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I want to make two generic points about the opening speech of the noble Lord, Lord Campbell-Savours. The first, I remark in passing, relates to parliamentary procedure. I totally understand the unhappiness about the inability of the Commons to debate and vote on the issue that we are discussing now. However, when I was a Whip in the Government between 1979 and 1983, on no less than three occasions we sat for between 100 and 135 hours and did not guillotine the Bill; in other words, we did what the House of Lords does—we looked at absolutely the whole Bill. I recognise that in the ensuing 20 years Governments have found that pattern of behaviour inconvenient, and of course the right to guillotine was always available to us, had we chosen to use it. However, it is slightly disingenuous of the noble Lord, Lord Campbell-Savours, to complain about the outcome in the House of Commons when it is the Government that he supported in the House of Commons who introduced programming that I personally consider to be a flagrant interference with the right of the elected House. I think that the noble Lord wants to interrupt me.
Lord Campbell-Savours: If I had still been in the elected House, I would have voted against it and spoken against it with passion.
Lord Brooke of Sutton Mandeville: I have no difficulty at all in recognising that fact. It is obviously worth referring to in the context of how this amendment has arrived here but I do not think that it can be blamed on the Official Opposition. Fortunately, scrutiny in the House of Lords is automatically available. It is one of the glories of the House of Lords that that is so. I do not in the least begrudge the noble Lord, Lord Campbell-Savours, bringing forward this amendment, and I think it is a very good thing on behalf of the nation that we should have the opportunity to scrutinise it.
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The second thing of a generic nature to which I wanted to allude was his observation about the advice that had, I gather, been offered to Labour MPs, although I know not whencesoever it came and the noble Lord, Lord Campbell-Savours, was not able to tell us. The commission briefing on the subject, while pointing out some of the difficulties, makes it quite clear that the issue that we are debating is a matter for Parliament and not for itself. The commission states that it is not for it to make a judgment on the issue.
In the context of the advice, I shall briefly recount a conversation that I once had with a Permanent Secretary of a department in which I was serving as a Minister. We had been contemporary undergraduates, so we knew each other very well in a private capacity. He said that politicians of both parties—I think the Labour Party is a little more prone to this than the Conservative Party, but there is no question that my party is prone to it as well—are extremely resistant to what they regard as negative advice given to them when they come into office, when civil servants tell them why what they want to do is impracticable. He said that they are making a mistake because members of the Civil Service are themselves part of the Government, and they take pride in the manner in which business is conducted because they are paid from the public purse.
The civil servants have two preoccupations. First, if a Minister does not listen to all the arguments against what he is proposing to do, there can be a moment when he is caught out at the Dispatch Box. That could happen even at the Second Reading of a Bill on which the Minister has intervened on dozens of occasions. He has to look at difficulties contained in the Bill which he has never considered before because he has brushed aside the advice that he has received. That is embarrassing for the civil servants sitting in the Box, who have no way of advising him.
Secondly, it is worse when a Government do not take advice in the early stages and then find themselves having to retreat in midstream from the legislation on which they have embarked and start again. It is infinitely easier to prepare legislation over six to nine months than to suddenly have to produce it in a month, to which there has previously been some allusion even in this Committee.
I do not think that the Government are wrong to point out the difficulties of doing certain things. It is the right thing to do so that everyone taking part in the debate on the legislation knows what the real practical difficulties are. I say that on behalf of people who have been in government in both major parties.
Lord Bach: The intention behind Amendments 82 and 84 is to seek to tie the ability of an individual to make a political donation to his or her taxation status. In order to be considered a permissible donor, the 2000 Act requires that an individual must be registered in an electoral register. Amendment 82 would introduce two further conditions or requirements. First, the individual would have to be resident in the United Kingdom for the purposes of the Income Tax Act 2007; and, secondly, that individual would have to not be a non-domiciled United Kingdom resident. Amendment 84,
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As the Committee has heard, identical amendments were tabled in the other place but were not reached. It goes without saying that the Government recognise the force of support that these amendments enjoy in another place. I can confirm, and do so, that we understand the argument that the ability of an individual to participate in the democratic processes of this country should be linked to their taxation status in a broad sense. But if these amendments were passed, that would not introduce any further controls on donations from other permissible donors—for example, from companies, and I shall come back to companies in a moment, and non-incorporated bodies. It could therefore have the effect of diverting these donations through other, less transparent routes.
