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

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Clause 101 : Declarations and notifications for purposes of section 100

185.     Clause 101 sets out the requirements in respect of declarations made by registered parties and of notifications made by individuals, companies and unincorporated associations. These include, in the case of companies and unincorporated associations, a requirement that the notification include the name of the person or officer responsible for ensuring compliance with the accounting and disclosure provisions of this Part (ie. the "responsible person"). Subsection (5) makes provision for a permitted participant to notify the Commission if any of its notified details are subject to change during the referendum period.

Clause 102 : Register of declarations and notifications for the purposes of section 100

186.     Clause 102 requires the Electoral Commission to maintain, for each referendum, a register of political parties which have made a declaration under clause 101 and of other persons who have given a notification under that clause.

Clause 103 : Designation of organisations to whom assistance is available

187.     Section 3 of the Referendum Act 1975 identified two umbrella campaign organisations ('Britain in Europe' and the 'National Referendum Campaign') which had emerged since the then government announced its intention to hold a referendum on continued membership of the Common Market. Clause 103 enables the Electoral Commission to designate similar umbrella organisations in any referendum to which Part VII applies.

188.     Where there are only two possible outcomes in a particular referendum (as has been the case with seven of the eight national or regional referendums held to date), subsection (2) provides that the Commission may designate one umbrella organisation for each of these outcomes. The Commission may not designate an umbrella campaign organisation for one side but not the other.

189.     Where there are more than two possible outcomes (as was the case in the 1997 referendum on Scottish devolution), the Commission may designate an umbrella organisation for each of the possible outcomes specified by the Secretary of State (subsections (3) and (4)).

Clause 104 : Applications for designation under section 103

190.     Clause 104 sets out the procedure and timetable for applications for designation and the basis on which the Commission is to determine such applications. The whole process, which commences at the start of the referendum period determined in accordance with clause 98, takes a maximum of six weeks (four weeks for applications to be submitted and two weeks for the Commission to come to a decision), although there is a power (in subsection (6)) to vary the timetable by order.

191.     The criterion for determining applications (namely, "whichever of the applicants appears to the Electoral Commission to represent to the greatest extent those campaigning for that outcome") is similar to that employed in respect of the 1975 referendum where the Government undertook to identify two organisations "which adequately represent" each side of the question (see paragraph 40 of the White Paper 'Referendum on United Kingdom Membership of the European Community', February 1975, Cmnd 5925). Under subsection (5) it is possible for the Commission to decide that none of the applicant organisations in relation to a particular outcome qualifies to be designated. Where that is the case, clause 103(2) would require that no organisation be designated in respect of any of the possible outcomes of the referendum.

Clause 105 and Schedule 11 : Assistance available to designated organisations

192.     Clause 105 and Schedule 11 confer certain benefits on designated umbrella organisations. Subsection (2) of clause 105 provides that the Commission may award each designated organisation a grant of up to £600,000. This figure is broadly the equivalent at today's prices of the £125,000 grant paid to the umbrella organisations in the 1975 referendum under the provisions of section 3 of the Referendum Act 1975. All umbrella organisations designated in connection with a particular referendum must receive the same level of grant. Such grants are intended to provide a designated campaign organisation with sufficient resources to mount an effective campaign. Subsection (3) enables the Commission to attach such conditions to a grant as they may determine. The conditions attached to the grants made to the umbrella groups in the 1975 referendum included a requirement that the grant be used only for purposes connected with the referendum; a requirement that the accounts were available for audit within two months of the date of the referendum; and that the accounts would be subject to audit by the Comptroller and Auditor General (Accounts of Campaigning Organisations, October 1975, Cmnd 6251). Subsection (4) and Schedule 11 confer benefits on designated referendum campaign organisations similar to those conferred on candidates and political parties at elections, namely:

         a)     the sending of a referendum address free to every household or elector;

         b)     the use of public rooms free of charge for holding public meetings; and

         c)     referendum campaign broadcasts. Under the terms of paragraph 4 of Schedule 11 the broadcasting authorities must, in determining their rules in respect of referendum broadcasts, have regard to any views expressed by the Electoral Commission.

