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Lord Bassam of Brighton moved Amendment No. 137A:

On Question, amendment agreed to.

[Amendments Nos. 137B and 138 not moved.]

Lord Bach: This may be a convenient moment at which to adjourn the Committee stage. I suggest that the Committee stage begins again at 8.30 p.m.

[The Sitting was suspended from 7.26 to 8.30 p.m.]

Lord Bach moved Amendment No. 138A:

    Page 29, line 41, at end insert--

("(da) a building society (within the meaning of the Building Societies Act 1986);
(db) a limited liability partnership registered under the Limited Liability Partnerships Act 2000, or any corresponding enactment in force in Northern Ireland, which carries on business in the United Kingdom;").

The noble Lord said: Although long in number, this group of amendments deals with a comparatively short point. In moving Amendment No. 138A, I shall speak also to the other amendments in this group.

The amendments respond to representations that the Government have received from the Building Societies Association. As Clause 49(2) currently stands--we discussed this clause at some length before the adjournment--a building society could not be a permissible donor to a political party. The association has argued that it would be inappropriate to exclude building societies from the list of permissible donors when companies, friendly societies and others are included in the list and therefore able to make donations. We agree. Accordingly, Amendment No. 138A seeks to add building societies incorporated under the Building Societies Act 1986 to the list of permissible donors. Whether a building society chooses to make a donation to a political party is entirely a matter for the society concerned.

Amendment No. 138A also adds limited liability partnerships, or LLPs, to the categories of permissible donor. The Committee will be aware that earlier this Session the House passed what is now the Limited Liability Partnerships Act 2000. That Act creates a new form of legal entity, the limited liability partnership, which will be a body corporate and exist as a legal person separate from its members. This new legal status and the limited liability that goes with it will be attractive to firms of solicitors, accountants and other professions which currently operate as partnerships or, in some cases, as companies. In their current guise, those firms would come within the definition of a permissible donor. It is right that they should continue to be able to make donations to political parties in the event that they changed their legal status to that of an LLP.

Where a building society or LLP has made a recordable donation to a registered party, Amendment No. 168B to paragraph 2 of Schedule 5 sets out the information about the donor that the party concerned must submit to the electoral commission. Having

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established building societies and LLPs as permissible donors, it is appropriate that they should also be able to become recognised third parties in an election campaign or a permitted participant in a referendum campaign. Accordingly, Amendments Nos. 210A and 231A make the necessary changes to Clauses 83 and 100 respectively to enable them to do so.

As a result of the last two named amendments, the categories of recognised third parties and permitted participants will exactly mirror the categories of permissible donor, save in one important respect. This one exception relates to individuals. Under Clause 49(2)(a) only a person registered to vote may be a permissible donor. In Clauses 83 and 100 we have not sought to prevent foreign nationals resident in the United Kingdom, who are ineligible to vote, from spending money in their own name in order to express their opinion and by extension influence the outcome of an election or referendum. It is one thing to prevent a foreign national donating money to a political party to help further that party's political objectives, but we believe that it is quite another to place absolute or disproportionate restrictions on the ability of a person to publicise his or her own views.

Amendments Nos. 210C and 232F would amend Clauses 83(3) and 101(4) respectively in order to clarify the information that must be provided to the electoral commission by a body wishing to become a recognised third party or permitted participant. The other amendments in this group are of a minor, technical or drafting nature. I beg to move.

Viscount Astor: I have a few questions for the Minister. Perhaps I may start with building societies. I understand that his amendment would make a building society a permissible donor. Under the rules, if a company wishes to give money to a political party, it will have to obtain shareholder permission. Indeed, under existing rules, that has to be put in the company's accounts. How will that proposal work with a building society? What is the analogy? A building society does not have shareholders but depositors, all of whom are, in effect, part of the building society. What will happen? Will the building society be able to give political donations whether they want to or not? Will they have to ask permission of all depositors or will a decision be made by the board, which would be rather different from the position in relation to the rules regarding companies?

