House of Lords - Explanatory Note
Political Parties, Elections And Referendums Bill - continued          House of Lords

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Clause 8 : Involvement of Commission in changes in electoral procedures

48.     Clause 8 provides for the involvement of the Electoral Commission in pilot schemes to test new electoral procedures conducted under section 10 of the Representation of the People Act 2000. Section 10 of the 2000 Act enables local authorities to conduct pilot schemes, with the approval of the Secretary of State, to test alternative procedures as to when, where or how voting at local government elections is to take place, or how the votes cast at such elections are to be counted. Clause 8 enables the Commission to co-sponsor particular pilot schemes in conjunction with a local authority. The clause also confers on the Commission the functions in relation to pilot schemes and the roll-out of successfully piloted electoral innovations which are set in sections 10 and 11 of the 2000 Act, as amended by paragraphs 14 and 15 of Schedule 20 to the Bill.

Clause 9 : Giving of advice and assistance

49.     Clause 9 empowers the Commission to provide advice and assistance to local authorities, the devolved administrations and international bodies. Under this provision the Commission could, for example, provide assistance to the National Assembly for Wales with the conduct of a poll under section 36 of the Government of Wales Act 1998, to the Scottish Executive with a review of aspects of the law in respect of local elections in Scotland and to the United Nations or the Commonwealth with the organisation or monitoring of elections in another member state.

50.     Subsection (3) also enables the Commission to provide advice and assistance to registration and returning officers, registered political parties, recognised third parties (within the meaning of clause 83), permitted participants in a referendum campaign (within the meaning of clause 100), and others. The Commission is expected to take over from the Home Office the functions of promoting best practice in the way in which registration and returning officers discharge their functions under the Representation of the People Acts and other enactments relating to elections.

Clause 10 : Broadcasters to have regard to Commission's views on party political broadcasts

51.     Clause 10 provides that the Commission's broad oversight of the way elections are conducted should extend to providing guidance on party political broadcasts. At present, sections 36 and 107 of the Broadcasting Act 1990 provide for the Independent Television Commission and the Radio Authority to draw up conditions requiring a licence holder both to include party political broadcasts in its services and to observe any rules in relation to party political broadcasts which the Commission or Authority may determine. The Independent Television Commission and the Radio Authority may determine the political parties on whose behalf party political broadcasts may be made and the length and frequency of such broadcasts. The British Broadcasting Corporation and Sianel Pedwar Cymru are not subject to any similar statutory requirement, but nonetheless provide air time for party political broadcasts as part of their role as public service broadcasters.

52.     The Neill Committee suggested that, while it should not be for the government to direct that broadcasters provide party political broadcasts, there could be a role for the Electoral Commission in putting forward non-binding views in relation to, for example, the scheduling of broadcasts. Clause 9 would require the Independent Television Commission and the Radio Authority, in determining the rules provided for under sections 36 and 107 of the Broadcasting Act 1990, to have regard to the views of the Electoral Commission. Subsection (3) would place the British Broadcasting Corporation and Sianel Pedwar Cymru, in determining their policy with respect to party political broadcasts, under a similar duty. It is not intended that these provisions should give the Commission a prescriptive role in relation to editorial and broadcasting decisions, which are properly a matter for the broadcasters themselves, nor is it intended that broadcasters should be required to seek the views of the Commission before deciding whether to transmit each and every party political broadcast.

Clause 11 : Policy development grants

53.     Clause 11 provides for the Commission to develop and, once it is approved by the Secretary of State, administer a scheme for the payment of policy development grants to registered political parties. It will be for the Commission to propose, and the Secretary of State to approve, the formula or criteria by which such grants are allocated to eligible political parties. Subsection (1) restricts the making of such grants to parties which are represented by at least two sitting Members of the House of Commons (in the current Parliament there are eight such parties: Labour, Conservative, Liberal Democrat, Ulster Unionists, Scottish National Party, Plaid Cymru, Social Democratic and Labour Party and Democratic Unionist Party). The purpose of such grants will be restricted to the development of policies which are to form part of individual parties' political platforms; it is not intended that they be used for the development of parties' internal policies or in respect of their organisation and administration. Subsection (8) limits the total amount of disbursements under such a scheme to £2 million in any financial year.