Clause 106 and Schedule 12 : Referendum expenses

193.     Clause 106 defines for the purposes of this Part the terms "referendum expenses", "for referendum purposes" and "referendum campaign". "Referendum expenses" are defined by reference to lists of qualifying expenses set out in Parts I and II of Schedule 12. This Schedule mirrors Schedule 7, which similarly defines qualifying campaign expenditure for the purposes of Part V. As with Schedule 7, Schedule 12 allows for the Electoral Commission to provide guidance through means of a code of practice and for the amendment of Parts I and II of the Schedule by Order made by the Secretary of State.

Clause 107 : Notional referendum expenses

194.     Clause 107 makes provision, equivalent to that in clauses 68 and 81, for treating as referendum expenses the value of any property, services and facilities provided for the use or benefit of an individual or body campaigning in a referendum, either free of charge or at a discount.

Clauses 108 to 111 : General restrictions relating to referendum expenses incurred by permitted participants

195.     In order to ensure proper observance of the limits on referendum expenses by permitted participants, clauses 108 and 109 require that all such expenditure, and any payment in respect of such expenditure, must be authorised or made by the responsible person or a person authorised in writing by him. Similarly, clause 110 requires that any claim for payment in respect of campaign expenditure must be sent to the responsible person or other authorised person. These provisions (and clause 111, which provides for disputed claims) are similar to the provisions in Part II of the Representation of the People Act 1983 concerning election expenditure by candidates and their agents.

Clause 112 : General restriction on referendum expenditure

196.     Clause 112 makes it an offence for a person to incur, during a referendum period, referendum expenses in excess of £10,000 unless they are a "permitted participant" (a term defined in clause 100).

Clause 113 and Schedule 13 : Special restrictions on referendum expenditure

197.     Subsection (1) introduces Schedule 13 which imposes limits on referendum expenses incurred by permitted participants. The limits for participants in a UK-wide referendum are set out in paragraph 2 of Schedule 13.

198.      The limits are as follows:

         a)     for a designated umbrella organisation - £5 million

         b)     for a registered political party a sum based on the percentage of the vote secured by the party at the previous parliamentary general election, namely:

Percentage of UK vote Permitted limit
More than 30%5
20 - 30%4
10 - 20%3
5 - 10%2
Less than 5% 0.5

    c)     other permitted participants - £0.5 million.

199.     If a referendum were held under the provisions of Part VII during the course of the Parliament elected in 1997, the permitted limit for the main political parties would be as follows: Labour (43.2 per cent of the vote) £5 million; Conservative (30.7 per cent) £5 million; Liberal Democrat (16.8 per cent) £3 million. All other political parties secured less than 5 per cent of the UK-wide vote and would consequently have a limit of £500,000.

200.     Paragraph 3 of Schedule 13 provides for the expenses limits in a referendum, which is not a UK-wide referendum, to be determined by order. Subsection (2) of clause 113 makes it an offence for a permitted participant to incur referendum expenses in excess of the permitted limit.

Clause 114 and Schedule 14 : Control of donations to permitted participants

201.     Clause 114 gives effect to Schedule 14 which provides for controls on donations to permitted participants in referendum campaigns. Part I of Schedule 14 defines donations to permitted participants in a referendum in terms equivalent to those in clauses 46 to 48 in respect of donations to registered parties. Part II of Schedule 14 applies restrictions on the acceptance of donations equivalent to those in clauses 49 to 56. Part III of Schedule 14 requires that the return as to referendum expenses, required under clause 115, must include a statement giving details of the source and amount of donations of £5,000 or more (including aggregate sums). The statement must also detail donations received, but rejected, from impermissible or unidentifiable donors. The requirements of this clause and Schedule do not apply to registered parties given that they will be subject to the ongoing controls on donations set out in Part IV.

Clauses 115 to 119 : Returns

202.     Clauses 115 to 119 require a permitted participant which has incurred referendum expenses during any referendum period to make a return to the Electoral Commission as to those expenses. The requirements as to the content, auditing and submission of such a return are similar to those in clauses 91 to 95 governing returns as to controlled election expenditure by third parties. In addition to detailing payments made in respect of referendum expenses, returns by permitted participants (other than registered parties) must also record relevant donations accepted for the purpose of meeting referendum expenses.

