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However, it is true that the Political Parties and Elections Bill provides

In view of the guidance from HMRC as to the complexity of the concepts of residence and domicile and the detailed inquiries that need to be made to ascertain the latter in particular, it is not clear what would constitute "reasonable steps" for these purposes. Primary legislation cannot be challenged on the grounds that it is unreasonable, but if it were considered unreasonable, that would support an argument that the provision was an infringement of human rights. I think that the Secretary of State acknowledged that earlier.

Martin Linton (Battersea) (Lab): Is not the problem that has led to the need for the amendment that the Conservative fundraising effort for many years has been directed not at people in this country, but at Spain, South Africa and Hong Kong? Is it not enough for the hon. Gentleman's party that people living in those countries should be able to give up to £7,500? People have often tried to give £1 million, £2 million or £3 million to the Conservative party. They will not be able to do so in future.

Mr. Djanogly: I hope that hon. Members in general will agree that I am trying to advance a reasoned and considered argument, but if the hon. Gentleman just wants to make party political trashy remarks, he can do so; that is up to him. The answer, by the way, is no.

We also think that the permissible donor provisions of clause 8 may be an infringement of an individual's right to freedom of expression, as my hon. and learned Friend the Member for Torridge and West Devon (Mr. Cox) suggested in his intervention. The case of Bowman
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v. the United Kingdom of 1998 showed that the European Court of Human Rights would step in to protect the right to freedom of expression even in the case of UK primary legislation designed to regulate the conduct of elections. In that case, it was found that the spending limit on third parties, which was £5 at that time, imposed by section 75 of the Representation of the People Act 1983 was an infringement of the right to freedom of expression under article 10 of the European convention on human rights.

As that right is a qualified right, the Court went on to look at whether the spending restriction was prescribed by law, pursued a legitimate aim, and was necessary in a democratic society. In considering the latter condition, the Court looked at whether the means employed were necessary and proportionate to the aim pursued. It found that the limit was not necessary or proportionate, and the UK Government subsequently amended the legislation to raise the limit.

It is generally established that the right to give a political donation is part of the right to freedom of expression. Clearly the amendment would be a restriction on that right. A court would therefore have to look at whether the restriction was necessary and proportionate to the aim pursued. We cannot pass legislation that restricts an individual's freedom of expression, particularly when we have not been provided with any evidence on whether such a restriction would be necessary and, importantly, proportionate to the aim pursued.

We must also consider the EU law implications of the amendment. According to article 18 of the Maastricht treaty, citizens have a right to move and reside freely within the territory of any of the member states, subject to the limitations and conditions contained in the EU treaty and secondary legislation. The European Court of Justice has defined Union citizenship as the "fundamental status" of Union citizens. Union citizens have a conditional right of residence, and a limited right to equal treatment.

Article 19 of the treaty provides that Union citizens residing in a member state different from that of nationality have the right to vote, and to stand, in the local elections of the state where he or she is residing, under the same conditions as nationals of that state. My right hon. Friend the Member for Wokingham (Mr. Redwood) elaborated on that point in his intervention.

It appears that the effect of the amendment, which would be to prohibit persons not resident or domiciled in the UK from making a political donation-and therefore possibly infringe their right to freedom of expression-could run counter to the basic principle of the free movement of people. That point was effectively expounded on by my hon. and learned Friend the Member for Torridge and West Devon. Indeed, the Secretary of State referred to possible ECHR issues connected with the amendment.

The next problem is that the permissible donor provisions of clause 8 do not correctly address the mischief that the Political Parties, Elections and Referendums Act 2000 aimed to address-arguably it blows a hole through it. The "mischief" at which section 54 of the 2000 Act is aimed, is that of "foreign donations". There appeared, at the time the legislation was passed, to be particular concern about donations from foreign Governments and donations from individuals and persons who had no direct relationship or involvement with the United Kingdom.

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Section 1 of the Representation of the People Act 1985 permits overseas British citizens to vote in a parliamentary election if they are registered on an electoral roll, were resident at a UK address within the last 15 years and registered at that address or were too young to be registered but a parent or guardian was registered at that address. Therefore, the requirement in the 2000 Act that an individual be on the electoral roll already incorporates a test of connection, or involvement, with the United Kingdom.