Under the proposed system, a board of a company cannot arbitrarily say that it wishes to give money to one party or another. There has to be a form of shareholder approval for political donations. Perhaps the Minister could enlighten the Committee on building societies and how the Government's proposal will work.

Amendment No. 138A would allow limited liability partnerships to make political donations. I am not an expert on the law relating to partnerships. I rather hope that the Minister is. Indeed, I am sure that in his prior incarnation he knew much about limited liability partnerships, and I look forward to his reply. The amendment concerns limited liability partnerships.

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What about partnerships which are not limited? I refer, for example, to veterinary practices or even, indeed, firms of solicitors. Will they be bound by the rules relating to individuals or the rules relating to partnerships? Who will decide? Will non-limited liability partnerships be allowed to make donations? If so, what provision will they fall under? Perhaps the Minister could enlighten the Committee on those two important points.

I turn to the final point made by the Minister: foreign donations. I am sure that the Minister explained this matter clearly. I tried to follow the thrust of what he said, but I have slight reservations about it. However, I shall carefully study Hansard. If I have any questions on the point after having done so, perhaps I may write to the Minister, rather than have a discussion now. I should be grateful for his reply on building societies and non-limited liability partnerships.

Lord Hodgson of Astley Abbotts: I have to declare an interest as a director of a building society. This is something that has arisen at our board meetings and I shall be interested to hear the Minister's response.

We are a mutual society in the urban West Midlands. I find it hard to conceive of circumstances in which we would wish to make donations to a political party, bearing in mind our mutual nature and the fact that we regard ourselves as the "safeguarder" of people's savings and, for most people, probably the most important single transaction in their lives: the purchase of their home. It is important that we have clear guidance as to how the provision will operate and how mutual societies will be able to ensure that the wishes of their members, which will cover the entire political spectrum, are properly complied with.

Lord Bach: Extremely apposite questions have been posed to me by noble Lords opposite. Of course the noble Viscount, Lord Astor, may write to me at any time regarding any of the matters in this Bill.

This amendment was tabled as a direct consequence of representations received from the Building Societies Association. It may be that the noble Lord, Lord Hodgson, is right; it is not easy to conceive of circumstances when a building society would wish to donate to a political party. But one never knows.

In response to the specific question posed to me I can say that building societies will not have to seek the authorisation of their members if they wish to make a donation to a political party. That is apparently the current position and it will not be changed by this legislation. So it will be the kind of board on which the noble Lord, Lord Hodgson, sits--no doubt with great distinction--which will make that decision.

In relation to partnerships, the people who may be attracted to the new limited liability partnership in order to gain limited liability may be firms of solicitors, accountants and other professionals. If they were a non-limited partnership, they would have been an unincorporated association and would thus come

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within the purview of Clause 49 anyway. Those that have limited liability as a consequence of changing their status will be companies and therefore will be subject to Part IX in any event. I hope that that answers the noble Viscount's questions. Those that become limited liability partnerships, in their previous existence would have been able to donate to political parties if they so wished.

Viscount Astor: I am grateful to the Minister for that explanation and he cleared up the questions relating to partnerships.

However, I am somewhat concerned about his reply in relation to building societies. We know that companies may wish to give to a political party because they wish that party to promote policies that enhance their shareholder value, in the same way as a trade union might give money to a political party so that the party enhances policies that will be helpful to its members. But building societies have a limited range of activities. They look after money and lend it for housing. I am sure that not many give large sums to political parties, though I do not profess to be an expert on building societies.

It strikes me as odd that we will allow a building society--some have vast assets, running into billions of pounds--to give money to political parties on the say so of a majority of the board, whereas a company will not be allowed to do so. An anomaly appears to exist in that regard and it is something that both we and the Government might consider before Report stage. There could be a limit set or rules introduced within which they must work. But it seems strange that we are exempting a whole group of wealthy institutions from the rules by which normal companies and limited partnerships must abide. That is something that we shall have to consider before the next stage of the Bill.

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