Clause 12 : Education about electoral and democratic systems

54.     Clause 12 of the Bill provides for the Commission to have a role to play in encouraging voters' participation in the democratic process by enabling it both to carry out programmes of education or information and to provide financial assistance to other bodies carrying out such programmes. The scope of this clause is intended to be such that such voter education is not restricted to addressing the mechanics of exercising the vote but is also able to address, through attention to the role of government and other elected bodies both at local, national and European level, the purpose and importance of exercising the vote.

Commission's electoral boundary functions

Clause 13 : Boundary Committees

55.     Clause 13 requires the Electoral Commission to establish four Boundary Committees, one for each part of the United Kingdom. These Boundary Committees will take on the functions of the Parliamentary and Local Government Boundary Commissions transferred to them under the provisions of clauses 15, 17 and 18. Each Boundary Committee will be chaired by an Electoral Commissioner and include at least two other members who must be either Electoral Commissioners or Deputy Electoral Commissioners (appointed under the provisions of clause 14). The minimum membership of three for each Boundary Committee reflects the size of the Parliamentary Boundary Commissions (paragraph 2 of Schedule 1 to the Parliamentary Constituencies Act 1986 provides for the appointment of four Commissioners, but the Chairman in each case, the Speaker of the House of Commons, does not take part in the Commissions' deliberations). It is expected that where the functions of a Local Government Boundary Commission are transferred to a Boundary Committee, the membership of that committee would be increased (the Local Government Commission for England currently has a membership of seven). Subsection (5) provides for the appointment of assessors to the Boundary Commissions who will provide expert advice on population changes and on mapping. The subsection mirrors the equivalent provision in respect of the Parliamentary Boundary Commission contained in paragraph 5 of Schedule 1 to the Parliamentary Constituencies Act 1986 (Schedule 21 to the Bill provides for the repeal of this provision).

Clause 15 : Boundary Commissions : transfer of functions

56.     Clause 15 provides for the transfer of the functions of the four existing Parliamentary Boundary Commissions to the Electoral Commission. Although originally established by the House of Commons (Redistribution of Seats) Act 1949, the Parliamentary Boundary Commissions are currently established under section 2(1) of the Parliamentary Constituencies Act 1986. Section 3 of that Act requires each of the Boundary Commissions for England, Scotland, Wales and Northern Ireland to "keep under review the representation in the House of Commons of the part of the United Kingdom with which they are concerned".

57.     In addition to their functions under the Parliamentary Constituencies Act, the Boundary Commissions are also responsible under the devolution legislation for the review of regional boundaries for elections to the devolved legislatures in Scotland and Wales. The relevant statutory provisions in each case are:

     a)     Schedule 1 to the Scotland Act 1998; and

     b)     Schedule 1 to the Government of Wales Act 1998.

Clause 17 : Local Government Commission for England

58.     Subsection (1) empowers the Secretary of State (in this case the Secretary of State for the Environment, Transport and the Regions) to transfer the functions of the Local Government Commission for England to the Electoral Commission.

59.     The Local Government Commission for England was established by section 12 of the Local Government Act 1992 to carry out the functions given to it by Part II of that Act. The principal functions of the Commission under the 1992 Act are to review local government areas in England and make recommendations to the Secretary of State on whether or not changes to local authority structure, boundaries and electoral arrangements would be desirable. The Commission also has functions in connection with the review of parishes under sections 13 and 19 of the Local Government and Rating Act 1997. Finally, the Commission has functions in relation to the electoral arrangements for the Greater London Authority under Schedule 1 to the Greater London Authority Act 1999.

