The Government's lobbying bill: follow-up - Political and Constitutional Reform Contents


3  Part 2: Non-party campaigning

17. Part 2 of the Bill makes changes to the rules for third party spending during election campaigns. Third parties are people or organisations who are not registered as political parties or standing as candidates. We discuss first the general issues that have arisen during consideration of Part 2, and then move on to discuss specific clauses.

Exempting charities

18. Not all third parties are charities, but there has been concern that the Bill will have what Georgette Mulheir, of the Commission on Civil Society and Democratic Engagement, described as "a very strong chilling effect" on charities in particular.[10] She commented that she believed that charities and other NGOs would "self-censor", adding:

    We will be too concerned about the potential risk of legal bills and so on, and about being on the wrong side of a law that is not clear, so we will be much more cautious about what kind of campaigning activities we are involved in during the 12 months up to a general election.[11]

19. During the Committee Stage in the House of Lords, on 16 December 2013, Lord Phillips of Sudbury moved an amendment to exempt charities from Part 2 of the Bill altogether. He commented:

    My claim is that the inclusion of charities is wholly unnecessary because, first, charity law is strong and clear; it is a 500 year-old branch of the law—only the Anglophone countries have a separate branch of charity law. Secondly, as I have said, the Charity Commission holds the sector to account as a very competent, long-standing regulator with good, solid legal skills. [12]

Lord Wallace of Tankerness, the Deputy Leader of the House of Lords, said: "The Government should be cautious about taking as significant a step as exempting charities from the regulatory regime. We would want to see more evidence and would pray for reassurance that this would not create a loophole."[13] He added:

    The position which has been taken up until now [that charities should not be exempt], as endorsed by the Electoral Commission, has commended itself to the Government. However, some important challenges to that position have been raised and I would therefore not wish to shut the door on further consideration of it.[14]

20. The Electoral Commission, the National Council for Voluntary Organisations and the Commission on Civil Society and Democratic Engagement all told us that they were against the idea of exempting charities from the Bill. Giving evidence on 19 December 2013, Jenny Watson, the Chair of the Electoral Commission, told us that she was "concerned to see that consideration might still be given to exempting charities." She said:

    It is relatively easy to set up a charity, and the risk in exempting charities would be that you leave a loophole and people could set up charitable organisations...The regulated community will be wide: it will be faith groups, trade unions, trade bodies, umbrella bodies, think-tanks and charities. It is the activity that needs to be regulated if we are to deliver transparency for voters.[15]

21. Karl Wilding, Director of Public Policy at the National Council for Voluntary Organisations, said that, superficially, exempting charities seemed quite appealing, but on the balance of arguments the Council could not support an exemption. Elizabeth Chamberlain, Policy Manager at the National Council for Voluntary Organisations, stated: "both the key regulators, the Electoral Commission and the Charity Commission, have been very clear that charities can come within the scope of the rules, so obviously that makes arguing for an exemption a bit problematic."[16] The point that existing charity law does not prevent charities from engaging in campaigning activities that would qualify as regulated activities under the Bill is worth emphasising.

22. Georgette Mulheir, of the Commission on Civil Society and Democratic Engagement, argued that "it is the actual campaigning activity that matters, and it is the activity that should be regulated, not the group carrying it out." She noted that "many groups have not yet registered as charities" and gave the example of people coming together "in campaigns locally to save their hospital or to fight against HS2". She, too, was concerned that there was a "risk of unscrupulous groups registering as charities to try to avoid regulation."[17] The Charity Commission stated in written evidence: "if charities were to be exempted from the lobbying bill, we have concerns about the potential impact on public trust and confidence in charities."[18]

23. We are pleased that the Government has decided not to exempt charities from Part 2 of the Bill. We do not support such an exemption.

Exemption for Northern Ireland

24. The second report of the Commission on Civil Society and Democratic Engagement, published on 10 December 2013, stated:

    The Commission raised specific concerns in its last report regarding the impact of the Bill in Northern Ireland. Particular reference was made to its impact on civil society activity in a post-conflict society with a mandatory coalition and a political process yet to be firmly established.... The Commission is of the view that the nuances involved are complex, multi-origin and difficult to untangle. The potential to do harm in Northern Ireland with hastily adopted legislation is likely to be of a different order to that in Scotland, Wales and England. [19]

25. Georgette Mulheir expanded on this point when she gave evidence to us. She told us that, in Northern Ireland, "Civil society has been a way for people to come together and make their voices heard in a constructive and a peaceful way." She gave the example of the Human Rights Consortium, which comprises "a whole range of different community, religious and disability groups". She commented:

    That campaign [in relation to a Bill of Rights] cost £100,000. Because it was specifically campaigning against a very clearly stated Government policy, it could be interpreted, according to the Electoral Commission guidance, as trying to influence the outcome of a general election. With that in mind, it would be caught by this Bill. The spending limit for Northern Ireland is £10,800. This campaign would have had to stop once a tenth of it had been implemented.[20]

26. Lord Rooker tabled an amendment at Committee Stage in the House of Lords to exempt Northern Ireland from Part 2 of the Bill. The Commission on Civil Society and Democratic Engagement proposed instead raising the threshold for registration in Northern Ireland (and Scotland and Wales) to £10,000 and exempting costs relating to security and safety from the list of regulated expenditure. Lord Horam repeated this point during the debate on Lord Rooker's amendment: "if the registration levels were raised, and if the costs of security and safety were exempted from the regulation, that would be another way of dealing with this issue, rather than exempting them [Northern Ireland] from the Bill as a whole."[21]

27. The Electoral Commission stated: "In all parts of the UK, it is important to strike the right balance, between controlling campaigning that has a significant effect on elections and enabling campaigners to participate. A general exemption for one part of the UK does not therefore seem the right approach."[22]

28. Lord Wallace of Tankerness told the House of Lords on 16 December 2013 that the Government would consider carefully concerns that had been raised about the Bill's application to Northern Ireland and suggestions such as exempting security-related expenditure.[23] During Report Stage in the Lords, the Government tabled amendment 43 to exempt expenses "incurred in providing for the protection of persons and property." This amendment was made.

