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20 July 2009 : Column 1401
12J: Insert the following new Schedule-
"DECLARATION AS TO WHETHER RESIDENCE ETC CONDITION SATISFIED Schedule 7 to the 2000 Act (control of donations to individuals and members associations)1(1) In paragraph 6 of Schedule 7 to the 2000 Act (prohibition on accepting donations from impermissible donors), for paragraph (aa) of sub-paragraph (1) (inserted by Schedule 3 above) there is substituted-
"(aa) any declaration required to be made in respect of the donation by paragraph 6A or 6B has not been received by the donee, or".
(2) After paragraph 6A of that Schedule (inserted by Schedule 3 above) there is inserted-
"Declaration as to whether residence etc condition satisfied6B(1) An individual making to a regulated donee a donation in relation to which the condition set out in section 54(2ZA) applies must give to the donee a written declaration stating whether or not the individual satisfies that condition.
(2) A declaration under this paragraph must also state the individual's full name and address.
(3) A person who knowingly or recklessly makes a false declaration under this paragraph commits an offence.
(4) The Secretary of State may by regulations make provision requiring a declaration under this paragraph to be retained for a specified period.
(5) The requirement in sub-paragraph (1) does not apply where, by reason of section 71B(1)(a), the individual by whom the donation would be made is a permissible donor in relation to the donation at the time of its receipt by the donee."
2 In paragraph 8 of that Schedule (acceptance or return of donations), after sub-paragraph (1) there is inserted-
"(1A) In its application in accordance with sub-paragraph (1), section 56(1A)(a) shall have effect as if the reference to a declaration under section 54B were construed as a reference to a declaration under paragraph 6B above."
3(1) Paragraph 10 of that Schedule (donation reports: donations from permissible donors) (as amended by Schedule 3 above) is amended as follows.
(2) In sub-paragraph (1)(b), after "paragraph 6A" there is inserted "or 6B".
(3) In sub-paragraph (5), at the end of paragraph (aa) there is inserted ", and any reference to section 54B shall be read as a reference to paragraph 6B above".
Schedule 11 to the 2000 Act (control of donations to recognised third parties)4(1) In paragraph 6 of Schedule 11 to the 2000 Act (prohibition on accepting donations from impermissible donors), for paragraph (aa) of sub-paragraph (1) (inserted by Schedule 3 above) there is substituted-
"(aa) any declaration required to be made in respect of the donation by paragraph 6A or 6B has not been received by the recognised third party; or".
(2) After paragraph 6A of that Schedule (inserted by Schedule 3 above) there is inserted-
"Declaration as to whether residence etc condition satisfied6B(1) An individual making to a recognised third party a donation in relation to which the condition set out in section 54(2ZA) applies must give to the recognised third party a written declaration stating whether or not the individual satisfies that condition.
(2) A declaration under this paragraph must also state the full name and address of the person by whom it is made.
(3) A person who knowingly or recklessly makes a false declaration under this paragraph commits an offence.
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(4) The Secretary of State may by regulations make provision requiring a declaration under this paragraph to be retained for a specified period."
5 In paragraph 7 of that Schedule (acceptance or return of donations), after paragraph (a) of sub-paragraph (2) there is inserted-
"(aa) section 56(1A)(a) shall have effect as if the reference to a declaration under section 54B were construed as a reference to a declaration under paragraph 6B above; and".
6 In paragraph 9A of that Schedule (inserted by Schedule 3 above)-
(a) in the heading, after "paragraph 6A" there is inserted "or 6B";
(b) at the end of that paragraph (which becomes sub-paragraph (1)) there is inserted-
"(2) In relation to each relevant donation falling with paragraph 10(2) in the case of which a declaration under paragraph 6B has been given, the statement must either-
(a) state that no reason was found for thinking that the declaration was incorrect, or
(b) give details of any respects in which the declaration was found or suspected to be incorrect."
Schedule 15 to the 2000 Act (control of donations to permitted participants)7(1) In paragraph 6 of Schedule 15 to the 2000 Act (prohibition on accepting donations from impermissible donors), for paragraph (aa) of sub-paragraph (1) (inserted by Schedule 3 above) there is substituted-
"(aa) any declaration required to be made in respect of the donation by paragraph 6A or 6B has not been received by the permitted participant, or".
(2) After paragraph 6A of that Schedule (inserted by Schedule 3 above) there is inserted-
"Declaration as to whether residence etc condition satisfied6B(1) An individual making to a permitted participant a donation in relation to which the condition set out in section 54(2ZA) applies must give to the permitted participant a declaration stating whether or not the individual satisfies that condition.
(2) A declaration under this paragraph must also state the individual's full name and address.
(3) A person who knowingly or recklessly makes a false declaration under this paragraph commits an offence.
(4) The Secretary of State may by regulations make provision requiring a declaration under this paragraph to be retained for a specified period."
