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When we considered this matter, we became convinced that it is the significant donations, either individually or in aggregate over time, that the public want to know more about, and it is right that they should. All parties agree that it is right that they should know more about such donations. If one looks at media reports on this subject, which are frequent and extensive, one certainly gets that impression. We have come to the conclusion that the levels for recording and reporting such relatively small donations impose a high burden of compliance
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that is not matched by the transparency gained from recording and reporting them.

I should note in passing that the thresholds have not been changed since the 2000 Act. I am not suggesting that the changes that we are introducing are merely designed to take account of inflation—they are not—but some increase for that reason would be merited in any event.

Bob Spink (Castle Point) (Ind): The right hon. Gentleman must be cognisant of the level of public distrust that there is in this place, and particularly in political parties campaigning locally. An amount of £200 is not seen as an insignificant sum, and £500 is a considerable sum. Why is he pushing the matter so far? Why is a 250 per cent. increase proposed, which can only reduce transparency for local people? People in Castle Point want to know who is funding the Castle Point Tories and Castle Point Labour party. Those people may be developers or businesses; they may have a vested interest in what goes on in local government and in this place.

Mr. Wills: The hon. Gentleman has a great deal of experience in party politics, and he is part of the select group in this House who has had the distinction of belonging to two political parties here. Obviously, I listen with great attention to what he has to say on this question. He is right to draw attention to the importance of the issue and, implicitly in his remarks, I think that he accepts that a balance has to be struck. How do we strike that balance between accountability through transparency, which is essential, and taking account of the fact that parties—even the party to which he now belongs—are also dependent on the efforts of volunteers. How do we put measures in place that square that circle? How do we have accountability through transparency on the one hand and, on the other hand, not put unreasonable burdens on the volunteer armies that sustain our democracy?

3.45 pm

Bob Spink: I am delighted that the Minister has allowed me to intervene again in order to explain that I belong to no party. I am an independent, so I have no workers. I take no money whatever from any businesses, political parties or developers, or from anyone else, and I will deliver no favours to anyone after the election. If he thinks that those people give their hard-earned cash to political parties in order to return a particular candidate without expecting their pound of flesh at the end of the day, he probably believes in the tooth fairy as well.

Mr. Wills: I am grateful to the hon. Gentleman for his intervention and I am happy that he has put the record straight in the way that he has. However, I was saying that I thought that he had made an important point. Implicit in what he was saying was the need to strike a balance between transparency, which those in all parts of the House subscribe to as a fundamental principle in party funding, and not putting unreasonable burdens on the volunteer armies that sustain the activities of us all and on which our democracy depends. We have to strike that balance.

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As I was saying, there has already been an increase since 2000 that would have been merited by inflation, but such an increase would not, on its own, account for the increases that we are suggesting. However, I want to stress one thing, before I deal with the substance of the amendments and the Government’s response to the Opposition amendments. This Government are fundamentally committed to transparency. It is worth noting that the Bill before us makes important provisions to increase transparency. In particular, clause 8 and the Government amendments relating to unincorporated associations, which we will come to shortly, do a great deal to enhance transparency.

The increases in the thresholds in the 2000 Act should be considered in that context. We have proposed to increase the recordable threshold for recording donations, loans and other transactions from the current limit, of to donations of more than £200, to a new limit, of to donations of more than £500. As the House will know, the recordable threshold requires recipients to verify the permissibility of the donor and to keep their details.

Pete Wishart (Perth and North Perthshire) (SNP): The Minister is proposing to increase what is permissible by 150 per cent. Has he taken into account the Electoral Commission’s concerns about that, given that people may be able to make quite substantial donations regularly, thereby compromising transparency?

Mr. Wills: I have great respect for the hon. Gentleman. He makes a valuable point about transparency and we agree with him about its fundamental importance. However, we have to be proportionate in all measures. We have to do what is necessary to increase public confidence and public trust, but we all have to make judgments on this, and we are making the judgment where we thought best.

What I hope is not in doubt is our commitment to transparency. We have made significant progress already. The Bill makes further progress in increasing the transparency of party funding in this country. That is a good thing and everyone in the House will welcome it, as will the public as a whole, whom we all serve. However, we have to ensure that those measures are proportionate. That is the point. We cannot ignore the fact—I am sure that the hon. Gentleman will know this from his party activists, just as every other hon. Member will know it from theirs—that we have to be clear that we are not putting unreasonable burdens on those volunteers.

The overwhelming majority of people who participate in political activity are decent, honourable citizens who do so from the best of motives. We may disagree on particular policy areas and our political values may be different, but the people who sustain us in this place are decent, honourable people who are fighting for the political values that they believe in.

Martin Linton (Battersea) (Lab): Is my right hon. Friend not concerned that foreign residents, such as Sean Connery, who are currently unable to make donations to political parties would now be able to make donations of amounts of less than £500, which could amount to quite a lot over the course of a year?

Mr. Wills: As always, I pay tribute to my hon. Friend, and on this occasion, I also pay tribute to his ingenuity. I have no doubt that we shall return to that issue as the proceedings progress.

