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Lord Bach: Perhaps I can make it clear that everything depends on the rules of the individual building society. Some will be at liberty to consult their members. But as has been said, they may receive a very mixed response to such consultation. In the end they may find themselves giving donations to all political parties, including some minor ones.

On Question, amendment agreed to.

8.45 p.m.

Lord Bach moved Amendment No. 138B:

On Question, amendment agreed to.

[Amendments Nos. 139, 140, and 140A not moved.]

[Amendment No. 141 had been withdrawn from the Marshalled List.]

[Amendment No. 142 not moved.]

Viscount Astor moved Amendment No. 143:

    Page 30, line 9, leave out subsections (4) to (7).

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The noble Viscount said: Amendment No. 143 seeks to eliminate regulations applying to a former donor. This is perhaps a small amendment and I shall not detain the Committee long.

What is laid down in subsections (4) to (7) is yet another piece of "excessive bureaucracy" dreamt up somewhere in the Home Office--I shall not say which part. In addition, I note that a criminal offence is created for failure to comply with that bureaucracy. Can the Minister justify to the Committee such a system being put in place?

The remaining amendments are more significant; they relate to trusts. Trusts are an important issue. We all know about the so-called "blind" trusts with supposedly anonymous donors such as were used to fund the Leader of the Opposition's office in the last Parliament. They were quite rightly rejected by the Neill committee in Recommendation 21.

The original version of the Bill banned political parties from receiving donations from any trust. But that perhaps is not right. The Neill committee specifically recommended in Recommendation 22 that open trusts should be allowed. Recommendation 26 makes clear that trusts based in the United Kingdom should be allowed to donate to political parties.

I recognise that, after concerns were raised by my right honourable friends in another place, the Government tabled amendments to improve the situation. But they have not gone far enough. In Clause 50(5) the Government only want to allow donations from trusts if the person who donated the money to the trust is a permissible donor or if the trust was set up by a bequest and the person making the bequest was actually registered in an electoral register at the time of his/her death.

We believe that that is a narrow approach. It takes no account of trusts set up before the new rules come into force. What would happen to money from a trust set up by a woman as recently as 90 years ago, when women were still not even allowed to vote and therefore could not even be on an electoral register? What would happen to money placed in a trust under the terms of a will when it was perfectly possible to prove the identity of the donor but impossible to prove that he or she had been registered to vote at the time of death because the registers are no longer available?

In adopting this narrow approach the Government cannot have considered these scenarios. We are not talking about "blind trusts" or about dodgy donations. I do not believe that the Neill committee can have intended to prohibit political parties from benefiting from such trusts. In taking such a course the Government are riding roughshod over the wishes of the people who have established trusts in their wills, or indeed many years ago, and who could never have been aware of this legislation or even thought of it. The Bill as drafted is unfair and I urge the Minister to reconsider it.

I am also advised--I am not a trust lawyer but can no doubt rely on expert advise from the Government Front Bench--that the Bill as presently drafted contains fundamental errors of law in relation to

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trusts. I am advised that in law there is no such thing as a "blind trust", as all beneficiaries of trusts are supposed to know who is giving money to the trust. Only if the beneficiary specifically waives this right to know can the trust be called "blind" in any sense.

Perhaps the Minister can advise me whether it would be simple to scrap the current wording of Clause 50(5) and replace it with a prohibition on donations from trusts where the beneficiary has waived his right to know the identity of those whose money is in the trust. Would that not be a better way of doing things?

I am not a lawyer but I hope that the Minister, having had legal advice, will assure me that Clause 50 as it presently stands has been written or approved by experts in trust law. I am sure he has such facilities available. I hope that the clause has been examined carefully and, if not, the Minister will reassure the Committee that he will do so. I beg to move.

The Deputy Chairman of Committees (Lord Lyell): I must advise the Committee that if Amendment No. 143 is agreed to I shall not be able to call Amendments Nos. 144, 145 and 146.

Lord Rennard: I rise to speak to Amendment No. 146A. It is concerned with the rights of political parties to receive money from trusts. It is entirely consistent with the principles of the Bill. It is quite possible that someone perfectly entitled to donate to a party has in the past decided to do so via a trust. Often a person has done that in his will so that a trust fund makes disbursements to a party after his death.

Clause 50(5) makes it plain that it is acceptable for a party to receive such funds provided that the donation or bequest to the trust was made by someone who was a permissible donor at the time. But for trusts established many years ago, it is now impossible in some cases to prove that the donor would have been a permissible donor. His desire to donate or leave money to a party in his will should not necessarily be frustrated.

For example, a trust fund was established by Sir Arthur Robotham, who was Liberal Mayor of Stockport in 1915. He was a great philanthropist who supported many worthy causes. When he died, he left a trust for the maintenance of Liberalism in Stockport. It was his will that the money he left would continue to support the work of his party in that area. It is clear from the Bill that it is permissible for the Liberal Democrats to receive money from this trust provided it can be shown that Sir Arthur was a permissible donor. In his case, that may or may not be possible.

However, the wishes of donors in the early part of the century to leave money to a trust for the benefit of a political party should not be frustrated simply because of a technicality that printed copies of the electoral register did not exist for this period. I am sure that that is not the Government's intention.

It would be particularly unfair to women who were excluded from the electoral register in the earlier part of the century for the very reason that they were not entitled to vote, but they sometimes gave or left money

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to a party via a trust. Their wishes should be respected. Therefore a donation from a trust should be permissible.