6.45 pm

Proposing the amendment in the other place on 30 April, Lord Campbell-Savours quoted the Electoral Commission as saying:

He took that as support for the amendment. It can also be read, however, to support a test that relies on registration on the electoral roll, as that already requires a connection with the UK.

Mr. Evans: Let us envisage a happy scenario: we have a general election and the Conservative party wins it. We do not repeal this legislation-if it becomes law-and we then fulfil our manifesto commitment to give the people of the UK a vote on the Lisbon treaty, which they were promised but on which Tony Blair reneged. The Bill would prevent British residents who have lived abroad for 10 years from coming back to the UK to campaign actively in, or give money to a campaign on, that referendum. Is that correct?

Mr. Djanogly: That could most certainly be the case, and that is a good example of some of the problems with the amendments and the underlying provisions.

In the same debate in the other place, Lord Campbell-Savours said:

How nicely put. So why have the Government so fundamentally changed their mind on this issue? We agree that there is a question as to whether it is reasonable to allow someone to vote in an election, and even to stand in an election, but not to make a donation to the political party for which he or she is voting. That would tend to suggest that the purpose behind the amendment is not to provide greater protection against foreign influence, as a person who holds public office is intrinsically likely to wield greater influence than someone who gives a political donation.

The Legislative and Regulatory Reform Act 2006 introduced statutory principles to which persons exercising regulatory functions should have regard. While Parliament
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is not bound by those principles, it is arguable that, when making legislation that has a regulatory function, it should take them into account. The principles are set out in section 21(2) of that Act:

Because of the difficulties that performing the new tests would entail, it is arguable that the proposals, even as now amended, would be disproportionate.

The increased resources that political parties and the Electoral Commission will need to apply in order to meet the proposed new requirements will not have been considered in the impact assessment. Will the Minister now update the impact assessment before this returns to the other place? I hope that the answer to that is yes. The provision is also disproportionate to the aim of the original legislation, which is to impose restrictions on "foreign donations". Individuals who are on the electoral register have a connection with the United Kingdom, and therefore should not fall within the category of impermissible donors.

The Electoral Commission has stated that if these permissible donor provisions are agreed in their current unamended form, those whom it regulates will be unable to comply with the resulting law, which is therefore unlikely to be enforceable in practice. The Electoral Commission is particularly concerned that the Bill does not provide donation recipients with a right to obtain reliable information-for example, from HM Revenue and Customs-about the donor's tax status. Whether its concerns have been addressed by the Government amendments is something that we will wish to consider carefully before this Bill returns to the Lords.

In the current climate of voter apathy, dwindling party membership, and an increasing disinclination to participate in the political process, is this the right message to send to those UK citizens living abroad who may be affected by the amendment? We should be encouraging people to get involved with democracy and not provide barriers to getting involved in the political process. The reality of modern life is that many people do need to live and work abroad. Are we really saying, in this age of globalisation, that some of our most industrious people-those who get out around the world and promote our country in foreign lands-should be rewarded by having their political tights removed in such a way?

If the provisions go through, will future laws seek to impose yet further restrictions on political donations? By shifting the link between voting and donating to one based on tax status, is there a risk of establishing a principle that political rights should be in some way based on making a contribution to the state through taxation? We cannot just allow political rights to be linked with taxation without a proper and full debate on the issue.

The strongest argument against the provisions is that it would be very difficult for individual donors, for the political parties and for the Electoral Commission, in some circumstances, to establish whether they were in compliance with the new requirements because of the legal complexity of the concepts of residence and domicile.

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Mr. Cox: My hon. Friend is making a very powerful critique of the Government's proposals. May I respectfully disagree with him on the strongest argument? The strongest argument, surely, is that there is a fundamental inconsistency between allowing somebody to vote in an election and not allowing them to donate?

Mr. Djanogly: Yes, my hon. and learned Friend makes a fair point. I will not start weighing up the relative merits and demerits of the points that I have been making, but I hope that they are all relevant.

We will need properly to review the Government amendments to consider how things will change. In addition, the parties and the commission would have to create new procedures and devolve additional resources in order to be in a position to ascertain or verify the residence and domicile status of donors. The new restrictions, we feel, would almost certainly be an infringement of the right to freedom of expression, which must be shown to be necessary and proportionate to the aim pursued. Taking that aim to be to prohibit foreign donors, it is arguable that the existing law already achieves that purpose by limiting donors to those on the electoral register. Since a connection with the UK is necessary in order to be on the electoral register, the amendment is therefore not necessary. However, if the aim, as intimated in debate in the other place on 30 April, is to attack the tax status of certain specific donors or to prevent undue influence on parties from large donors, it is arguable that both of those aims are better pursued through other measures, and that this particular measure is not proportionate in those contexts.

