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The amendments before us would negate the requirement for a declaration under Clause 8. They would mean that a person could only give a false declaration if they did so knowingly; that the test for making a declaration would no longer require an individual to be satisfied “to the best of their knowledge or belief”; and, most significantly, that any honest mistake would not be punishable.
This is a powerful combination of amendments that would render the declaration requirement nugatory. It would be very hard for the commission or Crown Prosecution Service to be satisfied to the criminal standard of proof, as is required by the changes proposed in these amendments. That is contrary to our intention. The clause seeks to remind donors of the requirements applying to them—requirements of which many donors could be ignorant.
Any individual signing a declaration must surely be required to be certain of the truthfulness of that declaration. That is a basic requirement in many spheres of law. Suggesting that it does not matter whether the statement is truthful, or that the individual has no responsibility for seeking to ascertain its truthfulness, detracts significantly from the value of the provision.
The provision is intended to buttress the existing regulatory regime for party finance, in particular by ensuring that donors of significant amounts—now above £7,500—should not be ignorant of the law. Clause 8 does not make it harder to comply with the law, since it does not restrict the permissibility of donors. Rather it ensures that the existing law is complied with.
Accepting the amendments would weaken the declaration requirement for Clause 8 when compared with other declaration requirements in the 2000 Act; and a justification for this difference in treatment is not evident. Moreover, removing the reference to recklessness in this context might incentivise ignorance of the rules. I reject the suggestion that all innocent mistakes ought to be disregarded. If an individual signs a false declaration under this requirement and there is no clear evidence that they knew that the statement was false, there might be evidence to suggest that the statement was reckless. If this cavalier attitude to the statutory requirements is permitted, it will over time erode public confidence in the probity of our party and of the electoral finance regime. For these reasons, I reject the amendment and hope that the noble Lord will withdraw it.
Lord Henley:At this stage, I can do nothing other than withdraw it. However, I am not happy with that response. I am perfectly happy about Amendment 83, which is not very important. However, the second amendment in the group, which brings in “recklessness”, and the third that provides cover for those who make an innocent mistake, are important. I certainly want to consider these again—it might be that the wording
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Lord Borrie: Before the noble Lord sits down, would he not agree that the word “reckless” implies that you do not care whether something is correct or not? Surely a person in that frame of mind should be regarded as having committed an offence.
Lord Henley: I will certainly look at that in due course. The third amendment is the most important. I always worry about the Government in their legislative capacity, particularly when I look at some of the motoring legislation in which they imply that careless driving is almost the same as reckless driving. One should be very wary about what they are up to when they use the word “reckless” here. That is why I will consider the amendments again, and there is a considerable likelihood that I will—carelessly or recklessly—bring them forward at Report. The noble Lord will then have a chance to debate them in the Chamber.
Lord Pearson of Rannoch: In view of what has been said, I support the second two amendments of the noble Lord, Lord Henley. Recklessness is a much more difficult thing to prove than whether somebody knew something or not. I suggest that recklessness is often in the eye of the beholder.
Secondly, Amendment 88, if carried, would certainly have avoided the problems to which I referred at Second Reading and in Committee yesterday of an innocent mistake ending up in court on appeal and even eventually going to the High Court at vast expense to the taxpayer and the recipient political party. I very much hope that the noble Lord, Lord Henley, will bring those last two back at the next stage.
Lord Tunnicliffe: Perhaps I may respond to the issue of how difficult it is to prove recklessness. That is quite properly so. I emphasised that the burden of proof must be to a criminal standard in this case. That is why we are opposed to the amendments. There is already a considerable burden on proving an offence under this provision to the standard required in the clause.
Lord Henley: I take note of what the Minister said, but I am buoyed up by the fact that both the noble Lords, Lord Borrie and Lord Pearson, would prefer to discuss this again in the Chamber. In withdrawing Amendment 83 and offering a commitment that I am unlikely to move Amendments 87 and 88, I give the Minister an assurance that I am likely to bring these amendments or something similar back at a later stage. I beg leave to withdraw the amendment.
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Amendments 86 to 88 not moved.
89: After Clause 8, insert the following new Clause—
“Donations by companies controlled by impermissible donors
(1) A donation from a company controlled by an impermissible donor shall itself count as not permissible for the purposes of the 2000 Act.
(2) A company shall count as controlled by an impermissible donor when—
(a) an impermissible donor, or any combination of impermissible donors, owns 75 per cent or more of the voting shares in the company;
(b) an impermissible donor acts as a shadow director of the company; or
(c) a majority of the board of directors of the company are impermissible donors.
(3) “Impermissible donor” means—
(a) a donor who is not a permissible donor under the 2000 Act; or
(b) a company controlled by an impermissible donor.
(4) “Shadow director” has the same meaning as it has in section 251 of the Companies Act 2006.”
Lord Tyler: We do not need to spend a great deal of time on this matter because to some extent we have covered it in a previous debate. In moving Amendment 89, I shall refer briefly to Amendment 90, which also follows Clause 8, and Amendment 142, which is a consequential amendment in Clause 29.