8 In paragraph 7 of that Schedule (acceptance or return of donations), after paragraph (a) of sub-paragraph (2) there is inserted-
"(aa) section 56(1A)(a) shall have effect as if the reference to a declaration under section 54B were construed as a reference to a declaration under paragraph 6B above; and".
9 In paragraph 9A of that Schedule (inserted by Schedule 3 above)-
(a) in the heading, after "paragraph 6A" there is inserted "or 6B";
(b) at the end of that paragraph (which becomes sub-paragraph (1)) there is inserted-
"(2) In relation to each relevant donation falling with paragraph 10(2) in the case of which a declaration under paragraph 6B has been given, the statement must either-
(a) state that no reason was found for thinking that the declaration was incorrect, or
(b) give details of any respects in which the declaration was found or suspected to be incorrect."
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10 In Schedule 20 (penalties) the following entries are inserted at the appropriate places-
12K: Page 59, line 30, at end insert-
"( ) In that section as amended by sub-paragraph (1)-
(a) after "section 54A" there is inserted "or 54B";
(b) after "paragraph 6A" there is inserted "or 6B"."
12L: Page 60, line 6, at end insert-
" In section 71H (authorised participants), after subsection (3) there is inserted-
"(3A) For the purposes of subsection (3), any reference to a donation in section 54(2ZB) is to be read as a reference to a regulated transaction.""
12M: Page 61, line 20, at end insert-
"( ) In sub-paragraph (3) of that paragraph (inserted by sub-paragraph (2) above), after "paragraph 6A" there is inserted "or 6B"."
12N: Page 61, line 33, at end insert-
"( ) In sub-paragraph (3) of that paragraph (inserted by sub-paragraph (2)(b) above), after "paragraph 6A" there is inserted "or 6B"."
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach): My Lords, I beg to move Motion A, that this House do not insist on its Amendments 11 and 12, to which the Commons have disagreed, but do disagree with the Commons in their Amendments 12A to 12F in lieu and do propose Amendments 12G to 12N in lieu of those amendments.
These amendments propose to add to the permissibility and declaration requirements relating to donations and loans from individuals. They respond to the amendments tabled by my noble friend Lord Campbell-Savours in this place, which were well supported across a wide spectrum of the House. They were debated extensively in another place a week ago, and I believe that, in their revised form, they strike an appropriate
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These amendments propose to add to the existing criteria in the 2000 Act that govern the permissibility of individuals making political donations or loans. They provide that individuals giving or loaning more than £7,500 to a political party or other regulated recipient must be resident, ordinarily resident and domiciled in the UK for the tax year in which the relevant donation or loan is made. This requirement applies irrespective of whether the donation or loan exceeds the threshold singly or in aggregate over the course of a calendar year. Individuals must make a statement that they are resident, ordinarily resident and domiciled in the UK and provide this along with their donation or loan. Making a false statement is a criminal offence, and a party cannot accept such a donation without the requisite declaration.
This requirement is additional to the existing requirement for individuals making political donations or loans to be on a UK electoral register. Importantly, however, the additional restriction applies only to more significant donations or loans: those above £7,500. The existing permissibility requirement of inclusion in an electoral register remains in force at the lower threshold, currently £200, but it is proposed to increase it by this Bill to £500, as I have already mentioned.
We propose the new restriction to apply to the higher threshold of £7,500 for reasons of fairness and proportionality. That is key and largely addresses a significant concern the Government had with the amendments tabled by my noble friend. As I outlined in debates in Grand Committee and on Report on this Bill, we were concerned at the low level of the restriction in my noble friend's amendments, which in our view amounted to an unfair restriction on individuals' ability to participate in our democratic system. Setting the threshold at £7,500 is much fairer, allowing, as it does, an individual who is not resident, ordinarily resident and domiciled in the United Kingdom to retain the ability, albeit in a newly restricted way, to make donations as a way of participating in our democratic system. The higher threshold also has the important advantage of reducing the burden of compliance for political parties and donors. Enabling an individual who does not meet the new permissibility requirement still to make significant donations that do not exceed £7,500 in a calendar year deals, in our view, with any concern of the sort that was expressed by Members of the Opposition in the other place about the compatibility of these proposals with EU law and the ECHR.
I should briefly outline how the amendments work in respect of aggregation of smaller donations towards the £7,500 threshold.
The amendments propose to require donations above the recordable threshold-£500, as proposed by the Bill-to the same donee to be accounted for where in aggregate they exceed the £7,500 threshold. This means that if a donor gave a series of donations of £2,000 to a political party, the fourth such donation would need to be accompanied by a declaration and the donor
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4 pm
We have considered whether it is feasible to have a more stringent requirement for the aggregation of all political donations and loans regardless of the recipient, but we have concluded that this would be unworkable in practice, and would impose an excessive burden on donors and more importantly on parties and other recipients. In addition, such a proposal would depart significantly from the way in which the 2000 Act currently requires aggregation to work in the reporting of donations and loans. This is particularly true given that political parties would have no means of ascertaining what other political donations an individual had made, and as such whether or not a declaration was required.