Clause 18 : Local Government Boundary Commission for Wales

60.     Subsection (1) empowers the National Assembly for Wales to transfer to the Electoral Commission the functions of the Local Government Boundary Commission for Wales ("the Welsh Commission"). The Welsh Commission was established by section 53 of the Local Government Act 1972 to carry out the functions given to it by Part IV of that Act, as amended by the Local Government (Wales) Act 1994. The principal functions of the Welsh Commission are to review local government areas and electoral arrangements in Wales, with a view to considering whether or not to make proposals to the National Assembly for Wales for effecting changes which appear to the Commission to be desirable in the interests of effective and convenient local government.

Part II: Registration of political parties

61.     The purpose of Part II of the Bill is to put in place arrangements for bringing political parties within the scheme of control set out in Parts III to V for regulating their income and expenditure. These arrangements take the form of a scheme of registration, building upon the existing registration arrangements established under the Registration of Political Parties Act 1998. This Bill would repeal much of that Act (see Schedule 21) and this Part of the Bill re-enacts its provisions but with significant modifications.

Clause 20 : Parties to be registered in order to field candidates at elections

62.     The registration scheme established by the Registration of Political Parties Act 1998 is voluntary in nature. If the controls on income and expenditure set out in the Bill are to be effective, however, then the means by which parties are brought within the ambit of those controls must, to all intents and purposes, be binding upon those parties which it is intended should be subject to those controls. The intention is that the controls on political parties' income and expenditure should apply to any organisation that has a candidate at a relevant election. The purpose of clause 20 is to provide the mechanism by which such organisations are brought within the registration scheme. Its effect is to require that an organisation wishing to put up candidates at a relevant election, as defined in subsection (3), must be registered as a political party with the Electoral Commission. It does so by providing that a person may only stand as a candidate at a relevant election if his nomination paper is accompanied by a certificate authorising his candidature issued by, or on behalf of, the nominating officer of a registered party or if his nomination paper either gives the description "Independent" or gives no description whatsoever. In the case of elections to the Scottish Parliament, the National Assembly for Wales or the Greater London Assembly under the additional member system, a party will only be able to be nominated to stand if it is a registered party; this rule also applies to elections to the European Parliament in Great Britain under the regional list system of election (see subsection (1)(c)).

Clause 21 : The register

63.     Responsibility for maintaining the register of political parties will transfer from the Registrar of Companies (as currently provided for under section 1 of the Registration of Political Parties Act 1998) to the Electoral Commission. But an existing entry in the register made under the 1998 Act will continue to have effect as if made under this Part of the Bill (subsection (2)).

Clause 22 : Office-holders to be registered

64.     Subsection (1) requires each registered party to have three registered office-holders, namely a registered leader, registered nominating officer and registered treasurer. The same person may be registered as the holder of two or three of these offices. Subsections (2) and (3), which relate to the registered leader and registered nominating officer respectively, reproduce the provisions in paragraphs 4(2) and 5(2) of Schedule 1 to the Registration of Political Parties Act 1998. The requirement on registered parties to have a registered treasurer is new. Subsection (4) provides that the registered treasurer must have overall responsibility for the financial affairs of the party and for ensuring compliance with the control on income and expenditure set out in Parts III to V and VII of the Bill. It is made an offence to register as the treasurer of a party a person who, within the past five years, has been convicted of an offence under the provisions of this Bill or in connection with a relevant election.

Clause 23 : Financial structure of registered parties : adoption of scheme

65.     It is intended that the registration process should serve to identify exactly what constitutes a particular registered party for the purposes of these controls. Parties in the United Kingdom are constituted in different ways. Some have a federal structure while others are more centralised. Party structures may also feature relationships between a central organisation and affiliated or associated bodies which may also have a separate and independent existence of their own and which may not necessarily be wholly comprised of members of the party in question. In some instances it may be more appropriate to regard such affiliates or associated bodies, for the purposes of the controls on party funding, as donors to the party rather than a constituent part of the party apparatus.