The amendments that we are to deal with later in the name of the noble Lord, Lord Tyler, Amendments 89, 90 and 142, seek, as I understand it, to prevent people who are not allowed to vote in local, parliamentary and European elections, and companies controlled by those people and other impermissible donors, from giving political donations. The qualification is not linked to the tax status of individuals or companies; it is the right to vote that the amendments will deal with, rather than the tax that they pay.
The noble Lord, Lord Pearson of Rannoch, asked about companies donating under European law. To donate, a company must be incorporated in the UK or in an EU member state, but must still carry on business in the United Kingdom. That is at Section 54(2)(b) of PPERA. Effectively, the amendment, even if carried, would not achieve the clear objective that it appears intended to achieve.
My noble friend asked the perfectly proper question of why the Government do not add an amendment to that effect. In order to donate to UK political parties, companies have to be registered and carry on business in the UK. The Government acknowledge the concerns that have been expressed about the scope for evasion of the ban on foreign donations contained in these provisions. As we have indicated throughout—and I shall say a little more about this later—the Government are of course willing to discuss how these provisions might be improved and are willing to hear representations on the best way forward. However, we believe that we should move forward on any proposals for better regulation in this area, if we can, on the basis of consensus. We think that in the long term that is much the best solution.
There are wider issues to consider than those that the amendments would address. We are concerned—and it is a fair concern—that if these wider issues are not looked at, we risk creating a constitutional anomaly. The amendments tabled by my noble friend seek to prevent those who do not pay certain types of tax in this country from donating in their individual capacity to a political party or other regulated recipient. However, they do not attempt to prevent those same people from participating in a very active way in our democracy in a number of significant ways, including by voting,
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Noble Lords may be aware—and let me tell them if they are not—that we approached the Committee on Standards in Public Life to suggest that it might want to consider the issue. However, we were advised that the work programme of the committee does not allow it to pursue the matter at present. We are continuing to reflect on how best to take forward this very important matter.
We are, however, clear that it would be wrong to tie democratic rights in one area to taxation status, as the amendments propose, while leaving other democratic rights unfettered. Let me deal with some of the significant practical and legal difficulties which mean that the amendments proposed might not work in their current form. I shall mention briefly a few of these.
First, the amendments raise real practical difficulties, which cannot be wished away, about how a recipient party or the Electoral Commission would be able to verify whether or not what a donor told them about their taxation status was accurate. Coming to a sustainable view about whether or not someone is resident or domiciled in the UK for tax purposes raises complex issues that it may be difficult for either a party or the commission—both may be involved—to resolve on their own without expending considerable time and, potentially, money. An individual’s taxation status is essentially retrospective—a tax return is normally submitted at the end of a financial year—and it might, therefore, be difficult at a point of time in the middle of a year to determine what an individual’s tax status is.
One way to deal with this might be to enable information about taxation status to be shared among key stakeholders in the process. Information on whether an individual is resident and/or domiciled in this country for taxation purposes is currently held only by Her Majesty’s Revenue and Customs in certain circumstances. HMRC does not collect data on residence and domicile status unless it is relevant to an individual’s tax calculation, and it does not hold a list of individuals who are non-resident or non-domiciled. It may be that for the proposal to be fully effective, HMRC would need to collect additional information specifically for this purpose in addition to any information it currently holds. The Electoral Commission or others would want to be able to access this information, whether it be routinely or on a more limited basis.
I hardly need to tell the Committee that the confidentiality and data-sharing implications of any proposal to tie residency to donation permissibility would at the very least have to be carefully considered given Her Majesty’s Revenue and Customs’ statutory duty to preserve taxpayer confidentiality. I note that the Electoral Commission has expressed concerns about
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“In order to assess whether any donation from an individual is permissible, the recipient would need access to authoritative information about that individual’s tax status. The Commission would also need access to that information to confirm compliance. We think it highly unlikely that this will be achievable in practice or (if so) that the resulting burden on regulated entities and on HM Revenue and Customs would be proportionate”.
I should also note that at present many people are potentially unaware of the concept of domicile or their domicile status because it is not relevant to their tax affairs. For example, domicile is irrelevant if you have no overseas income. Under this amendment people unaware of their domicile status could unwittingly commit an offence by giving to a political party.