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Of course I accept the points made by Opposition Members about the importance of transparency. We agree with them, but we must ensure that the measures are proportionate and that we do not put such burdens on volunteers that we choke off their contributions.

Mr. John Redwood (Wokingham) (Con): I have a lot of sympathy with what the Minister is trying to do; there is a burden involved, and there are many decent people who want to give relatively modest sums and who have no wish to influence an individual candidate or policy. Will he help the House by explaining how he arrived at the figure of £500? Was the decision based on some sort of rule of thumb?

Mr. Wills: It was a judgment. From memory, if we had increased the thresholds in line with inflation, the figure would have been about £250, give or take; I hope that I will not be held to a precise figure. The increase is not quite as great in percentage terms, but we had to take account of anecdotal experience and make a judgment. This was a judgment, and it is entirely a matter for the House if it wants to reject the threshold that we are proposing. We are doing our best, and we are making a judgment about where to strike the balance. It is in the nature of the task of striking a balance, as I am sure the right hon. Gentleman knows, that it is, to some extent, a matter of judgment. There is no rule for this and no science; it is a matter of judgment. This is our judgment about where we think the balance should be struck. Others might wish to strike it differently; that is a matter for them, and I am sure that there will be further contributions to the debate.

Bob Spink: Was any research done into the sums that ordinary people—the volunteers, the grass-roots workers—give to a party? I recollect that it is usually between £20 and £100, and that the sums that businesses and developers give to political parties are in the £200 to £500 bracket. I suggest to the Minister that many grass-roots people will give small sums of up to £200, while the number of people giving £300, £400 or £500 is extremely limited. Why should not the public know who those people are, so that the public can hold their elected officials to account for the money that they receive?

Mr. Wills: We are talking about recordable thresholds at the moment, not reportable thresholds, so the hon. Gentleman’s last point does not quite stand up. However, I do not disagree with him about the fundamental principle: of course the public have a right to know who is giving money to whom. That is the fundamental principle of transparency, and of course we agree with it. However, sometimes in life—political life and all other areas of life—fundamentally important principles can conflict with each other. It is important to have a vibrant democracy. That is a fundamental principle, and it is sustained by the efforts of volunteers, who are also fundamental to the health and vibrancy of our democracy. We have to ensure that, as far as possible, the two principles are kept reconciled.

Of course the hon. Gentleman is right to say that we have to set these thresholds at a level at which the public can be confident that no one is buying influence. Most Members would be utterly appalled to think that anyone believed that their voice in the House could be influenced
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or bought by a donation, however large or small. We would be utterly appalled by that prospect, but that is not the only issue. I paraphrase the hon. Gentleman here—I am sure that he will intervene on me if I am doing so incorrectly—but I think that he is saying not only that that must not happen, but that the public must be confident that that is not happening. In that, I am entirely at one with him.

The question is: at what level do we strike the balance? No one would think that it was worth placing a huge burden of compliance on those volunteers for the sake of the odd fiver here or there. However, I am sure that everyone would agree that £1,000 was worth recording, let alone £10,000, £50,000 or £100,000. There is no argument about that. The question arises about the relatively small sums of money, and, as I have said, that is a matter of judgment. The hon. Gentleman’s judgment on the matter might be different from ours, and that is a matter for him. It is implicit in what he is saying that there is a balance to be struck. The question is not one of whether there is a balance to be struck, but one of how and where to strike it. That is what we are discussing.

There is no science here, and there is no way of knowing for certain what will reassure the public; we have to make our best guess and proceed with it. If we on the Government side have got this particular threshold wrong, we will happily revisit it. There is nothing at stake here other than the desire to strike the right balance. If we have inadvertently struck it in the wrong place, I gladly pledge that we will come back to the House and change it—in whatever direction: whether we are imposing excessive burdens on volunteers that are not justified by the increased transparency, or conversely, if we set the threshold too high. I hope that Opposition Members will agree with that approach. If they feel that this is the right level, experience shows that they will support it in future and not seek to change it.

Mr. Andrew Tyrie (Chichester) (Con): I agree with everything the Minister says about the need for a balance between compliance and transparency. Will he be prepared to share with the House the advice that he no doubt will have received from the Labour party’s accounting officer on the dangers of imposing excessive burdens that will come with a low threshold? I am to some extent aware of what such advice is likely to have been and I think it would be helpful to have it as a matter of public record.

Mr. Wills: I think that the hon. Gentleman, who was a member of the Public Bill Committee, was present at the sittings where officers of both the Labour and Conservative parties—and, indeed, the Liberal Democrats—gave evidence about the dangers stemming from the excessive burdens of compliance on volunteers, on whom every party depends. I think that this is a matter of public record and of common sense; every Member knows about it from their own experience. We must be very careful. Throughout the lengthy Public Bill Committee stages, this issue came up over and over again, and it was raised by all parties. Broadly, there is, I think, a consensus. What we are debating is the fine detail of exactly where and how to strike this balance between transparency and excessive compliance. It is inevitably a judgment.