66.     Clause 23 is, therefore, intended to enable the Electoral Commission to pin down those constituent parts of a registered party's organisation which are to be required to comply, whether separately or through the party's central organisation, with the controls set out in Parts III to V and VII of this Bill. Each party applying for registration must propose a scheme setting out the arrangements for regulating the financial affairs of the party and the scheme must be approved by the Electoral Commission before the application is granted. Where the Commission is not satisfied that the proposed scheme properly reflects the organisation of the party it may request that the proposed scheme be modified. The arrangements for the adoption of schemes in relation to those parties which are already registered under the Registration of Political Parties Act 1998 are set out at clause 31.

67.     Under subsection (8), certain organisations (namely, trade unions, friendly societies, industrial and provident societies and other bodies which may be specified by order) are not to be regarded as forming a constituent part of a party for the purposes of a scheme adopted under this clause. As a result, money donated to such an organisation which is affiliated to a registered party would not be treated as a donation to that party. But a donation from such an organisation to the registered party (including an affiliation fee) would have to be treated as a donation to the party and not simply as an internal party transaction.

68.     Subsection (2) provides for a distinction to be drawn between parties which are to be regarded for the purposes of the Bill as a single unitary organisation and parties which are to be regarded as consisting both of a central organisation and of other units or organisations (for example constituency associations, local branches and women and youth organisations) which will have separate responsibility for their accounts. These subsidiary units or organisations are described as "accounting units". If a party scheme falls into the latter category the party will be required to adopt a scheme clearly identifying which parts of its organisation constitute its central organisation and which constitute its accounting units and will also be required to register a person as the treasurer for each separate accounting unit (subsection (3) and clause 24(2)).

69.     Subsection (7) provides for the adoption of a replacement scheme, for example following changes to a party's structure. A replacement scheme cannot take effect until approved by the Electoral Commission.

Clauses 25 to 29 : Registration

70.     Clauses 25 to 27 re-enact, with modifications, sections 2, 3, 4, 5 and 6(1) to (4) of the Registration of Political Parties Act 1998. Together with Parts I and II of Schedule 3, they set out the procedure for applying for the registration of parties and of their emblems and for making changes to the register. Clause 28 requires the registered treasurer of a party to provide the Electoral Commission with an annual notification that the particulars of a party's entry in the register remain accurate and complete. The annual notification must also provide details of any changes to the party's constitution. This must be provided with the annual statement of accounts (see clause 41).

71.     A party's entry in the register will now contain the following information:

         i)     the registered name of the party;

         ii)     the address of the party's headquarters;

         iii)     the name of the party's registered leader, registered nominating officer and registered treasurer. If one person holds all three offices, the party must name the holder of some other specified office in the party.

         iv)     where a party is a party with accounting units, the name and headquarters address of each accounting unit and the name of the treasurer of each such unit;

         v)     the registered emblems of the party;

         vi)     the name and office address of up to twelve deputy treasurers (see clause 69);

         vii)     the date of registration;

         viii)     any other information prescribed by the Electoral Commission in accordance with paragraph 6 of Schedule 3.

72.     It is possible, under the provisions of clause 29, for a party to apply to be removed from the register. But removal is conditional upon the party declaring that it does not intend to have any candidates at any relevant election, as defined by clause 20(3), and there is the additional safeguard that a party which is removed from the register in accordance with this clause will nevertheless remain subject to the requirements of Parts III and IV of the Bill in relation to its accounts and donations until the end of the financial year following the removal of the party's entry in the register.

Clause 30 : Request by Secretary of State

73.     Clause 30 re-enacts section 12 of the Registration of Political Parties Act 1998. The Commission will normally be requested to send a copy of specified parts of the register to returning officers at the time of a relevant election so that they can verify the names of registered parties.