Clause 120 : Restriction on publication etc. of promotional material by central and local government, etc.

203.     Clause 120 prohibits the government of the day, a local authority or any other publicly funded body from publishing, displaying or distributing promotional material in relation to a referendum in the 28 days prior to the date of the poll. The prohibition applies to material addressed or made available to the public at large but not to material specifically requested by a member of the public. The provisions of this clause do not apply to the Electoral Commission, which could therefore, for example, publish material designed to encourage voting in a referendum.

Clause 121 : Other publications to contain details of printer and publisher

204.     To assist the Electoral Commission to identify who is behind referendum publications, and therefore who has incurred referendum expenses, clause 121 requires advertisements or other documents relating to a referendum to include the name and address of the printer and publisher, together with the name of any person or body on whose behalf the advertisements are published. This mirrors an existing provision in section 110 of the Representation of the People Act 1983 in respect of election publications.

Clause 122 : Referendum campaign broadcasts

205.     Clause 122 requires that broadcasters may only include a referendum campaign broadcast in their broadcast services if it is made on behalf of an organisation designated by the Electoral Commission under the provisions of clause 103. This requirement together with that on broadcasters as to impartiality is intended to ensure that, in any referendum, each side of the campaign will have equal access to free airtime for referendum broadcasts. The two umbrella bodies in the 1975 referendum were each awarded free airtime for four ten-minute television broadcasts and three ten-minute and two five-minute radio broadcasts. Attempts to provide referendum broadcasts in the 1979 devolution referendums foundered following the decision of the Scottish courts in the case of Wilson v Independent Broadcasting Authority which held that the IBA, in deciding to allocate a broadcast to each of the four Scottish parliamentary political parties (which divided three to one in favour of devolution) had acted in breach of its statutory duty to ensure that programmes broadcast on the subject of the referendum maintained a proper balance.

Clauses 123 and 124 : Conduct of referendums

206.     Clause 123 makes arrangements for the counting of votes in a referendum. The clause designates the Chairman of the Electoral Commission as the Chief Counting Officer in any referendum to which Part VII applies (save in the case of a referendum held in Northern Ireland only where the Chief Electoral Officer is designated the Chief Counting Officer). The Chief Counting Officer is required to appoint a counting officer for each relevant local government area in Great Britain (the Chief Electoral Officer will be the counting officer in Northern Ireland) who will be responsible for certifying the result in that area before the result as a whole is certified by the Chief Counting Officer. Clause 124 confers a power on the Secretary of State to make provision, by order, for regulating the conduct of referendums. Such an order may, in particular, create criminal offences and apply, with modifications, the provision of other enactments. The intention is to use the order-making power to apply those provisions of the Representation of the People Acts and Regulations that relate to the administration of a referendum poll (polling hours; arrangements for postal and absent voting; issue of polling cards etc.).

Part VIII : Election campaigns and proceedings

Clause 125 and Schedule 15 : Control of donations to candidates

207.     Clause 125 and Schedule 15 inserts new section 71A and new Schedule 2A in the Representation of the People Act 1983. The new section gives effect to the new Schedule which provides for controls on donations to candidates made for the purpose of meeting election expenses. Part I of new Schedule 2A defines donations to candidates in terms equivalent to those in clauses 46 to 48 in respect of donations to registered parties. Part II of new Schedule 2A applies restrictions on the acceptance of donations equivalent to those in clauses 49 to 56. Part III of new Schedule 2A requires that the return as to election expenses, required under section 81 of the 1983 Act, must include a statement giving details of the source and amount of donations of £50 or more. The statement must also detail donations received, but not accepted, from impermissible or unidentifiable donors.

Clause 126 : Limitation of candidates' election expenses

208.     Clause 126 amends section 76 of the Representation of the People Act 1983. Subsection (2) inserts a new section 76(1) in place of the existing provision. The effect of the new subsection is to align this provision with the new definition of election expenses in new section 90A (inserted by clause 127). The new subsection also makes clear that expenses authorised in writing by the election agent count towards the maximum expenditure limit. Subsection (4) inserts new subsection (1B) into section 76 of the 1983 Act. This new subsection re-casts the criminal offence of exceeding the election expenses limit so that it is in similar terms to parallel offences created by this Bill in respect of, for example, campaign expenditure by political parties. Subsection (3) makes consequential amendments to section 76(1A) which is concerned with elections to the Greater London Authority.

