Political Parties and Elections Bill

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Mr. Tyrie: I shall be brief. I am grateful for the opportunity to answer the allegation about the Churchill luncheon club, which is a group of people who come together to have lunch, for which they pay £20 to £30, and £5 profit, if we are lucky, is made per person per lunch. The money slowly accumulates over two or three years, and once every few years a relatively small donation is made to the Bognor association or to the Chichester association. The last donation to my association was, I think, a few thousand pounds—£2,000 or so, although I cannot remember exactly how much—which was made some time in the early 2000s, perhaps 2001 or 2002. I wonder whether the hon. Member for Manchester, Central feels that there is anything untoward or concerning about that.
Mrs. Laing: Does my hon. Friend consider that it might have occurred to the hon. Member for Manchester, Central that, had the luncheon club to which my hon. Friend refers wished to give the impression that it had nothing to do with the Conservative party, it would not have chosen to call itself after Sir Winston Churchill?
Hon. Members: Missing the point!
Mr. Tyrie: I entirely agree with my hon. Friend. Hon. Members on the Government Benches say that she is missing the point, so let us find out what point we are missing.
Tony Lloyd: For clarity, I was not one of those who said that the hon. Lady is missing the point. I know that she often does, but it is not for me to comment on that now.
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Mr. Tyrie: I am grateful for that assurance. I am just left wondering why it was raised in the beginning, and why it has been raised on the Floor of the House on more than one occasion.
I want to make one other point of substance in the debate on the schedule. The Minister and several hon. Gentlemen, particularly the hon. Member for Manchester, Central, suggested that transparency was a sufficient condition for sorting out the problems of public perception in this area. Transparency is a necessary, but not a sufficient condition. Was it enough to dispel the impression that honours had been bought in the 1980s when captains of industry appeared to get them because they came from companies that quite transparently had made large donations? I do not think that it was enough. Was it enough to dispel the impression that Bernie Ecclestone’s donation, declared at £1 million, had some influence on whether a ban on tobacco advertising was enforced on the industry of which he was such a prominent member? Transparency is not enough. A necessary condition for cleaning up the area must come in two parts: a cap on donations and the removal of intermediary institutions, whatever their type.
Mr. Wills: We have largely dealt with the issues in the debate on clause 8 and the consequential changes, so I will not detain the Committee for long.
I hope that I was not suggesting that transparency was a sufficient condition. I agree with the hon. Gentleman that it is a necessary condition, but it is not the only condition that is needed. I do not necessarily agree with his entire prescription, but that is for another day. As I have said, we have largely debated the matter under clause 8, so I hope that the Committee will agree that schedule 3 should stand part of the Bill.
Question put and agreed to.
Schedule 3, as amended, agreed to.

Clause 9

Defence to charge of failing to return donation from impermissible donor
Mr. Djanogly: I beg to move amendment No. 182, in clause 9, page 8, line 18, leave out ‘all’.
The Chairman: With this it will be convenient to discuss the following amendments: No. 183, in clause 9, page 8, line 21, after first ‘the’, insert ‘party or its’.
No. 184, in clause 9, page 8, line 21, after ‘treasurer’, insert ‘reasonably’.
Mr. Djanogly: The clause proposes to insert a defence into section 56 of PPERA to excuse the party treasurer from liability for a criminal offence under section 56(3). Section 56(3) requires the treasurer of a party to return such a donation or to pay an equivalent amount back to the donee. The offence arises from a failure to return donations from donors considered impermissible under section 54(2) and attaches to both the party and the party treasurer.
We have tabled a series of probing amendments. Amendment No. 182 would remove the need for “all reasonable steps” in proposed new section 56(3A). By removing the word “all” in subsection (a), the requirement becomes more practical. Requiring reasonable steps is one thing, but requiring “all reasonable steps” is quite another. The exhaustive nature of the “all” requirement imposes an unduly high burden on parties and treasurers. In essence, they must second guess all the possible routes of verification that the commission could come up with.