Clause 31 : Financial structure of existing registered parties

74.     The purpose of clause 31 is to ensure that parties already registered under the Registration of Political Parties Act 1998 (of which there were 115 as of 13 March 2000) make the necessary arrangements to comply with the registration scheme established under the provisions of the Bill. In particular, those parties will be required to submit, within six weeks of commencement of this Part, a draft scheme as required under clause 23. In order that the time taken to consider and approve these schemes (and the work involved in doing so is likely to form a considerable part of the Commission's initial workload) does not delay the application of the requirements of Parts III to V of this Bill, subsection (3) provides that a draft scheme will have effect as if it had been approved by the Commission either until it is in fact approved or until the end of the period of nine months beginning with the date of commencement. If the Commission is not able to approve a draft scheme within that nine-month period it will be able to impose a scheme incorporating such modifications to the proposed scheme as it considers appropriate.

75.     An existing registered party will also be required to submit, again within the six-week period following commencement, details of its registered treasurer (subsection (6)) and, where the party is a party with accounting units, details of the treasurer of each of these units (subsection (7)). Where a party fails to provide either a draft scheme or the other information required under this clause within the time allowed, its registration will be suspended (subsection (10)); the party could not then field candidates at an election.

Clause 32 : Assistance by Commission for existing registered parties

76.     Clause 32 enables the Commission to provide financial and other assistance to existing registered parties to help them meet the initial costs involved in complying with the provisions of Parts III and IV. Up to £500,000, in aggregate, may be allocated to existing registered parties whether in grants or benefits in kind (for example, a computer software programme for recording donations). The method of apportioning this sum to parties will be determined by the Commission in accordance with a scheme prepared by them.

Clauses 33 to 36 : Supplemental

77.     Clauses 33 and 35 re-enact sections 14 and 19 of the Registration of Political Parties Act 1998 respectively. They prevent broadcasters from transmitting a party political broadcast on behalf of a party which is not a registered party, and make it a criminal offence for any person knowingly or recklessly to provide the Electoral Commission with a false statement for the purpose of this Part of the Bill. Clause 34 makes consequential amendments to the parliamentary elections rules set out in Schedule 1 to the Representation of the People Act 1983. Clause 36 defines terms used in Part II (and limits its scope in respect of parties contesting only parish or community council elections). The clause re-enacts, with modifications, the interpretation section (section 22) of the Registration of Political Parties Act 1998.

Part III: Accounting requirements

78.     In paragraph 4.42 of their report, the Neill Committee recommended that the public should be entitled to have access to the annual accounts of income and expenditure of every political party and that this should be put on a statutory basis. Part III of the Bill establishes a statutory scheme for this purpose. Many political parties already prepare, and some of them publish, annual accounts. A statutory scheme has, however, to start from scratch and quite detailed provisions are therefore required. Elements of the proposed scheme are drawn from provisions of Part VI of the Charities Act 1993, which in turn are partly modelled on the Companies Act 1985.

Clause 37 : Duty to keep accounting records

79.     Clause 37 requires the treasurer of a registered party to keep proper accounting records, as a basis for the preparation of an annual statement of accounts. The records must cover both the transactions which the party enters into and its assets and liabilities. They must be preserved for at least six years from the end of the financial year in which they are made (subsection (4)), or until the Electoral Commission has consented to their disposal following de-registration of the party (subsection (5)).

80.     Political parties in the United Kingdom do not at present share a common accounting year. The Neill Committee recommended (recommendation 4) that the Commission should be able to prescribe a common accounting period. Subsection (6) confers the necessary power on the Electoral Commission to specify a common financial year, but it may also specify different financial years for different parties, which might be done so as to enable parties to retain their existing financial year.

Clause 38 : Annual statement of accounts

81.     Clause 38 establishes a requirement to prepare an annual statement of accounts. Subsection (2) empowers the Electoral Commission to make regulations specifying the form and contents of a statement of accounts. The intention is that, over time, the Commission should be able to require best practice to be followed and ensure that the parties' accounts can be fairly compared with each other. The regulation-making power may be used, in particular, to specify information which is to be provided by way of notes to the accounts. The Commission could exercise this power to require, for example, that the notes to the accounts list all disclosable donations to the party in the period covered by the accounts.

