| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Baroness Ashton of Upholland moved Amendment No. 56:
The noble Baroness said: My Lords, this is a small amendment to bring the order-making power which concerns the weekly reporting requirements for loans in line with that for donations. I am most grateful to the Delegated Powers and Regulatory Reform Committee for pointing out an omission with regard to this power.
New Section 71U enables the Secretary of State, after consulting the Electoral Commission and registered parties, to extend the weekly—as opposed to the normal quarterly—reporting requirements to specified election periods for certain types of election other than a general election. This replicates the existing power in Section 67, which applies to donations.
Section 67 requires an order made under it to be subject to the affirmative resolution procedure, and this amendment will ensure that an order extending the weekly reporting requirement for the reporting of loans will also be subject to the affirmative procedure. I beg to move.
On Question, amendment agreed to.
Baroness Ashton of Upholland moved Amendments Nos. 57 to 60:
(a) "
Page 77, line 35, at end insert—
"(b) the date when, and the manner in which, the transaction was dealt with in accordance with subsections (3) to (5) of section 71I or those subsections as applied by section 71I(6) or 71J(2)."
Page 78, line 4, at end insert—
"( ) If the requirement to record the transaction arises only because the value of the transaction has, for the purposes of section 71M(4) or (6), been aggregated with the value of any relevant donation or donations (within the meaning of section 62), a quarterly report must contain a statement to that effect."
Page 78, line 24, at end insert—
"( ) The report must state whether the agreement contains a provision which enables outstanding interest to be added to any sum for the time being owed in respect of the loan or credit facility."
On Question, amendments agreed to.
Baroness Ashton of Upholland moved Amendment No. 61:
7 Jun 2006 : Column 1315
"( ) Part 5A of Schedule 1 amends the 2000 Act for the purpose of controlling loans and certain other transactions involving individuals and members associations."
The noble Baroness said: My Lords, in moving Amendment No. 61, I wish to speak also to Amendments Nos. 68, 76, 77, 78, 80 and 81.
My noble and learned friend the Lord Chancellor said on re-commitment of the Bill on 8 May, that while the amendments which now form Clause 60 were comprehensive in all respects as they relate to political parties, it would be necessary to bring forward further amendments,
"to close any gaps by extending the provisions in much the same manner to individual members of political parties, holders of elective office and members associations".—[Official Report, 8/5/06; col. 753.]
These important amendments therefore further extend the principles of the loans regime—which this House has already endorsed—to apply to individual members of political parties, holders of relevant elective office and members associations.
The approach taken in the amendments in respect of loans to individuals and members associations mirrors the approach taken for individuals and members associations in the existing donations regime of the Political Parties, Elections and Referendums Act 2000. As is the case for donations, we have drawn a capacity-based distinction in respect of the transactions entered into by individuals and members associations.
The activities of political parties are inherently political, but the activities of individuals are not. Under the donations regime, any donation afforded to a political party can be subjected to a regulatory regime concerned with,
PPERA recognises that this is not, of course, appropriate in the case of individuals. Accordingly, a donation must be a "controlled donation" before it falls within the ambit of Schedule 7, dependent on the donation being received by the individual or members association in circumstances where it has been offered or retained for use in connection with any relevant political activities.
The amendments take a similar approach. Regulated transactions entered into by individual members of political parties and members associations will only be captured by this regime if the individual or members association intends at the time they enter into the transaction to use any money or benefit obtained in connection with relevant political activities.
We also in these amendments remove from individuals and members associations the requirement to report loans on less than commercial terms under the donations regime. As noble Lords will be aware, the loans regime for political parties removes such loans from the definition of "donation", because they will now fall within the definition of a "regulated transaction". This change avoids a duplicate reporting requirement. A similar approach is taken for loans to individuals and members associations. We also extend
7 Jun 2006 : Column 1316
the principles of aggregation of loans and donations to individuals and members associations. We have taken exactly the same approach as that taken for political parties, whereby donations and regulated transactions from the same regulated participant that are below the reporting threshold fall to be disclosed when, in aggregation, such relevant benefits exceed the reporting threshold. I beg to move.
Lord Campbell-Savours: My Lords, I shall briefly intervene here. I wanted to find a peg this evening on which to hang an issue that arises under Amendment No. 68. The House will recognise that we are at the beginning of a discussion on the loans regime, which has not been before the House of Commons. When it considers the Bill that we will send to it, it will be considering for the first time the whole question of loans. I was in correspondence with the chairman of the Electoral Commission, Sam Younger, until 12 May when I received a letter from him, part of which I want to draw to the attention of the House.
I had been asking questions about the case of Fifth Avenue Partners Limited, not for any particular political reason but because I wanted to try to understand the extent to which it had implications for the loans regime, although it related to a donation. I will not quote the section of Sam Younger's letter which deals with Fifth Avenue Partners Limited, but I will quote the section that is relevant to this Bill:
"The measures being proposed in the Electoral Administration Bill concerning loans are based on the rules for donations. Hence, in order for a loan from a company to be permissible it has to pass the same three tests as for a donation".
We all know that the three tests a company must pass—as must a loan—are that the company is registered in the United Kingdom, that the company is incorporated in the United Kingdom or another member state, and that the company carries on business in the United Kingdom.
which is a donation discussion—
"could recur in the case of a loan—or indeed an otherwise 'straightforward' donation—to a party from a company.
In the light of the issue surrounding Fifth Avenue Partners, we are preparing guidance for political parties on the questions we think should be asked in relation to the 'carrying on business' test. Of course in the vast majority of cases a copy of the latest audited set of accounts filed at Companies House would be enough. However, we are considering what guidelines could be set down to cover, for example, newly established companies. On a practical level, we are inclined to suggest that, before accepting a donation, a party ought to see the company's latest set of audited accounts and/or a signed statement by (for example) the company secretary confirming that the companying is carrying on business.
Under the current legislation, it is for the party receiving a donation to satisfy itself that the donation is permissible. The provision of detailed guidance on what constitutes carrying on business should help parties,"—
that is, guidance that the Electoral Commission will be issuing—
"although any definitive statement of what constitutes carrying on business could only be given by a court of law. One way of giving parties more certainty about whether they are right to accept donations (or loans) would be to change the rules to specify that
- the Commission must receive and approve specified documentary evidence in relation to the donation (or loan) before it is accepted. This, however, would require a change in the law".
6.45 pm
In many ways, that is a different approach from that which is being adopted by the Government. I recognise that we could not have a system where the Electoral Commission was required to clear and approve at an early stage every possible loan given to a political party. However, it seems to me that one could set a fairly high threshold and ensure that every loan was approved by the Electoral Commission. We are not talking about large numbers of loans; we are talking about a very small group of substantial transactions, which in my view the Electoral Commission should be given the right to approve prior to that money being allocated to a political party. The result would be that many of the clauses in the Bill that we are discussing might not be necessary. Many of the problems alluded to by the noble Lord, Lord Kingsland, about whether it is fair to penalise people who might have acted honourably, would not even arise. In those conditions, approval having been given by the Electoral Commission, the responsibility would have passed to it.
When I discussed this with Sam Younger, he said that he did not have the resources. However, I wonder what resources would be required to police all this in the event that it might go wrong. One has not estimated what might happen in the event that the structure that we are establishing has to be used. What will the cost of that be in terms of carrying out administrative and judicial requirements? All I am saying is that there is another approach to this which is much simpler, and I suggest to the Government that they might want to consider it, even at this late stage. As this Bill moves to the Commons—because we are giving the Bill its first consideration—Members in the other place might want to consider a much simpler approach.
| Next Section | Back to Table of Contents | Lords Hansard Home Page |