29. We support exempting security-related expenditure from Part 2 of the Bill and therefore support the Government amendment to this effect which was made at Report Stage in the House of Lords.

Spending by coalitions of third parties

30. Currently, when two or more third parties work together on a campaign the total spending counts towards the individual spending limit of each third party. The Bill as originally drafted did not change this, but it did broaden the range of regulated activities and lower the spending limits. Jenny Watson told us:

    I think it is important to distinguish between the rules on working in coalition with the spending limits that currently exist and the range of activity that currently exists. What has been thrown into sharper focus is the combination of much lower registration thresholds and much lower spending limits.[24]

She went on to say that the rules on spending by coalitions of third parties were "a very important anti-avoidance tactic."[25]

31. The Commission on Civil Society and Democratic Engagement recommended in its second report:

    Where an organisation only takes part in regulated activity as part of a single coalition, it will not have to register separately with the Electoral Commission, provided that all its relevant spending does not exceed the registration threshold and is reported through either the coalition or one of the coalition partners.[26]

32. At Report Stage in the House of Lords, the Government tabled a new clause to exempt minor campaigners from having to register with the Electoral Commission provided that the minor campaigner's total regulated spending is less than the threshold for registration and that the lead campaigner reports the minor campaigner's spending. The Electoral Commission supported this change, which it said would reduce the regulatory burden on minor campaigners, but called for the Government "to ensure that the spending of unregistered campaigners is properly reported by lead campaigners."[27] The new clause was agreed to. We support the Government new clause, agreed at Report Stage in the Lords, to reduce the regulatory burden on minor campaigners that campaign in coalition with other third parties.

Postponing the regulated period

33. Third parties are regulated for 365 days before a general election and four months before elections to the European Parliament, the Scottish Parliament, the Northern Ireland Assembly and the National Assembly for Wales. The Bill as introduced provided for the regulated period covering campaigning in the run-up to the 2015 UK general election to begin on 23 May 2014, the day after the European Parliament elections. The regulated period was thus scheduled to start no more than a few months after the Bill was likely to receive Royal Assent. Peter Horne, Director of Party and Election Finance at the Electoral Commission, said "if the Bill were to receive Royal Assent in early February, we would have guidance out sometime within the four weeks after that", but commented that organisations would need time to seek guidance and make decisions. He stated: "We think that the regulated community's need to be able to make decisions on what they do is the constraint on the start of the regulated period."[28]

34. The Electoral Commission supported a shortened regulatory period, beginning in November 2014, in order to give charities more time to assimilate the guidance for the new regime and seek advice. Jenny Watson told us:

    We...welcome the debate that has been held on shortening the regulated period for the next general election only, so that it begins in November 2014 rather than May 2014. We think that that is an important change that needs to be made: campaigners will need time not just to read our guidance but to understand it and to test their plans against it, and to ask us for specific advice tailored to their own situation. They will then need to adapt their plans so that they comply with the regulatory regime.[29]

35. In its second report, the Commission on Civil Society and Democratic Engagement supported a six-month regulated period. Georgette Mulheir, from the Commission, stated:

    we believe that a practical solution is to shorten the regulated period to six months before the next general election to give proper time now for real consultation, dialogue, scrutiny and amending of the Bill, in an attempt to minimise the harm it that it could cause.[30]

It is worth noting that this reason for seeking a shortened regulated period differs slightly from that given by the Electoral Commission, which wanted a shortened regulatory period not so that there was more time to consider the Bill, but so that there was more time for third parties to assimilate the guidance that will be produced after Royal Assent. When we asked Jenny Watson whether shortening the regulated period would mean that more time could be taken to consider the Bill before Royal Assent, she replied:

    I think it is for Parliament to decide how it wants to debate and discuss this legislation. That is not for me to say, but I am conscious that the reason for our proposal is so that people have time to prepare.[31]

36. At Report Stage in the House of Lords, the Government tabled amendment 133 to change the start of the regulated period for the next general election to 19 September 2014. This amendment was made.

37. We are pleased that the Government has agreed to shorten the regulated period for the next general election, so that it begins on 19 September 2014 rather than 23 May 2014. This will give third parties time to understand the new guidance and to plan their activities accordingly. We therefore support the Government amendment to this effect that was made at Report Stage in the House of Lords.

