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9 Feb 2009 : Column 1138

Amendment 65, page 27, line 23, leave out sub-paragraph (8).

Amendment 75, page 28, line 6, after ‘shall’, insert ‘promptly’.

Amendment 77, page 28, line 9, leave out from ‘requirement’ to end of line 18 and insert

‘at any point within 28 days of receipt of the notice under paragraph 6(5)’.

Amendment 66, page 28, line 34, leave out sub-sub-paragraph (b).

Amendment 67, page 29, line 8, leave out sub-sub-paragraph (b).

Amendment 82, page 29, line 28, leave out ‘a county court’ and insert ‘the High Court’.

Government amendment 23.

Amendment 7, page 36, line 39, leave out ‘from time to time’ and insert ‘annually’.

Government amendments 24 to 27.

Government amendment 28, page 37, leave out lines 3 to 6 and insert—

‘( ) This paragraph does not require the Commission to include in a report any information that, in their opinion, it would be inappropriate to include on the ground that to do so—

(a) would or might be unlawful, or

(b) might adversely affect any current investigation or proceedings.’.

Amendment (a) to Government amendment 28, after ‘their’, insert ‘reasonable’.

Amendment (b) to Government amendment 28, in sub-paragraph (b), leave out ‘might’ and insert ‘would’.

Amendment 83, page 37, line 6, at end insert—

‘(3) In a report the Commission will not specify the names of those persons who have been the subject of the cases specified in sub-paragraph 1(a), (b) and (c) save where the amount of any penalty exceeds £5,000.’.

Mr. Hamilton: New clauses 3 and 4 give me an opportunity to examine some of the broader issues with which the Bill has tried to deal. I am grateful to the Government for having—as has been pointed out by the hon. Member for Huntingdon (Mr. Djanogly) and others—amended it considerably since its initial draft in an effort to establish far greater cross-party consensus. Given, however, that in its present form it extends the power of the Electoral Commission, I think it timely to consider whether the commission has used its powers wisely in the past.

Unfortunately, its record is not all that impressive. On the one hand, it appears to have failed to ensure adequate compliance by regulated donees since 2001 when it was set up. Hundreds of late notifications—most of them honest mistakes—have been identified. Indeed, I understand that in the last six months of 2008 a total of some £750,000 was identified, accounting for more than 150 late donations. On the other hand, it appears to have been very heavy-handed and, I would argue, incompetent in dealing with certain cases, most notably that of my right hon. Friend the Member for Neath (Mr. Hain).

The Standards and Privileges Committee admitted in its conclusion that my right hon. Friend had made an “honest mistake”. It seems incredible, does it not, that the Electoral Commission did not even send warning letters to him, or to other Members of Parliament and other regulated donees who notified it late of donations
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received. Up until the beginning of last year, no warning letters had been sent. I think the commission should have a duty to give clear guidelines and positive advice to Members who are genuinely trying to comply, but it has been quite evasive about providing full information on its performance in response to parliamentary questions, many of which I tabled myself. It appears from its answer to one of my questions that it inexplicably and, I would say, recklessly destroyed numerous original donation forms that were in its care.

There have been a great many cases of non-compliance on the part of many Members, some of whom were high-profile figures on the Opposition Benches, but on a number of occasions the commission has simply issued a press statement to the effect that no further action will be taken, or that the law has not been broken. In the early part of 2008, however, it clearly wanted to make an example of someone as part of its campaign for new and more draconian legal powers.

That is where the case of my right hon. Friend the Member for Neath comes in. He himself informed the commission as soon as he discovered that his campaign had failed to meet the commission’s notification requirement, but he was asked no questions whatsoever by commission officials about the reasons for the lateness. Incredibly, when he visited the commission’s offices to discuss the late notifications, officials actually lobbied him for some of the new powers that are in the Bill.