We have been carefully advised that, contrary to what the Minister said a few moments ago, if we had already approved Amendments 82 and 84 in the name of the noble Lord, Lord Campbell-Savours, an impermissible donor would include someone who had been made impermissible under those amendments. So when the Minister said a few moments ago that it entirely relied on those who were not qualified in terms of their electoral status, that is not our view. If they were not permissible donors under the amendments that we endorsed for tax reasons, they would fall within this definition as well.
Amendment 89 relates to those companies whose control is in the hands of an impermissible donor either for electoral reasons or for tax reasons. That meets the point made by the noble Lord, Lord Campbell-Savours. Were we to take the view that impermissible donors would include those whose tax status made it impossible, it is illogical if those people could get round that by using a company under Amendment 89. Therefore, the amendment would make it impossible for them to use that route.
Similarly, under Amendment 90, we were looking at the specific issue of those who are not qualified to vote under all three types of election. When this matter was discussed in the other place, there was some anxiety that those Members of your Lordships’ House who are disqualified from voting in parliamentary elections should not be permitted to make donations to political parties. That is not our view and we have
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3.45 pm
I want to refer briefly to the debate in the other place at the 11th sitting of the Public Bill Committee on this Bill because there was a very interesting exchange between representatives of the three parties on the issue of consensus, about which we have heard again today. The Minister, Mr Wills, said:
“I hope that one day we will see a consensus emerge on what we all agree are important issues”—
that is, the issues that we are now discussing and the wider issues that we discussed earlier today. My honourable friend Mr Howarth, our spokesman, said:
“The Minister came back to the point about consensus, but he seems to have a highly restricted view of where we should be going and how. There are times when politicians have to go with the consensus of the public rather than the consensus of the parties”.
Most interesting of all, Mr Andrew Tyrie, for whom I have the widest respect—I have worked very closely with him and he has given more attention to this issue on behalf of the Conservative Party than anyone else; indeed, some would say more than anyone else in the House of Commons—said:
“I agree entirely with the hon. Gentleman. Does he agree that we cannot arrive at the point at which one party can have a veto over change if it were clearly what the overwhelming majority of voters concluded would enable greater public trust to be restored in such matters”.—[Official Report, Commons, Political Parties and Elections Bill Committee, 20/11/08; col. 414.]
Mr Howarth said that he agreed with that.
I quoted Mr Andrew Tyrie in particular because he sums up precisely where the public are on this issue. Any representative of a political party who thinks that we can just coast along and wait for some entirely impossible situation to arise where the minority of politicians are able to veto the view of the public, and probably the majority of politicians generally, must realise that that is no longer a sustainable position. The public have a perception of Parliament and politics which is not doing us any good at the moment.
This was reflected at Second Reading from all sides of the House. We may have to find a compromise. It may well be that all of us will have to give a little and be prepared to listen to others. If we simply go on, as Ministers tend to do, saying that until we have agreement between the parties on the lowest common denominator we will do nothing, not only your Lordships’ House and the other place but the whole of Parliament and the whole of our political life will continue to suffer an increasing degree of disengagement and disillusionment with our political systems.
These amendments are similar to the amendment moved by the noble Lord, Lord Campbell-Savours, which we supported, and are an attempt to address a real public concern about the way in which money is being employed to try to influence our political system. Unless we face up to that, and unless Ministers are prepared to give leadership on these issues instead of always waiting for the lowest common denominator of consensus, then we will have a major problem.
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At this stage of the day, I think that is enough. I beg to move.
Lord Brooke of Sutton Mandeville: My intervention will be extremely brief. I did not table an amendment to this effect, but does the noble Lord, Lord Tyler, agree that, on the principle of the difference between “and” and “or”, the meaning of subsection (1) would be clearer if it said,
The omission of the “and” introduces a slight element of ambiguity and requires the reader to read it at least three times before he knows what the noble Lord is trying to say.
Lord Tyler: Perhaps I may briefly respond. The noble Lord, Lord Brooke, has a great deal more experience than I have, but we were advised that this is the normal way to identify these options. I may be wrong; if so, we can correct this between now and Report.
Lord Tunnicliffe: I must say that officials and ourselves had also read the amendment as implying that it would apply to Members of your Lordships’ House, but shall adjust my notes for brevity and we will look at the words even more carefully if this amendment comes forward on Report.
This group of amendments seeks to effect a significant change in the regulation of donations to political parties. Amendment 89 adds to the permissibility requirements for political donations from companies and would prevent companies which are controlled by impermissible donors from donating to UK political parties. Under the proposed new clause, a company would be deemed as being controlled by an impermissible donor in a range of specified circumstances. For example, it would be deemed as being controlled by impermissible donors where 75 per cent of the voting shares are held by an impermissible donor or a combination of impermissible donors. It would also be deemed as being controlled by impermissible donors where a person who would be an impermissible donor under the 2000 Act acts as a shadow director of the company, or where the majority of the board of directors of the company would be impermissible donors if they were donating in their capacity as individuals.