A review of the legislation

38. The Commission on Civil Society and Democratic Engagement recommended that "a Committee of the House, such as the Political and Constitutional Reform Select Committee review the regulation of non-party campaigning as a matter of urgency after the 2015 General Election."[32] The Electoral Commission stated: "We support the principle that a review of the rules should take place after the election."[33] Lord Wallace of Tankerness told the House of Lords on 16 December that the Government "agree with those who think that the provisions of Part 2 should be subject to review after the 2015 UK parliamentary general election." He stated: "The Government therefore commit to laying this review before Parliament, and an amendment to this effect will be introduced at Report Stage."[34]

39. Georgette Mulheir commented that the key points about a review were: "that it needs to take place in the period immediately after the general election", that the "evidence-gathering process...needs to happen in the regulated period before the general election", and that consideration needed to be given to "what resources will be available to make sure it is done properly".[35]

40. At Report Stage in the House of Lords, the Government tabled a new clause to provide for a post-election review. The new clause was made. Under the new clause, the Government must, within 12 months from the day on which the Act is passed, appoint a person to conduct a review of Part 6 of the Political Parties, Elections and Referendums Act 2000: the part which deals with third party campaigning and which is amended by Part 2 of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill. This meets Georgette Mulheir's requirement for a prompt review. It does not, however, guarantee that the evidence-gathering process will begin during the regulated period before the general election. The new clause contains a subsection stating: "The Minister may pay to the appointed person such remuneration and expenses as the Minister may determine."

41. The Bill has been rushed through Parliament without proper consultation or pre-legislative scrutiny. It has been improved slightly during its consideration by both Houses, but in the time available it has not been possible to solve all the problems that have emerged. It is vital that the Bill is reviewed after the next general election. For this reason, we are pleased that the Government tabled a new clause at Report Stage in the House of Lords to provide for a post-election review. We support the new clause. We emphasise to the Government that evidence gathering for the review will need to begin during the regulated period.

SPECIFIC CLAUSES

Clause 26 - Definition of controlled expenditure

42. In the Bill as originally introduced in the House of Commons, clause 26 changed the meaning of "controlled expenditure" in section 85 of the Political Parties, Elections and Referendums Act so that the definition of third party spending more closely reflected that used for political parties. Clause 26 introduced the concept of spending incurred "for election purposes". The new concept attracted considerable criticism, including from the Electoral Commission, which commented:

    It could be read narrowly, so that the activity is only covered if it is quite clearly promoting a particularly party or group of candidates. Or it could be read very widely, so that activity is covered if it relates to or discusses a policy that someone could see as being associated with a party or group of candidates, and even if the activity is not directed at the public.[36]

The National Council for Voluntary Organisations stated: "we have major concerns that the provisions of the Bill are very broad in scope, due to a new definition of 'activities for election purposes'. Furthermore, they are highly complex and unclear and run the risk of discouraging charity campaigning."[37] A wide range of individual charities and other organisations and people contacted us to express concern about the lack of clarity arising from the concept of spending "for election purposes".

43. Our original report recommended:

    The definition of spending "for election purposes" as currently drafted is likely to cause confusion. It is unsatisfactory that its interpretation should be left largely to the Electoral Commission—a state of affairs that the Commission itself has criticised. The Government must define clearly in the Bill itself what it means by "for election purposes". We recommend that it should be defined relatively narrowly, so that it relates clearly to promoting a particular political party or candidate, or the intent to damage a particular political party or candidate.[38]

44. During the Bill's Committee Stage in the Commons, the Deputy Leader of the House, Rt Hon Tom Brake MP, said the Government would introduce amendments on Report to address such concerns.[39] At Report Stage in the Commons, the Government moved amendment 32, which removed the controversial new concept of spending "for election purposes" and replaced it with a definition of controlled expenditure which is very similar to that which currently applies to third parties under the Political Parties, Elections and Referendums Act. The Deputy Leader of the House stated:

    By reverting to the existing terminology, amendment 32 achieves the aim of making the test for controlled expenditure one that has been in existence since 2000. I have seen continued comment from some organisations that the rules will prevent charities and other campaigners from making their views known. Those objections are based not on what is being done in the Bill but on the rules already set out in PPERA. Those rules have been in place for a number of elections, including the 2005 and 2010 general elections. I am sure that everyone on both sides would agree that, during those elections, charities and other campaigners were not prevented from engaging and influencing public policy.[40]

45. The Electoral Commission was broadly supportive of the Government's changes to clause 26 of the Bill. In its briefing on the Report Stage amendments in the Commons, it commented:

    There is a revised definition of controlled spending which is based on whether spending on an activity can "reasonably be regarded as intended" to promote electoral success (amendment 32). This means that spending on an activity can be regulated even if it can also be regarded as intended to have another purpose as well (amendment 35). These two aspects of the revised definition are features of the current law. (When introduced, the Bill originally used a wider definition that covered spending "for the purpose of or in connection with" promoting electoral success.) In our view, the new wording is clearer than the wording in the Bill as introduced, and we think this change is helpful.[41]

When she gave evidence to us on 19 December 2013, Jenny Watson described "moving the definition of third party campaigning closer to the one that already exists in PPERA" as one of the "welcome changes to the Bill".[42]

46. Elizabeth Chamberlain, of the National Council for Voluntary Organisations, described the change to clause 26 as "a slight improvement on what the Government initially proposed in the Bill." However, she added:

    Reversing to the previous situation is certainly better than where we started from, but it is still a very vague and a very broad definition that can easily catch activities that are not intentionally or deliberately promoting a particular party or candidate.[43]

47. Concerns have been expressed that the existing definition in PPERA functions only because the range of activities to which it applies is currently relatively narrow. The Bill would expand this range of activities, and lower the thresholds for registration with the Electoral Commission. The Countryside Alliance, in evidence given to the Commission on Civil Society and Democratic Engagement, said:

