for
fear of incurring liability for breaching complex rules. That was the
point made by Roy Kennedy, director of finance and compliance for the
Labour party, in his reference to the “volunteer armies”.
Anything that imposes complicated and misunderstood rules on those
people by way of regulatory sanction could stifle their desire to
become involved. At a local level, such volunteers are the lifeblood of
our parties. Often more senior in age, they give their time from a
sense of civic or national pride. At a time when more and more people
are turning their backs on the political process and large sections of
the electorate feel disfranchised, we must be careful not to discourage
involvement by imposing heavy-handed regulations that are difficult to
understand and comply with, and which could lead to financial or
criminal penalties if
breached. We
would very much like the position of volunteers to be protected in the
Bill. We must ensure that we do not push away those already involved or
likely to become involved in the political system with the fear of
regulatory penalty. The Minister may come back with something more
acceptable in due course. In the meantime, I shall certainly recommend
to my hon. Friends that we vote against the
clause. David
Howarth (Cambridge) (LD): The starting point for this
debate ought to be whether proxy donations are a good thing or a bad
thing. I am quite clear that they are a bad thing, and that people
making donations on behalf of others is, as the Government are right to
think, inherently fishy. The question is what to do about them. I
congratulate the Government on introducing such a strict clause in the
first place, because it is the Labour party, until very recently, that
has had the most trouble with proxy donations, such as in the David
Abrahams affair. However, it should be mentioned that all parties could
be in trouble over such matters. Only this weekend, a question was
raised about what might have been an attempted proxy donation to the
Conservative party, and it made headlines in The Sunday
Times.
The starting
point must be that proxy donations are inherently not a good idea,
especially in the context of the 2000 Act, which tried to create
transparency. However, there are the questions of proportionality,
which was mentioned by the hon. Member for Huntingdon, and of putting
excessive burdens on volunteers, which he was also right to mention.
The Government have introduced an amendment raising the limit to
£5,000, which is to be welcomed. However, in order to understand
how much that new approach should be supported, it is important
to put it into its potential context to see where the reform lies. He is
right that clause 8 will not change the substantive rules about
donations, so the question of proportionality is difficult to judge.
The limit will be £5,000 where there is no donation limit. Is
that
proportional? There
is also a question, again raised by the hon. Gentleman, about how the
clause will work in a mechanical way. The transparency parts of it will
not put the real donors’ names on the public record, as perhaps
they ought to. Why will it work that way? I have an optimistic scenario
for why that has been done and why it might work in other
circumstances.
The
optimistic scenario is simply this: the clause will work, in an
interesting way, if a donation cap exists. If there were a donation
cap—£50,000 was proposed by Hayden Phillips, and the
Committee will debate a £10,000 option later—political
parties would need to be clear about who gave them the money.
Otherwise, it would be a simple matter for donors to evade the donation
cap by making a proxy donation. That would be an easy avoidance
technique. At that point, declarations to parties would be a way in
which parties could effectively protect themselves against the
accusation that they had taken a donation above the limit because they
would have a declaration from the donor and would know who the real
donors were, so that mechanism can be a coherent part of a capped
donation system. I want to know whether that is how the Government
conceive it. If that is how they conceive it, I am rather more
optimistic about the future for that area of regulation.
Were we to
move to a cap on donations, even one as high as £50,000, as
proposed by Hayden Phillips, we would be on the way to taking big money
out of politics. The points about volunteers and participation,
although valid, do not justify massive donations by individuals, the
only plausible interpretation of which, from the outside, is that they
have massively more influence over politics than ordinary people who
make small
donations.
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