I believe that, up to now, the commission has been wholly unaccountable to Parliament and, indeed, to the general public. The present rules, fiercely defended by the commission, ensure that most staff, and indeed commissioners themselves, have no knowledge whatever of the world of politics, which seems rather bizarre when we consider the whole purpose of establishing the commission in the first place.

As we know, when the commission referred my right hon. Friend the Member for Neath to the police it destroyed his position in the Government, but it also destroyed its own credibility here in Parliament when, months later, the Crown Prosecution Service decided that there was absolutely no case to answer. It exposed the fact that the initial commission referral to the police was incompetent and, indeed, reckless, and that it was not even fully conversant with electoral law.

Under the initial Bill, the commission could be judge, jury and executioner, breaking into MPs’ offices and compelling Members, their staff and anyone else to attend to them and answer questions. That was very worrying, because it exposed the fact that no one was regulating the regulator. That is why I tabled new clause 4.

In common with, I think, all Members, I believe that the transparency of Parliament is generally a good thing, but why hitherto has there not been transparency in the Electoral Commission’s operations? When asked in Parliament when it decides to refer a case to the police, a rather obscure answer was given, which was, “When the commission decided the facts of the case merited it.” I do not think we would tolerate such an answer from a Minister, so my question is this: is the Electoral Commission above Parliament? Of course it is not.

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I am glad that the Electoral Commission now has a new chair. I hope, however, that she is good at building bridges, because she will need to build many.

Andrew Mackinlay (Thurrock) (Lab): She is very handsomely paid, too.

Mr. Hamilton: She certainly is.

Members are generally happy to comply with reasonable requirements to register donations, even if the rules are not quite as clear as we might hope, and we had a very good debate on that earlier. The simpler the rules are, the better it is for all Members to ensure that they comply, and it is not unreasonable to expect positive support and guidance from the commission itself. If some Members refuse to comply with reasonable requests, commit serious crimes or seek to evade their responsibilities, no reasonable person would think that the commission should not have the power to act, with the appropriate checks and balances, of course.

Concern has been expressed that the Electoral Commission has in the past been biased against the party of Government. I hope that is not true, and I hope it never will be, but it will be for the new commission chair to demonstrate a number of principles that I believe will correct the imbalance and bring the commission more into public view. The principles are: the commission should devise new ways of being open and transparent to Parliament, and I hope that the new chair will ensure that is so. I also hope that it will swiftly unify procedures with the Register of Members’ Interests; we need to know precisely when that will happen, and I hope the Minister will be able to tell us in his reply. Non-compliance should be decriminalised as much as possible where it is clear that mistakes have been made and there was no intent to undermine the legislation or to take in funds fraudulently and try to disguise them, and that is where new clause 3 comes in. The use of penalties and sanctions—which the Electoral Commission has, and will be given more of—will need to be monitored externally; new clause 4 addresses that. Finally, there must be more dialogue with Members of Parliament to ensure that the commission has more genuine political support from all parts of the House; only then can it do its job, both politically and in the public’s view, to a standard we would expect and the public can trust.

Mr. Jonathan Djanogly (Huntingdon) (Con): All the amendments in the first group except the first two new clauses address clause 3 and schedule 2, which introduce a range of civil sanctions for the Electoral Commission. The sanctions relate to the commission of offences and the contravention of restrictions or requirements under the Political Parties, Elections and Referendums Act 2000, or PPERA. Together, clause 3 and schedule 2 empower the commission to impose these civil sanctions on a “person”, “registered party”, “recognised third party” or “permitted participant”, as defined in the 2000 Act.

5 pm

The Conservatives agree that the making available of enhanced civil powers and sanctions will, in certain situations, be more appropriate than the sledgehammer of criminal sanctions under the 2000 Act. The commission will have a wider range of sanctions to enable it to be a
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more effective and robust regulator, and that was identified by the Committee on Standards in Public Life report in January 2007, which picked up on the problems facing the commission. However, we are keen to ensure that any use of sanctions is valid—the use of powers must be proportionate, risk based and fair, and a number of aspects require further review by us today.