    Although Clause 26 was amended in the Commons to take the definition of 'controlled expenditure' and 'election material' back to one which is closer to that contained within PPERA, PPERA was, and is, in our opinion flawed. The reason why many charities and campaign groups could live with PPERA was because what counted as controlled expenditure was limited, and the threshold for registration with the Electoral Commission and the limit on expenditure for those registered were set at levels which did not capture the small scale activity of most third parties.[44]

48. The Commission on Civil Society and Democratic Engagement recommended:

    The PPERA definition, as amended by the Lobbying Bill, should be used for the 2015 General Election; but this recommendation is entirely contingent on the Lobbying Bill being amended to implement this report's other recommendations on: registration thresholds, spending limits, constituency cap, the definition of an organisation's supporters, and the range of campaigning materials and activities subject to regulation and staff costs.[45]

49. We are pleased that the Government listened to the concerns we and many others expressed about the definition of controlled expenditure in clause 26. Reverting to the existing definition under PPERA is not an ideal solution, because the existing definition is itself problematic, but it is the best solution that could be achieved in the time available. We recommend that the person who conducts the review of the legislation after the next general election should be charged with producing an improved definition of controlled expenditure.

Schedule 3

50. Schedule 3 lists the types of activity that will count for the purposes of controlled expenditure. This expands the list of activities that are currently regulated. Under the Bill as originally drafted, staffing costs would have been regulated not only in the case of the production and distribution of election material, but in the case of press conferences and other media events, transport, and public rallies and other public meetings. Although the changes in Part 2 as a whole are intended to bring the rules for spending by third parties more in line with the rules for political parties, staffing costs do not currently count as a regulated activity for political parties. However, the Electoral Commission argued in its June 2013 report on party and election finance laws that the scope of the Political Parties, Elections and Referendums Act 2000 should be broadened "to cover political parties' staff costs related to campaigning, and a wider range of non-party campaigning activity." They added: "However, we recognise that these are complex and potentially controversial changes that would need further thought and consultation before they are implemented."[46] Commenting specifically on the Bill, the Electoral Commission stated:

    In principle these costs [staffing costs] should be regulated for both political parties and non-party campaigners. However, the issues raised by campaigners during the passage of the Bill suggest that the inclusion of staff costs in the expanded list of activities will make the rules difficult to comply with in practice...On the grounds of practicality we would support a proposal to exempt staff costs from the rules for the 2015 UK Parliamentary general election alone.[47]

The Electoral Commission also stated that it supported "an exemption in principle for translation costs" and "would support an equivalent measure being adopted for political parties in due course."[48]

51. The second report of the Commission on Civil Society and Democratic Engagement recommended:

    The wider range of campaigning activities set out in Schedule 3 of the Bill should remain but be subject to two amendments to secure alignment with the regime for political parties. First, staff costs should be specifically excluded. Second, market research and canvassing should be covered only where this relates to ascertaining polling intentions.[49]

52. Lord Gardiner, speaking on behalf of the Government during Committee Stage in the Lords, commented:

    the Government acknowledge that there are genuine concerns regarding the issue of the calculation of staff costs...The Government support ensuring that materials are accessible to all electors and they have received representations related to translating materials....I want to confirm again that the Government will be considering these issues carefully in the light of today's debate and we will return to them on Report.[50]

When pressed on the issue of staff costs, he said: "I am not in a position to say how the staff costs issue will be dealt with but...it is part of the considerations."[51]

53. The Government did not table any amendments on Report to exempt staffing costs. However, Lord Harries of Pentregarth, Lord Tyler, Lord Cormack and Baroness Mallalieu, tabled amendment 45, which excluded staffing costs associated with press conferences or other media events, transport, and public rallies or other public meetings. Lord Harries said that he wanted to exclude staffing costs in these instances to avoid the need for "additional bureaucracy". He commented:

    It is easy to assess the amount of money you are going to spend on hiring the hall for a public rally; you get an invoice for that. You do not get an invoice for a member of staff or the 10% of their time spent over four weeks doing that.[52]

The amendment was made.

54. In principle, we think that staffing costs should be regulated for both third party campaigners and political parties. However, we note that the Electoral Commission would support exempting staffing costs for the 2015 general election alone, on practical grounds. We support the non-Government amendment, which was made at Report Stage in the House of Lords, to exempt certain background staffing costs, on the grounds of reducing bureaucracy. We recommend that the person charged with conducting the review of the legislation should be tasked with devising a workable proposal for including staffing costs within controlled expenditure after the 2015 general election.

Clause 27(1) - Thresholds for registration

55. Under the Political Parties, Elections and Referendums Act 2000, third parties who wish to undertake election campaigning need to register with the Electoral Commission when they plan to spend more than £10,000 in England or more than £5,000 in each of Scotland, Wales or Northern Ireland. Clause 27(1) as originally drafted changed these limits to £5,000 and £2,000 respectively.