The proposals would seem to run counter to the EU principle of free movement of people. They would alienate UK workers and residents abroad, breach regulatory principles, potentially link political rights with taxation and be extremely difficult to implement. They are certainly bad law. I say again that the Bill, with these proposals-whether or not they are amended by the Government-no longer carries cross-party support. We shall review these provisions in the detail that they deserve and return to them in the other place.

David Howarth: May I, too, express my sadness at the death of Lord Kingsland? He always made calm, rational, accurate and perceptive contributions to debates in the other place and he will be sadly missed by those in all parties there and in this House.

The hon. and learned Member for Torridge and West Devon (Mr. Cox) is right that the question is whether there is any difference between the right to vote and the right to donate. If he is right, what is going on here makes a fundamental breach with that principle. However, I think that there is a difference between participating with one's own voice-and counting as one as an elector in an election-and seeking to influence the opinions of other electors through the use of money. They are different things.

The principle behind the amendments and the original proposal in the House of Lords is simply that those who seek to distance themselves financially from this country by using their tax status to reduce their tax liability have, by that very act, distanced themselves from monetary participation in politics. That is different from participation as a voter. It seems absolutely crucial to make that distinction, especially as the Government have now introduced proposals-about which I am
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fairly relaxed-that mean that the rule applies only when the sum of £7,500 is involved. That is a very large donation, in my view. I do not think that there can be any question about whether there is a violation of rights to participate in associations-an article 11 argument-because there should not be any fundamental right to participate in organisations that it costs more than £7,500 to join.

Mr. Djanogly: Is the hon. Gentleman saying that somebody who decides to go and work abroad and to become non-resident is giving up his right to participation? I think that he said that or came very close to saying it.

David Howarth: No, in fact, I said the opposite. That is why I differ from the hon. and learned Member for Torridge and West Devon, who is saying that the right to participate and the right to donate are absolutely linked. I am saying that they are not. That is my answer to the hon. Member for Huntingdon (Mr. Djanogly). I am not denying that people who go abroad have the right to vote, but I am saying that those who go abroad and then seek to change their tax status to reduce their liability distance themselves from monetary aspects of the political system of this country in a way that should lead to a restriction on their right to influence others through money.

Mr. Redwood: Does the hon. Gentleman then apply the same logic to media groups owned outside the United Kingdom that have an influence on campaigns in Britain? Is he seeking to ban them, too?

David Howarth: I fear going along the lines that the right hon. Gentleman wants me to, but the answer is yes. A fundamental problem in the politics of this country is that foreign-owned media groups are so influential. However, that is not the issue before the House at the moment.

I do not think that the article 10 point raised by the hon. Member for Huntingdon works. His argument was that there is no legitimate purpose in the restriction. If that were right, it would be equivalent to the £5 limit on third party activity in the Bowman case. I disagree with him, however. There is a legitimate purpose. It is the purpose that was put forward in the Bowman case, which is the need to protect the equality of arms between different candidates-in other words, as the Secretary of State said, to keep big money out of politics. That is a legitimate aim and the European Court of Human Rights recognises it as a legitimate aim. The Court said that the provisions in the Bowman case went beyond that and amounted to a bar on any expression by Mrs. Bowman at all. That cannot possibly be the case with this proposal, because, first, it applies only to donations and, secondly, it applies only to donations of more than £7,500.

Mr. Cox: I have enormous respect for the hon. Gentleman, who is a thoughtful contributor to such debates, but I find his distinction "convenient", if I can put it like that. The truth of the matter is that his argument would have more intellectual respectability if he were arguing for a cap on all donations. It is inconsistent and irrational, however, to single out a single class who are entitled under the law to vote, who are British citizens and who have a powerful connection with this country and to deny them the right to donate while allowing it to the hon. Gentleman or to me.

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David Howarth: The hon. and learned Gentleman is correct-I do seek a limit and a cap on all donations. If he is arguing that I am supporting this proposal because it is the thin end of the wedge, he is also right. I hope that it is. If there are any inconsistencies of the sort that he describes, I hope that they are resolved in a way that broadens the regulation so that it applies to more and more people.

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