209.     Under section 76(2) of the 1983 Act, the expenditure limit for parliamentary by-elections is presently limited by a formula based upon whether the constituency is a borough or a county constituency and the number of registered voters in the constituency (the average is some £34,000). The Neill Committee observed that the limits on by-election expenditure imposed by the existing formula were unrealistic, given the intensity of by-election campaigns, and recommended that a higher maximum be set. Subsection (5) increases to £100,000 the maximum amount a candidate may spend at a parliamentary by-election. This new flat rate limit applies to all constituencies.

Clause 127 : Meaning of "election expenses"

210.     Restrictions on candidates' expenses are currently applied by Part II of the Representation of the People Act 1983. For the purposes of that Part, section 118 of the 1983 Act defines "election expenses" in relation to an election as "expenses incurred, whether before, during or after the election on account of or in respect of the conduct of management of the election".

211.     The purpose of clause 127 which inserts new sections 90A to 90C, is to clarify the meaning of "election expenses". In particular, these new sections provide for benefits in kind given to candidates to be regarded as election expenses. In doing so, they bring the 1983 Act's treatment of notional expenses into line with the provisions of the Bill in respect of campaign expenditure by political parties, controlled expenditure by third parties (as defined in Part VI) and referendum expenses by permitted participants (as defined in Part VII).

212.     New section 90A of the 1983 Act defines "election expenses" as any expenses incurred for the acquisition or use of property or for the provision of services or facilities which is or are used for the purposes of the candidate's election. Subsection (3) provides for a number of exemptions from the definition of "election expenses", including the payment of the candidate's deposit, material relating to the election published in a newspaper or periodical or included in a broadcast service (other than advertisements), facilities made available to candidates under the 1983 Act (for example, free mailing facilities), and the provision of services by a person free of charge and in his own time.

213.     New section 90B is concerned with the calculation of election expenses incurred for the purposes of new section 90A. Subsection (1) deals with the valuation of property, goods, services or facilities acquired direct by the candidate or his agent. Subsection (2) is concerned with the apportionment of the cost of property, goods, services or facilities which is or not used exclusively for the purposes of the candidate's election. Such apportionment may be appropriate, for example, where parliamentary and local government elections are held on the same day and a party's candidates for such elections jointly acquire premises to act as their campaign headquarters in respect of both elections.

214.     New section 90C makes provision for treating as election expenses the value of any property, goods, services or facilities provided for the use of a candidate either free of charge or at a discount.

Clause 128 : Meaning of "candidate"

215.     Clause 128 amends the definition of a "candidate" in section 118 of the Representation of the People Act 1983. The definition of a candidate is relevant to determining the date from which the restrictions on incurring election expenses apply. The revised definition makes two substantial changes. First, in relation to the definition for both a parliamentary and local government candidate the reference to a candidate who is elected is omitted; this will ensure that sitting MPs and councillors are treated on an equal footing with other candidates. The second change is that the definition of a local government candidate now includes a starting time for a person's candidature, namely the last day for the publication of the notice of election (that is, 25 working days before the date of the election). To avoid election expenses being incurred before that time in an attempt to evade the limit on election expenditure, new section 90A(2) of the 1983 Act (as inserted by clause 127) provides that any expenditure on property, goods, services or facilities purchased in advance of the relevant time, will nonetheless need to be accounted for as election expenses.

Clause 129 : Corrupt and illegal practices : consequences for persons convicted of such practices

216.     Clause 129 substitutes a new section 173 of the Representation of the People Act 1983 for the existing provision. At present section 173 of the 1983 Act precludes a person convicted of a corrupt practice from sitting in the House of Commons or holding any public or judicial office, but there is no such provision in respect of conviction for an illegal practice. Section 173 as substituted by this clause brings the consequences of conviction for an illegal practice into line with those for conviction for a corrupt practice. Subsections (3) and (4) of the new section 173 are intended to clarify the law in respect of the vacation of a seat or office following conviction for a corrupt or illegal practice. The vacation of a seat or office under subsection (3) will be final. However, subsection (4) makes provision for a stay of vacation where a notice of appeal against conviction is given, until either the determination of that appeal or the end of a period of three months whichever is sooner. The revised section 173 clarifies the statutory provisions following the Divisional Court's decision of 30 April 1999 in the case of Fiona Jones. In its revised form section 173 will now deal only with the electoral consequences of a conviction for a corrupt or illegal practice. The loss of any public or judicial office (other than an elected office) will henceforth be dealt with under the normal conditions of employment for such offices.