56. When she gave evidence to us on 3 September 2013, Jenny Watson, Chair of the Electoral Commission, suggested that one practical way of improving the Bill would be "to raise the thresholds at which people have to register."[53] Our report recommended:

    In the absence of any evidence that there is a need to lower the threshold for third parties to register with the Electoral Commission, we recommend that the Government revert to the existing levels. To this end, we recommend that clause 27(1) is removed from the Bill.[54]

When she gave evidence to us on 19 December 2013, Jenny Watson said:

    we think they [the thresholds] are too low, and that they will catch very small fry that are not spending large sums of money on campaigning. We would certainly want to see them raised. Beyond that, it would be for Parliament to decide an appropriate level of registration threshold.[55]

57. The Commission on Civil Society and Democratic Engagement recommended in its second report that the thresholds for registration be raised beyond their current limits to £20,000 in England and £10,000 in each of Scotland, Wales and Northern Ireland. Georgette Mulheir told us that this was to allow for the "significant inflation" since the original levels were set and to allow for the fact that "the scope of types of activity to be regulated is being broadened out significantly."[56]

58. Lord Wallace of Tankerness stated during the Committee Stage in the Lords on 16 December: "the Government will bring forward on Report amendments to increase the registration thresholds in England, Wales and Northern Ireland."[57] Karl Wilding, of the National Council for Voluntary Organisations, told us on 19 December that he believed that the increase "will still be below the PPERA threshold for registration".[58] In fact, at Report Stage, the Government tabled amendment 46, which increased the thresholds to £20,000 in England, and £10,000 in each of Scotland, Wales and Northern Ireland. The amendment was made.

59. In our first report on the lobbying Bill we called for clause 27(1) to be deleted so that registration thresholds could be restored to their current levels. The Government has amended clause 27(1), at Report Stage in the House of Lords, so that registration thresholds are not simply restored to their current level, but increased. We very much welcome this change and are pleased that the Government listened to us and others.

Clause 27(2) - Spending limits

60. Clause 27(2) as originally drafted changed the maximum that third parties can spend on election campaigning to 2% of the maximum campaign expenditure limit for political parties in England, Wales, Scotland and Northern Ireland, which is currently £19.5 million. The table below shows the effect of this change:
England ScotlandWales Northern

Ireland

Current limit £793,500£108,000 £60,000£27,000
Original Bill proposal £319,800£35,400 £24,000£10,800

61. In written evidence to our original inquiry, the Joseph Rowntree Foundation commented: "The cost limits are reduced in a way that is neither explicable, nor relevant".[59] Karl Wilding, of the National Council for Voluntary Organisations, told our original inquiry that he did not know the basis on which the Government had decided on the new limits for expenditure, adding: "One may suggest that they are arbitrary."[60] Our original report recommended:

    We have stated already that we have not seen adequate evidence for setting the new thresholds for expenditure at the levels imposed by Part 2 of the Bill. The Government must explain the reasoning behind its decisions during the passage of the Bill. Even if the Government can make the case for imposing lower levels, it must be able to given a convincing account of why it has chosen these particular limits as opposed to any others. If it cannot do so, we recommend that the existing levels continue to apply until such point as the case for change has been made.[61]

62. The Commission on Civil Society and Democratic Engagement's second report recommended that the existing limits be reinstated, and then adjusted upwards for inflation. Jenny Watson of the Electoral Commission described "reconsidering the spending limits" as one of the "significant amendments" that she would like to see.[62] Asked whether the Electoral Commission supported restoring the limits to their current levels she said that was "a question for parliamentarians", but added that she wanted to make it clear that the Electoral Commission "were not suggesting in our regulatory review that, if you widened the range of activity covered, the limits should also be brought down."[63]

63. At Report Stage in the House of Lords, the Government tabled amendment 47. The amendment makes no change to the proposed spending limit for England, which would remain at £319,800. However, it increases the spending limits for Scotland, Wales and Northern Ireland to £20,000 each, plus 2% of the maximum campaign expenditure in each respective part of the UK. In practice, this would mean the limit was £55,400 in Scotland, £44,000 in Wales, and £30,800 in Northern Ireland. The amendment was made. The table below shows the effect of this change:
England ScotlandWales Northern

Ireland

Current limit £793,500£108,000 £60,000£27,000
Original Bill proposal £319,800£35,400 £24,000£10,800
Bill as amended in the Lords £319,800£55,400 £44,000£30,800

64. At Report Stage in the House of Lords, the Government made an amendment to raise the maximum expenditure limits in Scotland, Wales and Northern Ireland from those originally proposed in the Bill. In the case of Scotland and Wales, the new limits still fall short of the current limits, as they do in England. The changes are an improvement on what was originally proposed. However, we are still not clear about the rationale for altering the current limits. We therefore recommend the following amendment to the amendment:

Agree with Lords Amendment Page 15, line 3, leave out from "substitute" to end of line 5 and insert "—

(a) in relation to England, 2% of the maximum campaign expenditure limit in England;

(b) in relation to Scotland, £20,000 plus 2% of the maximum campaign expenditure limit in Scotland;

(c) in relation to Wales, £20,000 plus 2% of the maximum campaign expenditure limit in Wales;

(d) in relation to Northern Ireland, £20,000 plus 2% of the maximum campaign expenditure limit in Northern Ireland.";"

As an Amendment to the Lords Amendment -

Leave out from "England" to end and insert -

"£793,500;

(b) in relation to Scotland, £108,000;

(c) in relation to Wales, £60,000;

(d) in relation to Northern Ireland, £20,000 plus 2% of the maximum campaign expenditure limit in Northern Ireland.";"

Clause 28 - Constituency limits

65. The Bill places limits on how much third parties can spend in individual constituencies. This is a new control. Under clause 28, spending by third parties in individual constituencies is limited to 0.05% of the maximum campaign expenditure limit for political parties in England, Wales, Scotland and Northern Ireland, which is £19.5 million. This produces a spending limit per constituency of £9,750. Originally, the Bill specified that a maximum of £5,850 of the £9,750 could be incurred during the period after the dissolution of Parliament, but Government amendments 49 to 51 and 53 to 62 made at Report Stage in the House of Lords, removed this sub-limit. We welcome the Government amendments made at Report Stage in the House of Lords to remove the sub-limit on constituency spending for the period after the dissolution of Parliament. They go some way towards simplifying the new regime.