However, I accept that there are a couple of issues related to the amendment which the Government will need to address in order to ensure that the principles of the Bill are consistently maintained. First, I do not believe that it is appropriate that overseas trusts, or trusts created outwith UK legislation, should be afforded such protection. Foreign donations are specifically prohibited in the Bill. Secondly, I accept that it may be possible that a trust may have been recently established for the purposes of subverting the legislation. This seems to me unlikely since any money up to now could simply have been handed over. But that is a possibility.

I accept the argument that recently established trusts--say, since the publication of the Government's White Paper on the issue or perhaps during the past five years--should be excluded. We should not now change the rules on donations to parties in order to prevent parties benefiting legitimately from trust funds established in the UK some time ago, because that would unfairly frustrate the wishes of those who gave money in that way.

Lord Bassam of Brighton: This group of amendments is concerned with donations made through the agency of another person. I was surprised to see Amendment No. 143 because I could not think why anyone should want to table it. The amendment would remove what I should have though were self-evidently necessary components of the scheme. The Neill committee thought so and in paragraphs 4.63 and 4.66 noted that a wealthy individual might evade the disclosure requirements simply by persuading a number of relatives to make separate donations on his behalf.

Alternatively, large donations might be made to a front organisation, which would in turn make a single consolidated donation on behalf of the individual donors, thus ensuring their anonymity. Such arrangements would not only offer scope for the evasion of disclosure but also for the evasion of restrictions on foreign donations.

The Neill committee therefore recommended (Recommendation 19) that any person or organisation transmitting to a political party any consolidated donation which consists of contributions received from two or more persons should be required to supply a list of any individual donations received which are at or above the disclosed threshold. Subsections (4) to (7) give effect precisely to that recommendation. They are good provisions, ensuring transparency and shoring up the overall scheme of the Bill. I could not advise the Committee under any circumstances to remove the provisions.

But from this point onwards I can be more helpful and conciliatory. The remaining amendments in the group are concerned with donations made by trusts, whether established in a person's will or in his lifetime.

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The amendment tabled by the Liberal Democrats deals with both matters and the four tabled by the Official Opposition deal with them separately. These various amendments are much to the same end and as currently drafted would have an overlapping effect.

If only for that reason, they cannot all be accepted. Nor at this stage would I care to choose between them. I can, however, give a commitment that the Government are sensitive to the points made in favour of the amendments. There is not a great deal with which I can disagree. We will consider the issue further with a firm view to bringing forward government amendments on Report.

There is, plainly, an issue about whether it is right to prevent parties from continuing to receive benefit from trusts which may have been established many years ago. Our attention has been drawn to the difficulty which may be encountered in determining whether the person who established the trust was a permissible donor. Clearly, if it was an aged widow back in the Victorian times she would not have been a permissible donor. She would not even have been on the electoral register and there is no way in which we can reach a hand into the grave to find out. In any event, we accept that to find out whether or not they are permissible would be very difficult; indeed, it would be an impossible task. Therefore, there is an issue which merits careful attention.

In undertaking to consider the matter further, I should point out some of the considerations in our minds. All of the amendments before the Committee would create a cut-off point. In the case of trusts established before that date, it would not be necessary to establish that the settlor (as I believe he is called) was a permissible donor; for trusts established after the date, it would be. Basically, we are sympathetic to that approach. However, when the Bill returns to the House I reserve the right to propose that the cut-off date should be earlier than proposed in the present amendments, although obviously I am open to suggestions on the matter. I ask noble Lords to write to me or contact my officials so that we can be as accommodating and practical as possible.

As far as concerns the Liberal Democrats, the proposition is put on the basis of having to go back many years to establish whether the person who provided the funds is a permissible donor. It is a different matter if trusts have been established in more recent years and the difficulty of tracking back is not so apparent. Foreign funding has already been an issue in public life.

We also want to ensure that, as the Neill report recommends, parties do not receive money from blind trusts at least in the future, or whatever period is exempted from the normal restrictions. As the Bill stands, it affords no possibility of money being received from blind trusts. Thus, Amendment No. 149 is unnecessary and, taken on its own, redundant. However, I agree that these points need to be watched carefully if other amendments are made to Clauses 49 or 50. I trust that, on the basis of my comments, the noble Viscount is able to withdraw his amendment.

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9 p.m.

Viscount Astor: I do not know whether the noble Lord, Lord Rennard, wishes to speak before I respond to my amendment.

I am grateful for the Minister's reply. I appear to have discovered a deep vein in the Liberal Democrat Benches. Obviously, there are some very old trusts, perhaps left over from the Lloyd George era, which still put pennies, pounds or perhaps even tens of pounds, into the coffers. Far be it from me, or even the Minister, to deny the Liberal Democrats that important funding that has been trickling down for many years. That funding has probably trickled down from some of the ancestors of noble Lords who sit in this place. I am sure that we are all delighted to help them.

As to the cut-off date, I do not know for how long electoral registers are held. Can one find them in county libraries? Is there a statutory rule that they are kept? I do not know the answer to that question, but perhaps it is a matter that the Minister will take into consideration--I do not require an answer now--when he considers the date. Councils may or may not keep everything. I am grateful for the enormously helpful response of the Minister. We look forward to seeing his proposals at the next stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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