Clause 130 and Schedule 16 : Corrupt and illegal practices: election petitions etc.

217.     Clause 130 introduces Schedule 16 which amends the provisions of the Representation of the People Act 1983 in respect of the procedure on election petitions and the consequences of reports by election courts. The changes to the 1983 Act made by Schedule 16 in respect of election petitions are largely by way of repeal of provisions which are no longer considered necessary to the effective operation of the petitioning procedures.

Clause 131 and Schedule 17 : Election campaigns and proceedings: miscellaneous amendments

218.     Clause 131 introduces Schedule 17 which makes various changes to Parts II and III of the Representation of the People Act 1983. Paragraphs 2, 4, 7 and 8 of Schedule 17 repeal provisions of the 1983 Act which are considered out of date and no longer serve a useful purpose.

219.     Paragraph 3 of Schedule 17 amends section 81 of the 1983 Act principally to omit the requirement that the form of return for candidates' election expenses should be that in Schedule 3 to that Act. The form of return in Schedule 3 is now considered out of date referring, for example, to telegrams but not to modern forms of communication. New section 81(6) of the 1983 Act, inserted by paragraph 3(5), instead provides that the Electoral Commission may set out a form of return in regulations.

220.     Paragraph 5 of Schedule 17 inserts new section 87A into the 1983 Act. This new section places a duty on returning officers in respect of parliamentary elections and elections of the Mayor of London to forward returns as to election expenses to the Electoral Commission. As regards other local government elections, the returning officer is required to forward a copy of a particular return if requested to do so by the Commission. This provision links into the Commission's functions of monitoring compliance with the restrictions on candidates' election expenses contained in clause 135 of the Bill.

221.     Paragraph 11 of Schedule 17 repeals various provisions of the 1983 Act relating to legal proceedings; such matters are now dealt with by rules of court.

Part IX : Political donations and expenditure by companies

Clauses 132 and Schedule 18 : Control of political donations by companies

222.     The general purpose of clause 132 and Schedule 18 is to require directors of companies to seek the approval of the company in general meeting to the making of political donations to political parties or organisations or to the incurring of expenditure for political purposes. At present the making of political donations and expenditure by a company on other political purposes is left to the general discretion of the directors and the management of the company. As a result of the Bill the detailed arrangements will continue to lie with the directors, but it will not be lawful for such action to be taken unless approved in advance by the company in general meeting.

223.     Part IX of the Bill goes further than the regulation of political funding in the United Kingdom and covers the approval of company donations to political parties and organisations in other member states of the European Union. This reflects the potential for the views of political parties based in other member states to have a direct impact on the commercial climate in the UK through bodies such as the European Parliament.

224.     The regime for control of political donations and expenditure is set out in Schedule 18 of the Bill, which inserts new Part XA (comprising new sections 347A to 347J) into the Companies Act 1985.

225.     Part IX of the Bill does not extend to Northern Ireland, which has separate company law.

New Section 347A : Introductory provisions

226.     New section 347A establishes the general purpose of the new sections on control of political donations and expenditure by companies, as set out above. In addition, it provides the following definitions in respect of new sections 347A to 347J:

         a)     "director" includes shadow director;

         b)     "donation" means anything that would constitute a donation under sections 46 and 47 of the Bill;

         c)     "EU political expenditure" means any expenditure incurred by a company in respect of the preparation, publication or dissemination of any advertising or other promotional material which could reasonably be regarded as intended to affect public support for any EU political organisation;

         d)     "EU political organisation" means either a registered party or any other organisation which carries on, or proposes to carry on, any activities of a political nature.

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Prepared: 17 March 2000