66. The provisions in clause 28 cover campaigning in relation to political parties or groups of candidates, as opposed to campaigning for or against a particular candidate. The rules on campaigning for or against a particular candidate are set out in the Representation of the People Act and are regulated by the police, not the Electoral Commission. Thus, removing clause 28 from the Bill would not remove the existing rules that relate to campaigning for or against a particular candidate. Separately, clause 34 increases the amount of money that a third party can spend when campaigning for or against a particular candidate from £500 to £700, to take account of inflation.[64]

67. The Commission on Civil Society and Democratic Engagement's second report recommended: "Remove constituency spending limits for non-party campaigning proposed in the Lobbying Bill."[65] Georgette Mulheir argued that the existing regulation, in the Representation of the People Act, of spending on campaigning for or against a particular candidate was sufficient:

    it would be very helpful for us to know from the Government's perspective where the evidence is that there is a specific problem at constituency level that is not dealt with by the Representation of the People Act and needs to be dealt with by PPERA.[66]

She added:

    We need evidence for this, because all the NGOs that work at constituency level or across a number of constituencies—most don't work on just one constituency—are saying that it is completely unworkable for them to apportion their spending according to, "Which constituency did we do which bit of a campaign in, and how much was that?"—particularly if they are having to apportion staff time.[67]

68. The National Council for Voluntary Organisations also argued for the removal of the constituency limits in clause 28. Karl Wilding stated:

    We do not think that there should be constituency limits...We think that they are a regulatory burden. My understanding is that the Electoral Commission says that trying to police those constituency limits will be difficult at best, and quite probably unworkable.[68]

69. During our original inquiry, the Electoral Commission expressed concern that the limits on spending in individual constituencies might be unenforceable: "Obtaining the information necessary to identify potential cases of non-compliance at constituency level, and particularly the evidence needed to be able to sanction breaches, is likely to be so difficult that these provisions may be unenforceable in practice."[69] In a briefing paper published on 13 December 2013, the Electoral Commission stated that among the changes that would improve the workability of the legislation would be "amending the new constituency limits to make them more workable, proportionate and enforceable."[70]

70. Giving evidence on 19 December, Jenny Watson said that the Electoral Commission continued to be of the view that clause 28 may be unenforceable in practice, but said that she wanted to clarify exactly what she meant by that:

    Our concern is that they would be unenforceable by us in real time during a general election period. The background and context to that is that it is traditional—and has been ever since the late 1800s, when candidate spending controls were brought in—that enforcement activity is after an election period. There is not an expectation that we are intervening. In that case, it would not be for us anyway, but there is not an expectation that people are intervening in real time to stop behaviour during an election campaign. Our concern around that is that parliamentarians understand the role that we would be playing during a general election period.[71]

Jenny Watson said that the Electoral Commission was "attracted to the amendment suggested in the House of Lords that would limit what was covered by the constituency spending provisions to something that might be more geographic in scope."[72]

71. Lord Tyler tabled amendment 170A at Committee Stage in the House of Lords that would have restricted the constituency spending limit to spending on election material that was addressed to or directed to electors or households in a particular constituency, or on unsolicited phone calls to electors or households in a particular constituency. He commented:

    It would make things simpler for those who are caught by the definition because, where telephone calls are being made or letters or leaflets sent to someone's home, you would know it is a campaign targeted at that particular geographical area and deliberately trying to affect the outcome in that constituency. There can be no uncertainty about that. The amendment sticks to the vital policy intention to have a constituency limit but makes it operation much simpler.[73]

Lord Tyler withdrew the amendment, but tabled Amendment 52 to the same effect at Report Stage. Lord Tyler again withdrew his amendment at Report, on the basis that the Minister would discuss the issue with the Electoral Commission before Third Reading. Lord Harries, Baroness Mallalieu and Lord Cormack tabled a similar amendment at Third Reading in the Lords. The amendment was made.

72. We continue to be concerned about the enforceability of the constituency level limits on spending by third parties. We see merit in the suggestion of keeping the constituency spending limit, but restricting it to spending on election material that is addressed to or directed to electors or households in a particular constituency, or spending on unsolicited phone calls to electors or households in a particular constituency. This strikes us as a workable solution that could be enforced by the Electoral Commission.

Clauses 32 and 33 - reporting requirements

73. Clause 32 requires third parties to submit quarterly reports on donations to the Electoral Commission during the regulated period and weekly reports during the post-dissolution of Parliament period. Under clause 33, third parties are also required to submit a statement of accounts to the Electoral Commission (individuals are exempt).

74. Karl Wilding, of the National Council for Voluntary Organisations, commented: "there is a huge amount of regulatory red tape in terms of new accounting and reporting requirements for organisations."[74] The Commission on Civil Society and Democratic Engagement recommends in its second report:

    All additional reporting requirements for non-party campaigning proposed in the Lobbying Bill should be removed.