Local treasurers are not professionals. They are often volunteers who help out of a sense of civic duty. To require them to take “all reasonable steps” seems unreasonable to us. The requirement of reasonableness, as set out in the clause and in many other pieces of legislation on any number of different subjects, applies the so-called reasonable man test to any given set of circumstances. Called on to adjudicate on disputed behaviour, the courts should ask what a reasonable man would have done. That should be adequate.
Amendments Nos. 183 and 184 would amend proposed new section 56(3A) of PPERA as set out in the clause. The section covers the party’s belief as well as that of the treasurer and states that such belief must be reasonable. Amendment No. 184 seeks to rerun the arguments in favour of the inclusion of a test of reasonableness, where the opinions of individuals form the crux of the section in question. The need for objectivity as the yardstick against which to measure that belief where it has given rise to dispute, is important to ensure fairness and safeguard individuals from arbitrary penalties.
Amendment No. 183 would insert the word “party” alongside “the treasurer” in subsection (b). That is included in proposed new section (3A), and is perhaps a drafting oversight on the part of the Government. As it stands, only the treasurer must believe the donor to be a permissible donor. That is odd because the reasonable steps verification requirement in subsection (a) is imposed on both party and treasurer.
As I understand it, the party would currently be able to take reasonable steps to verify whether a donor is permissible, and leave it at that. Furthermore, it could suggest that in such situations, the treasurer must believe the donor to be permissible, despite not necessarily having undertaken the verification. That seems confusing and the amendment has been tabled in an attempt to clarify what is required by the people involved, and to ask the Minister to explain the drafting of the provision.
Mr. Wills: I appreciate the intention behind the amendments. They seek to clarify important points of detail and I am happy to respond. Amendment No. 182 would downgrade the requirement on regulated persons to prove that they have taken “all reasonable steps” and to claim that as a defence. Instead, it would require them to take only “reasonable steps”. In our view, that would undermine the important requirement to take “all reasonable steps” found in section 56 of PPERA. It would mean that having taken some—but not all—reasonable steps could be used as a defence. That would create a mismatch between the obligation in the 2000 Act and the protection that should properly result should it be fulfilled.
Section 56 (1) of the 2000 Act imposes the requirement to take “all reasonable steps” to verify that a donation can be accepted. If that obligation is fulfilled, and if the party still feels that it is entitled to accept the donation, there would be no offence if it turns out later to have been wrong. To allow some protection if the obligation is only partially fulfilled does not make sense. Indeed, it may result in less rigorous efforts to comply with the requirements to ascertain the identity and permissibility of donors.
The requirement in section 56 means that parties are under an obligation to ensure that they take all reasonable steps to verify the identity and permissibility of donors. Amendment No. 182 would devalue that by establishing an easier defence. “Reasonable” is the key word. “All reasonable steps” does not mean that all steps that could possibly be taken, should be. We are concerned about the amendment, not least because it would send the wrong signal about the importance of compliance.
Amendment No. 183 would mean that a decision on the permissibility or otherwise of a donation could be made by the party as a distinct entity, as well as by the party’s treasurer. It is unclear how it could be proved that the party as a collection of members believed something, but that is what the amendment would allow. We believe that the provision is workable only if it refers to an individual’s belief and the treasurer is the obvious individual in that respect.
The amendment would not expose the treasurer to any wider liability. It simply makes it clear that it is his or her belief that is important in a case where all reasonable steps have been taken, and that there is a subsequent question about whether it was believed that the donation should lawfully be accepted. For those reasons, I do not believe that the amendment would work.
I do not fully grasp the purpose behind amendment No. 184. A reasonable belief may be harder to prove than a simple, subjective one and that makes the defence more difficult to satisfy. In that situation, requiring a reasonable belief to be shown would be unduly burdensome, and it is therefore unnecessary. It is hard to imagine an unreasonable belief being reached if all reasonable steps have been taken to ascertain the permissibility or identity of a donor. Therefore, we are not sure that the amendment adds much. In the absence of clarity as to the rationale for the amendment—which potentially makes the defence easier while the other amendments in the group have the opposite effect—we would resist it.