My second practical point, if that is the right expression, is that following the changes made in the 2008 Budget, my right honourable friend the Chancellor of the Exchequer gave a commitment that there would be no further substantial changes to the taxation regime for resident non-domiciles in the rest of this Parliament or the next. Any change to the rules on permissibility of donations should be mindful of this commitment.
Finally, we must also consider any legal implications arising from a proposal further to limit the ability to participate in our electoral system, whether through a narrow limitation on the ability to make donations or something wider on participation more generally.
It is possible—I do not say that it is inevitable, but it is possible—that the proposals in this area would touch on some key principles. For example, any limitation on participation may well raise issues relating to Article 10 of the ECHR, the right to freedom of expression, and Article 11, the right to freedom of association. We must bear in mind that this amendment proposes a restriction that would apply to UK citizens who happen not to be resident in the UK for various tax purposes. Any proposal that seeks to limit the right to democratic participation of a UK citizen, whether it is in this field of donation or any other, will require particularly careful scrutiny and may raise legal issues for which there may be little established precedent. So I hope that the Government can be forgiven for acting here with some caution.
Any potential legal issue will almost certainly be complicated by focusing only on donations, rather than by taking a more consistent approach across the board towards the issue of tax status and participation in politics more generally. These matters may be complex and it is clearly sensible to take the proper amount of time to examine them with the care that they deserve. I do not consider that a task of that detail and potential complexity can safely be completed during the timetable allowed for by this Bill.
There are many other points to bear in mind, some of which have been raised during this debate and which the Government will reflect on in taking forward work on this complex issue. I thank my noble friend for raising this issue in the way that he has and for giving us the opportunity to have this debate, which, I suspect, we may in some way or another come back to at a later stage of the Bill.
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Lord Tyler: I am not sure whether the Minister intended to complete his remarks, but could he address the important point raised with me by the Electoral Commission—twice now—that, just short of the threshold for both verifying and reporting, it is possible to make a number of regular donations which would not alone trigger that limitation but would clearly do so in aggregate? That is relevant not only to this discussion but also to the wider one in which we are engaged.
Lord Bach: I have an answer for the noble Lord: if donations which are above the recordable threshold of £500 under this Bill are made by one donor, and the total of those donations over a period exceeds the reportable threshold of £7,500 in that same year, they have to be reported to the commission. We could lower the threshold, but if we were to do so it would be a disproportionate administrative burden. The noble Lord, as I look at him from quite a long way off, does not seem entirely satisfied by what I have said and so I offer to write to him with an answer before the next stage of these proceedings.
I had almost finished what I was going to say. It is for the aforementioned reasons that the Government cannot support the amendments. I hope that my noble friend at least realises that we consider this to be a very important matter, to which I know we will return at a later stage.
Lord Campbell-Savours: I am grateful to my noble friend for his comments. I do not want to be rude to noble Lords, but I shall be quite brief in dealing with them. What my noble friend has said will now be pored over in the House of Commons. His contribution to the debate today will be that which Members of Parliament at the other end will want to read in some detail; indeed, it will be widely circulated.
Lord Bach: I suspect that Members of Parliament may also want to read what the noble Lord said.
Lord Campbell-Savours: I think that they will be far more interested in what the Minister said as against what I said. It is clear that the noble Lord, Lord Tyler, understands the politics of this at the other end; he has obviously been well briefed by his colleagues. The noble Lord, Lord Hodgson of Astley Abbotts, used the £50,000 argument without explaining how it is possible to police foreign donations if they are capped at £50,000. It is utterly impossible, unless you have policemen all over the world checking up on inter-company and inter-family relationships.
The noble Lord, Lord Pearson of Rannoch, presses me on Europe. I have to tell him that my interest in Europe is not as detailed as his, as we know from his weekly interventions at Question Time. The noble Lord, Lord Brooke, raised an important issue: the whole question of how we legislate. He may be interested to know that this recommendation came from a report, sponsored by the IPPR, written some 16 years ago entitled Money and Votes. Among its recommendations is that donations from overseas sources should be banned with three exceptions: registered overseas votes; allocations from parliamentary groups and the European Parliament; and donations below £1,000. Therefore, there has been a longstanding argument over many years on the need for reform in this area.