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It might help the hon. Member for Castle Point (Bob Spink) if I explained more about the difference between the recordable and the reportable threshold, so let me say a few words about that. The recordable threshold requires recipients to verify the permissibility of the donor and to keep details about it, but the information is not reported to the Electoral Commission unless, in aggregate, donations from the same donor exceed the reportable threshold in a calendar year. We believe that the burden for parties and others of keeping records of really quite small donations—those of £500 or less—exceeds the benefits of verifying their source.

We also propose to increase the thresholds for reporting donations, loans or other regulated transactions to the Electoral Commission from the existing level of more than £1,000 to more than £1,500 and from the existing limit of more than £5,000 to those with a value of more than £7,500. We believe again that increases of that order are proportionate and that they strike the right balance between the transparency that everyone agrees is so necessary and the burden of compliance. A certain increase would have been merited by inflation, but we decided that to increase the thresholds by more than inflation alone was merited for precisely the reasons that I have set out in respect of recording donations, loans and other transactions.

Overall, the Bill’s provisions will increase information in the public domain about significant political donations. In our view—it is our view—this is the key area of public interest, and the moderate increases in reportable thresholds should be considered in that context. I know that hon. Members have referred to percentage increases, but I think that this is one of the occasions where percentages can be misleading—more misleading than the numerical figures themselves. I hope the House will focus on the number of pounds involved rather than on the percentage increases. As I say, they may be misleading about the overall impact of these changes.

4 pm

As with the other provisions in the Bill, the Government and I are determined that we move forward on those measures, which are aimed, as I say, at striking the right balance between transparency and the compliance burdens on party officials and other donees. We want to do that on the basis of a broad political consensus. I am open to views and further consideration as to the precise levels of the thresholds. I note that Conservative Members have tabled amendments relating to donation thresholds and will turn to those in a moment. I will be happy to give them further consideration, if that is the will of the majority of the House. I ask hon. Members to support new clause 19 and consequential amendments 94 to 111.

I want to discuss amendments (a) to (c) to new clause 19, and amendments 123 to 139, which were tabled by Conservative Members. Amendments 124, 125, 129,131 and 133 would increase the £1,000 threshold set out in clause 8 and schedule 3 to £3,000. That means that donations of more than £3,000 to party accounting units and regulated donees, except members’ associations, would have to be accompanied by a declaration as to the source of the donation. We understand that the intended effect would be to increase across the board the local reporting threshold for donations made to
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accounting units of parties to £3,000. I am sure that Conservative Members will speak to their amendments shortly but, in doing so, I hope that they will correct me if I have misunderstood the purpose of their amendments.

The thresholds in clause 8 and schedule 3 mirror the thresholds for the reporting of donations, so that all donations that are reported to the Electoral Commission will be accompanied by declarations as to their source. We have therefore tabled amendments to increase that threshold to £1,500, in line with new clause 19, which would increase the threshold above which party accounting units and regulated donees, except members’ associations, must report donations to £1,500.

We have believed that aligning the thresholds above which donations must be accompanied by declarations with the levels at which donations must be reported would provide clarity for recipients of donations. We think that having different thresholds could make the system unnecessarily complex. These proposals would set the reporting and declaration thresholds at different levels. That might be an unnecessary and unhelpful complication, although I understand that it might not be the intended effect. It might be that hon. Members are suggesting—again, I would be grateful for their correction if I have misunderstood—that the threshold for both reporting and declaration in relation to donations to party accounting units and regulated donees, except members’ associations, should be £3,000. The hon. Member for Huntingdon (Mr. Djanogly) is nodding, so I think my understanding at that point is correct.

Increasing the threshold in such a way would undoubtedly be a significant change, but, having reflected, we are prepared to agree to it in principle—in the interests of consensus and on the ground that there is a judgment to be made here as to how best to strike the balance. We decided to strike it in one way; Opposition Members decided to strike it differently. In the interests of achieving consensus, we are prepared to concede the point. However, we see some problems with the proposals, and they reflect in particular the point about indexation.

Again, we understand what Conservative Members are trying to do with indexation. We want, as far as possible, to secure a consensus on these measures and we do not think it a fitting use of the House’s time to keep returning to those issues. Some years, they will be overlooked, for whatever reason—pressures of business, perhaps, or other things might be happening. We may find ourselves again in the position that we are in today, when the thresholds have not been examined for a long time. Some Members have drawn attention to the percentage increase, but in numerical terms the sums are relatively modest, and, as I have said, we think that the right balance has been struck.

We take the point that we think the Opposition are making—no doubt we shall hear from them shortly—about indexation and the need to provide some automaticity in the process. However, they are proposing a rather simple form of indexation. I am usually all in favour of simplicity, which has great merits, but in this instance the thresholds might become unbelievably complex. We might end up with pennies being added to them. I do not think that anyone wants a threshold of £3,223.33, for example. That really would impose an unnecessary compliance burden.

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