Mr. Tyrie: I would be grateful if the Minister guessed at what his own test of reasonableness would translate into, in time or cost per case. That would give us a sense of what we are talking about. If someone could show that he had put in that amount of time, reasonably and intelligently, would that constitute a defence?
Mr. Wills: So far, in these lengthy proceedings, I have resisted all temptation to give specific examples, and I will do so even at this late stage. The hon. Gentleman knows that every situation is different, and it would be wrong to give any indication otherwise. He is well aware of the consequences of my doing so, and so he will forgive me if I resist. I am happy to give way again, but he will not tempt me.
Mr. Tyrie: Is the Minister aware of the impact assessment’s own assessment that £5 per case might cover it?
Mr. Wills: Of course I am aware of that. We have already discussed it in the Committee. I will not be tempted down that route. We have made a general statement, and have made a perfectly reasonable guess about what the amount might be. The hon. Gentleman asks for specific examples in specific cases and, as I have said, I will not be tempted down that route. However, I hope that I have given enough clarification to encourage the hon. Member for Huntingdon to withdraw the amendments.
Mr. Djanogly: That was an interesting debate on reasonableness. I listened to the Minister talk about “all” reasonable processes; I would have thought that if something is reasonable, it is reasonable. I am still not sure why “all” is needed. I shall go away and think about that further.
On the individual and the party, I agree that belief can attach only to an individual. I do not dispute that. My issue is a drafting one. One part of the clause refers to the individual, and another to the individual and the party. That might be a consistency issue, and the Minister may wish to look at it in due course. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
David Howarth: I beg to move amendment No. 152, in clause 9, page 8, line 22, at end add—
‘(3B) The defence established by subsection (3A) shall not apply where the donor was not a permissible donor by virtue of section [Non-electors to be impermissible donors].’.
The Chairman: With this it will be convenient to discuss new clause 22—Non-electors to be impermissible donors—
‘(1) For the purposes of the 2000 Act a person who is not qualified to vote at parliamentary elections shall not count as a permissible donor.
(2) A company controlled by a person who is not a permissible donor by virtue of subsection (1) shall also not count as a permissible donor for the purposes of the 2000 Act.
(3) A company shall count as controlled by a person in the same circumstances as those set out in section [Donations by companies controlled by impermissible donors] (2)(a)-(c).’.
David Howarth: The amendment is to the new defence to which the hon. Member for Huntingdon referred, and would exclude from the scope of that defence the effect of new clause 22. The heart of the debate is therefore the new clause, and it will become obvious why the new defence should not apply to it.
The new clause simply aims to exclude Members of the House of Lords from giving donations to political parties. In the future, the House of Lords may become an elected body, and its Members would become parliamentary electors again. They are not parliamentary electors now, but they could be in the future, at which point, my proposal would have to be reconsidered. Nevertheless, in the interim period, the purpose of the new clause is to exclude donations from Members of the other place.
2.30 pm
The new clause could be interpreted more radically, although that was not the intention of myself or my hon. Friend the Member for Argyll and Bute when we tabled it. However, it is a legitimate interpretation that will interest the hon. Member for Chichester, and would make it the single most unpopular new clause ever proposed to a Bill dealing with party funding. Under this more radical interpretation, the new clause would exclude donations from all companies, trade unions, unincorporated associations and trusts, which would destroy the financial base of all three main parties. That is not the intention, but it might be useful to discuss that point.
During the stand part debate on schedule 3, the hon. Gentleman said that one of his criteria for cleaning up politics—another was a donation cap—was that donations from all intermediate bodies should be got rid of, which is the case in other jurisdictions in the world, such as Canada, I believe, and certain parts of the United States. It is worthwhile thinking why we should not adopt the same policy, at least as a goal.
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