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I turn to the comments of my noble friend Lord Bach. I noted that his brief closely followed mine—that is, the one that I received from my colleagues, which was circulated in the House of Commons. Clearly, it must have come from the Government, because even the order in which the points were raised was very similar to the order of the points in the document that I read to the Committee.
On my noble friend’s point about the release of information from Her Majesty’s Revenue & Customs, is he aware of the NTC project? It is referred to in the document that he was not too happy with, produced by Rowntree. He may remember the debate about two weeks ago on the Floor of the House in which he commented on his reservations about the Rowntree report. I cannot remember the name of the report but it referred to NTC projects which provide HMRC tax-credit data to local authority housing departments. Therefore, there is obviously a process whereby HMRC is able, certainly in the case of housing benefit, to provide information to departments outside HMRC.
My noble friend said that the Government are continuing to reflect on these matters. In the event that this amendment were agreed in the House of Lords, they would have to reflect very fast. I understand that, if it goes back to the other House, Members will want to vote on it unless the Government come up with some alternatives, so they might want to get a move on and sort out an alternative approach, rather than put the Commons in a position where they might have to vote on the amendments that I have tabled here today.
Lord Bach: For the record, the Rowntree report that I was talking about—it is easy to get them confused—is not the one on the administration of elections; it is the one on data-sharing. I am afraid that a few words of criticism did cross my lips on that report.
Lord Campbell-Savours: The reference to the interflow of data between various organisations within government appears in the section dealing with data-matching. Of course, the Government’s case is that through data-matching they will be able to make the system of individual registration more effective. On that basis, I beg leave to withdraw the amendment.
83: Clause 8, page 6, line 16, leave out “best of the individual’s” and insert “individual’s reasonable”
Lord Henley: I shall speak also to Amendments 87 and 88. We now move on to what will be new Section 54A, which is inserted via Clause 8 and relates to declarations as to source of donation. Our amendments are designed merely to provide some sort of protection for those who have a duty to make such a declaration. The first one changes the words from,
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to “individual’s reasonable knowledge”. The second amendment leaves out in line 41 “or recklessly”, so it has to be quite clear that a person knowingly makes a false direction and there is no question of recklessly. To underline that particular point, after that we insert a new subsection to make it clear that:
“A person does not commit an offence if it can be reasonably proven that the person had no intention of making, or by innocent mistake made, a false declaration under this section”.
When a new criminal offence is being created, as it is here, it is right that if the individual does not have the mens rea and has not properly thought that he was committing a crime, it would be unwise to deem that he or she has done so in that event. I hope that the Minister will accept that it is particularly the last amendment that is the most important, in that it makes it quite clear that from Amendments 87 and 88 a person must know that they are committing an offence before they commit it, rather than being able to be found guilty having made a reasonable mistake. I beg to move.
3.30 pm
Lord Rennard: The amendments in this group do not really find favour with me. Amendment 83 would cause confusion when what is needed is clarity on this situation. You should really know whether it is your own money that you might be giving to a political party; the test should be a matter of fact rather than a supposedly reasonable belief that you think that it is your own money. We had sufficient controversy with Mr Abrahams’s donations in the north-east a few years ago. The Bill is tightening up on those problems, and introducing Amendment 83 would not help.
Amendment 87 would weaken the Bill significantly by leaving out “or recklessly”. We need to punish recklessness, not just dishonesty. There has to be a reasonable expectation that you will endeavour to comply and that, if you are reckless in not actually complying, you should be open to punishment for it. On Amendment 88, it may be that there is a slightly better form of words to be found; perhaps “proven beyond reasonable doubt” would be better. But to make a donation and not know that it is your own money seems rather absurd. If you are in any doubt that it is your own money that you are giving to a party, you should really not be giving it away.
Lord Tunnicliffe: Amendments 83, 87 and 88 relate only to Clause 8, the requirement for a declaration as to the source of a donation above a certain threshold. Government amendments alter the level above which such a declaration is required so that it is necessary to provide a declaration for donations above £7,500 only. The intention of these amendments appears to be to ensure that so-called “innocent” mistakes—essentially, the inadvertent submission of a false declaration under the requirement in Clause 8—are not needlessly punished. That is an intention with which I have some sympathy, but I am afraid that the effect of these amendments in this specific context is not something I can support.
While I am determined that the public interest is effectively served by a rigorous and enforceable regulatory regime, I am equally determined that minor or genuine mistakes are not automatically pursued where it is not
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