New clause 3 would replace a number of criminal offences in the 2000 Act with a fixed penalty of £1,000. The suggestion is interesting, but we are concerned that it could reduce the effectiveness of the Electoral Commission and weaken the strength of sanctions—there could be a lack of a proper deterrent in many cases if the commission is limited to the use of a fixed monetary penalty for the offences implicated by the new clause. We are prepared to review this conceptually in later stages, and the points made by the hon. Member for Leeds, North-East (Mr. Hamilton), particularly on the lack of guidance, were well put.

New clause 4 would create an independent panel responsible for producing a code of practice relating to the Electoral Commission’s use of civil sanctions. The panel would also offer guidance to it. Although the new clause offers an interesting protection against the abuse by the commission of its powers, the 2000 Act contains an equivalent measure. Under that Act, the Parliamentary Parties Panel can make submissions to the commission on the use of sanctions, so this extra provision should be unnecessary. Again, I take the hon. Gentleman’s well made point about careful monitoring, and I hope that the panel is put to its full use in that regard.

Our amendments 59 to 62 relate, respectively, to paragraphs 1(b), 2(b), 3(b) and 4(b) to schedule 2. They would remove the commission’s ability to impose a fixed monetary penalty on a person, registered party, recognised third party or permitted participant for a non-offence contravention of the Act. It is important to note that the commission would still have the power to issue a fixed penalty for the commission of a prescribed offence.

The power to issue fines is one of the key new flexible powers that the commission is given by the Bill. We hope that they will enable it to deal with enforcement more flexibly and proportionately than it has been able to do in the past. Fixed penalty notices require the person, registered party, recognised third party or permitted participant to pay an amount specified in the notice to the commission. We tabled the amendments because we feel the need to err on the side of caution when dealing with non-offence infringements of the Act. Will the Minister explain the scope of what we could be dealing with here? Our concern is that, depending on the operation of future electoral commissions, things may be interpreted oppressively, resulting in large fines for relatively minor infringements. We must be sure that we clearly set out the parameters of these powers and the circumstances in which they may be used—not necessarily for the current commission, which has been privy to much of this debate, but for the commissions of the future, which may not be so rational in the use of these powers.

At the grass-roots level of political engagement in particular, this is an extremely complex and difficult area of law, and the possibility for wide interpretation and the potential for abuse are correspondingly high. This lack of clarity has potential to have a negative impact at the implementation level. We do not want
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individuals and smaller groups and associations to live in fear of reprisal for minor infringements. When a potentially hefty penalty is the punishment, the criteria of contravention of the prescribed restriction or requirement could be too opaque and broad.

Amendments 74 and 82 would, respectively, amend paragraphs 2(6) and 9(3) to schedule 2. The paragraphs state which court is to be used for the appeal process in relation to a fixed monetary penalty and a non-compliance penalty for failure to satisfy discretionary requirements under part 2. The amendments would change the relevant court from a county court to the High Court. We remain concerned that the expertise of the county court could be insufficient to deal with a potentially complex case under the legislation.

The length of discussion on these technical points in Committee, and the debate so far today, show how complicated the various relevant provisions can be. For that reason, we suggest that the high level of judicial scrutiny that the High Court offers is to be favoured. Furthermore, the reputation of the High Court and the scrutiny it applies will serve as a useful check on the commission. Any case that reaches the High Court would become a useful precedent, and any guidance that the High Court gives would be useful in helping to avoid future court appearances. Furthermore, the need to satisfy the demands of the High Court would also encourage the commission to be thorough, if a case were to proceed to judicial scrutiny.

I remind hon. Members that the use of such powers would be very limited. As such, relatively few cases would be expected to reach this stage and it is unlikely that this requirement would place too great a burden on the High Court. What is important is that cases are considered properly and the relevant level of scrutiny is applied. We consider amendment 74 an important enough issue to press to a Division at the appropriate moment.