Amendment 90 defines an impermissible donor as one who is not registered to vote in the UK, either in parliamentary, local or European elections. Amendment 90 extends this proposed exclusion whereby a company controlled by an impermissible donor by virtue of this proposed provision should also be deemed to be an impermissible donor. Amendment 142 would mean that the provisions in the proposed new clauses would come into effect on Royal Assent.
I begin by saying that I am sympathetic to the intention behind these amendments which seem primarily intended to prevent foreign donations from being channelled through companies operating in the UK. We owe a huge debt of gratitude to the noble Lord, Lord Neill, under whose stewardship the Committee on Standards in Public Life provided the blueprint for the Political Parties and Referendums Act, which was
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The Government welcomed this recommendation and sought to implement it in the Bill which became the Political Parties, Elections and Referendums Act 2000.
I assure noble Lords that we remain committed to the important principle that political parties should not receive foreign donations; and some of the provisions in the Bill would provide a disincentive for foreign donors channelling donations through legitimate structures to circumvent the rules on transparency—for example, the proposals in Clause 8 which seek to ensure that provisions regarding donations on behalf of others are understood and complied with, and those in Clause 12 which seek to bring more transparency to donations from unincorporated associations.
The provisions preventing foreign companies from donating to UK political parties have existed since 2000 and are a vital component of the regulatory regime. Section 54 of the 2000 Act requires a company to be registered in the UK or in a member state, and carrying on business in the UK. I understand that there are some concerns about whether those provisions go far enough and I do not want to dismiss those concerns out of hand. However, I do not believe that the amendments proposed here are effective.
The scheme envisaged by these amendments would almost certainly require a party or other donee to verify the permissibility status of those who own voting shares, of shadow directors and of board members. For example, although “shadow director” is defined in legislation, it would require considerable expertise in the law relating to companies to be able to say for certain whether someone was or was not such a director. Therefore, it seems clear that verifying these new permissibility requirements would be, at the very least, a difficult and onerous task. It could greatly increase the possibility of parties and others inadvertently accepting donations that they had concluded were valid. I cannot see that the resulting damage to trust in politics which might follow, even in cases where there is no blame to speak of, would be at all desirable.
Ultimately, these amendments may well have the effect of substantially reducing the number of companies from which donations can be accepted if those matters cannot positively be verified, including companies about which there is no real concern but in relation to which the relevant details are simply unavailable. Consequently, the potential effects of the amendments could be far-reaching and disproportionate.
Amendment 90, which prevents those ineligible to vote in UK elections donating to UK political parties, is also something that I have to oppose. The existing provisions in the 2000 Act require individuals donating to a regulated recipient to be on an electoral register. Extending this provision so that it excludes those who are not “qualified to vote” would seem to have no positive effect.
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Finally, as noble Lords will know by now, consensus is a watch-word of the Bill. A significant step such as that proposed by the amendments would need to command broad cross-party consensus, and I am not convinced that such a climate exists at present. Therefore, I hope that the noble Lord will withdraw the amendment.
Lord Marland: I apologise for arriving late at the Committee. I also apologise for taking noble Lords beyond four o’clock when they all have things to do. I want to say a few things from a practical point of view. I completely agree with the noble Lord, Lord Tyler, about getting public perception right, and I obviously endorse many of the things that Andrew Tyrie said in the other place.
The purpose of the Bill is partly to make party funding easier and more transparent. However, I am afraid that I do not believe that the amendment, as presented, makes it more transparent; it makes it more difficult for the parties to practically operate and police the giving of donations. How is there a means of finding out the dynamic of a shareholder register during the period of a gift? How can you police each individual shareholder of a party as a party treasurer or compliance officer? Who can determine their status? It should not be incumbent on the political party to act as policeman for companies’ shareholder registers.
The two criteria by which we have to transact, as does the noble Lord as party treasurer, are as follows. First, is the company UK-registered? That strikes me as being fair enough. Secondly, is it a company that trades? Once those two criteria have been met, it becomes almost impossible to police the shareholder register. Whereas I am extremely sympathetic, as I am sure are all of us in this Room, with the wish to clear up public perception and find a method whereby we can control these issues, I do not believe, with due deference to the noble Lord, that this works on a practical level.
Lord Tyler: I am very grateful to the noble Lord, Lord Marland, in particular, because I know that we share a great deal of concern about the reputation of our political system and we are seeking practical ways in which to go forward. At this stage, I can say only that we will look at the matter very carefully. I am very grateful to the Minister because he recognised that there is a genuine anxiety here that we all share. However, finding the right practical solution is more elusive. We will look carefully at what the Minister said and at what the noble Lord, Lord Marland, said, because he speaks with great practical experience in this field as a former national treasurer of the Conservative Party. If we can find a way in which this can be addressed more effectively between now and Report, we will bring it back. In the mean time, I beg leave to withdraw the amendment.
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Schedule 3: Declaration as to source of donation
93: Schedule 3, page 46, line 26, leave out from first “a” to “by” in line 28 and insert “regulated donee”
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Schedule 3, as amended, agreed.
Lord Tunnicliffe: This may be a convenient moment for the Committee to adjourn until next Tuesday at 3.30 pm.
Committee adjourned at 4.01 pm.
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