82.     The Commission may prescribe different requirements according to whether the income or expenditure of a party falls into one of three bands (up to £5,000, between £5,000 and £250,000; over £250,000). The intention is that, where a party has only a small turnover, the Electoral Commission should be able to apply a 'light touch' regime requiring only a simple annual statement.

Clause 39 : Annual audits

83.      Clause 39 requires a party which has an annual income or expenditure exceeding £250,000 in any financial year (this threshold parallels that which applies to charities) must have its accounts audited within six months of the end of the financial year. The Electoral Commission may also require the accounts of any other party to be similarly audited within three months of it so directing. If a party fails to comply with an auditing requirement, the Commission may appoint a qualified auditor to audit the party's accounts and the cost will be recoverable by the Commission from the party concerned. Subsection (6) enables the Electoral Commission to make regulations about the appointment and removal of auditors and specifying the duties of auditors carrying out an audit in accordance with this clause.

Clause 40 : Supplementary provisions about auditors

84.     Clause 40 provides for an auditor to have access to the party's records and to be entitled to require the party's treasurer or other party officers to provide necessary information and explanations. If access or information is denied, the Electoral Commission may give written directions requiring a person to provide an auditor with access or information and, if those directions are not complied with, the Commission can in the last resort apply to the High Court for the offending person to be held in contempt of court and treated accordingly.

Clause 41 : Submission of statements of accounts etc. to Commission

85.     Clause 41 requires the treasurer of a registered party to submit its statement of accounts (and, in appropriate cases, the auditor's report) to the Electoral Commission. Statements of accounts must be submitted within three months of the end of a party's financial year or, where the party's accounts are required to be audited, within six months of the end of the financial year. Subsection (3) allows the Commission to extend the period for submission of these documents in particular cases for any special reason. A party's registered treasurer must submit with the annual statement of accounts the notification (required under clause 28(1)) detailing any changes to the party's entry in the register of political parties.

Clause 42 : Public inspection of parties' statements of accounts

86.     Clause 42 requires the Electoral Commission to make parties' statements of accounts available for public inspection as soon as practicable following their receipt.

Clause 43 : Criminal penalty for failure to submit proper statements of accounts

87.     Clause 43 creates criminal offences for failure to comply with the provisions of Part III. The offences are intended to catch a failure to duly prepare, as well as a failure to duly deliver, a statement of accounts. Subsections (2) and (3) contain defences.

Clause 44 : Revision of statement of accounts

88.     Clause 44 makes provision for the revision of statements of accounts which do not comply with the Commission's regulations. The clause is based on like provisions as to companies' accounts in sections 245 to 245B of the Companies Act 1985, as substituted by the Companies Act 1989.

Clause 45 and Schedule 4 : Division of responsibilities in case of party with accounting units

89.     Clause 45 has the result that where a party is a party with accounting units (as defined in clause 23), the central organisation of the party and each of the party's accounting units are independently responsible for complying with the accounting requirements as set out in Part III. This means that, in the case of a national party with a network of constituency associations and ward-level branches, each association and branch will maintain their own accounting records and produce their own annual statements of accounts, thereby absolving the central organisation from having to produce omnibus accounts for the whole party. The provisions of clauses 37 to 44 are applied, with adaptations, to accounting units by Schedule 4. Under paragraph 6(1) of Schedule 4 the requirement to submit an annual statement of accounts to the Electoral Commission will only apply automatically to accounting units which have an income or expenditure exceeding £25,000. However, paragraph 6(2) enables the Electoral Commission to require any other accounting unit to send to the Commission their statement of accounts and any auditor's report. Only those statements of accounts submitted to the Commission are open for public inspection under the Bill.

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Prepared: 17 March 2000