Amendment 78 looks to remove the early payment discount provisions in schedule 2.3(3)(d). As the Bill stands, that and other similar sections provide that notice of a possible penalty must include information about any early payment discounts. That implies that the commission may provide discounts for the early payment of a proposed penalty, imposed under the 2000 Act. Our amendments delete reference to early payment and thereby prevent discounts from being issued.

While we understand that the intention behind the provisions is to encourage swift settlement of penalty liabilities, we disagree that the discount mechanism currently in place is the best means of achieving the goal. A penalty is an important indication of wrongdoing. Allowing a discount for early payment could suggest that the seriousness of the offence had in some way been mitigated. That could send out the wrong message, and could trivialise the penalty regime.

Amendments 63 to 67 would serve to remove monetary penalties from the discretionary requirement regime. Amendment 63 would specifically remove sub-sub-paragraph (a), relating to monetary penalties, from sub-paragraph (8), which defines what may constitute a “discretionary requirement”. It would leave two remaining powers with the commission, which would be extremely flexible and could require a subject to take such steps as the commission sees fit to remedy an offence or contravention. Amendments 64 to 67 are consequential.

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The power to issue fines is one of the key new powers that the commission will be granted by the Bill. Fines can act as a crude penalty and disincentive when the 2000 Act has been breached. Conceptually, we support the penalty regime in certain circumstances, but we remain concerned at the potential for the Bill to encourage the over-zealous use of penalties when other avenues should be explored first. That is particularly so in the case of minor infringements of the legislation. The discretionary requirement regime, minus the penalty provision, is capable of remedying minor breaches, and we should not encourage a simple fine system that could fail to address the root of the problem. By removing the penalty, the commission would need to focus on imposing a discretionary requirement to take steps to stop or remedy a breach, under paragraph 5(b) and 5(c) respectively. We believe that that is a positive step, and would encourage understanding rather than retribution.

I expect that there may be concern that the commission will be seen as a light touch without the penalty regime. However, the amendments would leave in place the power to fine when an offence had been committed under the 2000 Act. Thus, in serious cases there would be no need to use the part 2 “discretionary requirements” provision unless it would be useful to do so. Furthermore—and this is a point that I would like to emphasise—if a non-penalty “discretionary requirement” is not satisfied, paragraph 9 would allows the commission to then impose a monetary penalty as a final resort. By leaving it as a final resort in non-offence and less serious cases, it would encourage the commission to help remedy the breach rather than issue a draconian penalty.

The purpose of amendment 77 is the introduction of a time limit into the Bill. It relates to the period in which an individual can respond to the relevant civil sanction imposed on them by the commission. We contend that the provisions in place could be too vague. Clarity is preferred, especially when potentially innocent subjects are seeking to respond to the commission. The simple addition of specific predefined time limits into the schedule could tackle that problem. Amendment 77 would apply a 28-day limit to the making of representations and objections against a discretionary requirement to the commission. I would point out that part 2 of the schedule provides that in relation to a discretionary requirement the period for representations or objections

Does the Minister not agree that that inconsistency is revealing? Surely that shows that 28 days, as a minimum, should be a fair amount of time.

Amendment 75 would insert the word “promptly” into paragraph 6(5) in part 2 of schedule 2, which relates to the notice of a discretionary requirement. The Minister dismissed the use of the word “immediately” in Committee, which is why we are now back with a slightly less prescriptive term. The amendment would require the Electoral Commission to notify the subject of its final decision to impose a discretionary requirement or fixed monetary penalty promptly because, as things stand, there is no time limit for serving the notice.

Discretionary requirements, of course, are intended to provide the commission with a flexible means of ensuring compliance with the provisions of the 2000 Act. That flexibility is reflected in paragraph 5 in part 2, which states that a discretionary requirement can be

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