    Introduce the option of a declaration by non-party campaigns that have registered that they did not spend above the threshold.[75]

75. In written evidence submitted to our original inquiry, the Electoral Commission stated: "The new requirement for weekly reporting after Parliament has been dissolved is likely to be particularly onerous and potentially impracticable for large organisations with branches and other complex structures."[76] Of the new accounting requirements, it remarked: "The new requirements appear onerous, in that the accounts will have to be produced within a few months of polling day and will cover a period of time that is not a standard accounting period."[77] Giving oral evidence to us on 19 December, Tony Stafford, Head of Policy (Party and Election Finance) at the Electoral Commission, stated: "For both those sets of requirements [reporting and accounting], we think there is a lot of scope to simplify and reduce administrative burdens."[78]

76. In a briefing paper, the Electoral Commission recommended: removing the requirement for parties with no reportable donations within a quarterly period to have to provide further reports until a reportable donation is received, and replacing the weekly reports required after the dissolution of Parliament with a single report, only required if a reportable donation is received. It also raised the following issues with the accounting requirements:

    That the exemption as currently drafted will not apply to campaigners producing some common types of accounts, including abbreviated company accounts, and non-company charity accounts on a receipts and payments basis.

    That campaigners will need to produce accounts within as little as three months from polling day.

    That it seems unnecessary for campaigners to produce accounts if they register with us on a precautionary basis, but do not then incur spending at a level that would have required them to register.[79]

77. At Report Stage in the House of Lords, the Government made a series of amendments to simplify the reporting and accounting requirements. In particular, third parties that register with the Electoral Commission but do not receive any reportable donations during the reporting period will no longer need to send in a nil return. We support these amendments, as does the Electoral Commission. However, like the Electoral Commission, we believe further changes are necessary. The Electoral Commission has called for the following changes:

    ·  "where a campaigner reports a donation during the regulated period, it will also have to report that donation in its post-poll spending return. This duplication is unnecessary and may cause confusion; it should be removed."

    ·  "if the regulated period for the 2015 UK Parliamentary general election starts on 19 September 2014, the third "quarterly" donation report will now cover a period of only a few days before the dissolution of Parliament. There should be a transitional provision so that only two donation reporting periods apply before Parliament is dissolved in 2015."

    ·  "We recommend a further change to require registered campaigners that do not need to send in a spending return to give us a declaration that they have spent less than the registration threshold. This would be a simple tick-box requirement and would remove the need for such campaigners to deal with enquiries from us about why they have not sent in a return. It would also help to deter attempts to avoid transparency by failing to submit a return, or reporting late. It was an integral part of our regulatory review recommendation."

    ·  "We recommend a further change so that registered campaigners which have to send us a spending return (because they have spent more than the registration threshold) will have to indicate in their return whether they are exempt from the statements of accounts rules. If this is not done, then in cases where a campaigner sends in a spending return and does not subsequently send us a statement of accounts, it will often be unclear whether the campaigner is exempt or has simply failed to comply with the rules."[80]

78. During Report Stage in the House of Lords, Lord Wallace of Tankerness undertook to look again at the additional changes proposed by the Electoral Commission, but added: "I do not want to do that with any raising of expectation, because...we have given considerable consideration to these points."[81]

79. We recommend the following amendments to the Lords amendments.

Agree with Lords Amendment Page 25, line 43, at end insert—

"( ) A "pre-dissolution period" means a period—

(a) beginning with the first day of a qualifying regulated period, and

(b) ending with the day before the day (or the last day) during that qualifying regulated period on which Parliament is dissolved."

As an Amendment to the Lords Amendment -

At end add -

"() If the final period of less than 3 months referred to in subsection (2)(c) is less than 2 weeks, this final period shall be added on to the preceding 3 month period and only 1 quarterly donation report shall be required for this period."

***************************

Agree with Lords Amendment Page 26, leave out lines 28 to 31

As an Amendment to the Lords Amendment -

At end add--

"and insert '() This section does not require a third party which reports a donation during the regulated period to report the same donation in its post-election spending return.'"

*****************************

Agree with Lords Amendment: Insert the following new Clause—

"Returns as to controlled expenditure

(1) Section 96 of the Political Parties, Elections and Referendums Act 2000 (returns as to controlled expenditure) is amended as follows.

(2) For subsection (1) substitute—

1) Subsection (1A) applies where, during a regulated period, any controlled expenditure is incurred by or on behalf of a recognised third party in a relevant part of the United Kingdom in excess of the limit for that part mentioned in section 94(5).

(1A) The responsible person must prepare a return in respect of the controlled expenditure incurred by or on behalf of the third party during that period in each relevant part of the United Kingdom.

(3) In subsection (7)—

(a) in the opening words, for "(1)(a)" substitute "(1A)";

(b) in paragraph (a), omit "falling within subsection (1)(a)"."

As an Amendment to the Lords Amendment -

[After subsection (1A)], at end insert-

"() A third party must make a declaration to the Electoral Commission in either of the following circumstances—

(a) it does not have to prepare a return because it has spent less than the registration threshold;

(b) it has to send a spending return but is exempt from the statement of account rules."

Clause 35 - role of the Electoral Commission

80. Clause 35 amends the Political Parties, Elections and Referendums Act by imposing a new requirement on the Electoral Commission to monitor and take all reasonable steps to secure compliance with the controls imposed by that Act. The Electoral Commission commented in its written evidence to our original inquiry that there were "significant practical issues" about enforcement.[82] It stated: "In practical terms, even with significant additional resources we would not be able to identify every case of potential non-compliance in advance."[83] It continued: "The Bill includes a change to the Commission's regulatory remit. The Commission's Board and Accounting Officer were not consulted on the change, and we are concerned that it has been brought forward without consultation and with no clear rationale."[84]

81. Giving oral evidence to us on 19 December, Jenny Watson said:

    The fear that we have about this change to our remit, which incidentally will affect our work with political parties as well as our work with non-party campaigners, is that it could lead to an increased risk of legal challenge from people who think we have not taken all reasonable steps, and that will create uncertainty in the regime, which is not helpful to anybody, so we would still like to see it removed.[85]

82. We are still concerned that the Bill makes a change to the regulatory remit of the Electoral Commission which the Commission itself thinks could lead to uncertainty in the regime. We are disappointed that the Government has not removed clause 35 from the Bill.


10   Q59 Back

11   Q59 Back

12   HL Deb, 16 December 2013, col 1110 Back

13   HL Deb, 16 December 2013, col 1128 Back

14   HL Deb, 16 December 2013, col 1129 Back

15   Q6 [Jenny Watson] Back

16   Q41  Back

17   Q61 Back

18   Charity Commission written evidence  Back

19   Commission on Civil Society and Democratic Engagement, Non-party campaigning ahead of elections, 10 December 2013, pp 42-43 Back

20   Q63 Back

21   HL Deb, 16 December 2013, col 1034 Back

22   Electoral Commission, Briefing note: Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill, 13 December 2013 Back

23   HL Deb, 16 December 2013, col 1043 Back

24   Q33 [Jenny Watson] Back

25   Q33 [Jenny Watson] Back

26   Commission on Civil Society and Democratic Engagement, Non-party campaigning ahead of elections, 10 December 2013, p 9 Back

27   Electoral Commission, House of Lords Report Stage Briefing Note, 15 January 2014 Back

28   Q9 Back

29   Q1 Back

30   Q59 Back

31   Q12 Back

32   Commission on Civil Society and Democratic Engagement, Non-party campaigning ahead of elections, 10 December 2013, p 10 Back

33   Electoral Commission,Briefing note:Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill, 13 December 2013 Back

34   HL Deb, 16 December 2013, col 1041 Back

35   Q62 Back

36   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government'slobbying Bill: Volume III, written evidence  Back

37   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government'slobbying Bill: Volume III, written evidence  Back

38   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14, The Government's lobbying Bill, para 74 Back

39   HC Deb, 10 September 2013, col 857 Back

40   HC Deb, 9 October 2013, col 202 Back

41   Electoral Commission, Briefing Note, 9 October 2013 Back

42   Q1 Back

43   Q42 [Elizabeth Chamberlain] Back

44   Commission on Civil Society and Democratic Engagement, Non-party campaigning ahead of elections, 10 December 2013, p 12 Back

45   Commission on Civil Society and Democratic Engagement, Non-party campaigning ahead of elections, 10 December 2013, pp 7-8 Back

46   Electoral Commission, A regulatory review of the UK's party and election finance laws: Recommendations for change, June 2013, p 8 Back

47   Electoral Commission, Briefing Note, 13 December 2013 Back

48   Electoral Commission, Briefing Note, 13 December 2013 Back

49   Commission on Civil Society and Democratic Engagement, Non-party campaigning ahead of elections, 10 December 2013, p 8 Back

50   HL Deb, 16 December 2013, col 1098 Back

51   HL Deb, 16 December 2013, col 1100 Back

52   HL Deb, 15 January 2014, col 279 Back

53   Q292 Back

54   Political and Constitutional Reform Committee, The Government's lobbying Bill, para 78 Back

55   Q17 Back

56   Q65 Back

57   HL Deb, 16 December 2013, col 1041 Back

58   Q40 Back

59   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government's lobbying Bill: Volume III, written evidence Back

60   Q202 Back

61   Political and Constitutional Reform Committee, The Government's lobbying Bill, para 82 Back

62   Q1 Back

63   Qq19-20 Back

64   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government's lobbying Bill: Volume III, written evidence Back

65   Commission on Civil Society and Democratic Engagement, Non-party campaigning ahead of elections, 10 December 2013,p 8 Back

66   Q67 Back

67   Q67 Back

68   Q54 Back

69   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government's lobbying Bill: Volume III, written evidence Back

70   Electoral Commission, Briefing Note, 13 December 2013 Back

71   Q21 Back

72   Q36 [Jenny Watson] Back

73   HL Deb, 18 December 2013, col 1300 Back

74   Q58 [Karl Wilding] Back

75   Commission on Civil Society and Democratic Engagement, Non-party campaigning ahead of elections, 10 December 2013,, p 9 Back

76   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government's lobbying Bill: Volume III, written evidence Back

77   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government's lobbying Bill: Volume III, written evidence Back

78   Q27 Back

79   Electoral Commission, Briefing Note, 13 December 2013 Back

80   Electoral Commission, Briefing Note, 15 January 2014 Back

81   HL Deb, 15 January 2014, col 310 Back

82   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government's lobbying Bill: Volume III, written evidence Back

83   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government's lobbying Bill: Volume III, written evidence Back

84   Political and Constitutional Reform Committee, Seventh Report of Session 2013-14,The Government's lobbying Bill: Volume III, written evidence Back

85   Q29 Back


 
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Prepared 24 January 2014