I stress that the amendments do not provide for parties, the Electoral Commission or Her Majesty's Revenue and Customs to access tax data to verify the accuracy of the residence and domicile status declarations, and as such there is no provision here for the enforcement of the requirements by the Electoral Commission or HMRC. Frankly, it has not been possible to devise such provisions in the time available, given the new onerous and costly data-holding and data-sharing requirements they would be likely to create. More importantly, we believe that it would be challenging to do so in a way that was consistent with the important principle that, without a criminal offence, an individual's tax data are a confidential matter between him or her and HMRC. As such, were an individual to lie in a declaration, it would be for law enforcement agencies to investigate.
Given the difficulty that parties would have in probing the accuracy of declarations, and in recognition of the largely volunteer nature of our political parties, the amendments propose that where the party,
receipt of a declaration would be treated as meeting the requirement in Section 56(1) of the 2000 Act for a party to take reasonable steps to verify the permissibility of donations.
If a party had concerns about the accuracy of a declaration, it could seek further information from the donor on a voluntary basis. This might include, for example, a letter from an accountant. If the party had concerns that the donor was not resident, ordinarily resident and domiciled for tax purposes, the party should not accept the donation. In line with the Electoral Commission's overarching guidance-giving role, this new requirement might be an issue on which the commission might usefully give guidance.
My right honourable friend the Secretary of State for Justice outlined the specific considerations that apply to Northern Ireland, and these provisions address that by ensuring that the requirements do not apply to Irish donors making donations to Northern Ireland parties under Section 71B(1)(a) of the 2000 Act.
I hope that these amendments will be accepted by the House. We believe that they are a proportionate and effective way of giving effect to the will of Parliament,
20 July 2009 : Column 1406
Lord Tyler: My Lords, I am afraid I still feel that the Bill is a sad example of a terribly wasted opportunity. Ministers' obsession with the illusory consensus has meant that they have never been able to step up to the mark and use the Bill to clean up big-money politics. Because they were so determined to do nothing to cause anxiety to the Conservative Party, they have ended up doing next to nothing about serious reform. I think all parties said they were determined to achieve such reform, so we regret this.
However, we are delighted that the consensus across your Lordships' House in support of the amendment tabled by the noble Lord, Lord Campbell-Savours, and US has at least led to the blocking of a very important and dangerous loophole in the law. The amendments put before us by the Minister are certainly a considerably improved package, which we welcome very much. We in this House, across all parties, were determined to prevent multi-millionaire tax exiles from continuing to buy parties and constituencies on a scale of intervention which has hardly been matched since the corruption of pre-1832 rotten boroughs.
These amendments seem reasonably effective, but in correspondence with the right honourable Mr Michael Wills, the Minister responsible for the Bill in the other place, I raised two continuing concerns, part of which have been addressed in his opening remarks by the Minister, but I want to press him on some details. First, throughout all stages of the Bill, we have been anxious to ensure that the thresholds for reporting and recording donations could be bypassed by making a series of payments, each individually below the threshold, but in aggregate greatly exceeding them. That is obviously an issue to which the Minister paid attention just now. For example, there would seem to have been a danger that a tax exile who is not a permissible donor could simply donate £7,499 on a number of occasions each year and avoid the provisions of this legislation.
In his response, Mr Wills wrote in his letter that,
- "multiple donations to the same political party, or same MP, which over the course of a year exceeded £7,500, must be accompanied by a declaration of the tax status of the donor, and the donor must be ROD in the UK".
ROD apparently stands for "resident, ordinarily resident and domiciled in the UK". Mr Wills continued:
- "This aggregation requirement applies to donations to different accounting units where those units report to the Electoral Commission via the central party. However, the aggregation requirement does not apply to multiple donations to different recipients (e.g. a party and an MP). This is because we do not believe it is fair to require donors to keep track of their interaction with different entities".
It is that latter qualification to which the Minister has just referred which really adds to our concern. I hope that the Minister will be prepared to give an explicit assurance that everything possible will be done to monitor the situation and, if necessary, to take steps to avoid any exploitation if a new loophole is discovered. We really need the Government's intention on the record if we are fully to fulfil the intention of your Lordships' House in passing the original amendment.
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Incidentally, I have some difficulty with the suggestion from Mr Wills that donors may be given special treatment if they give money to several MPs. Surely their parliamentary duties are now well funded by official sources, which is something that we have all learnt over recent weeks, and there should be no special treatment for those who donate for their party-political campaigning. What would be the position if a tax exile multi-millionaire decided to give a donation below the threshold to every MP of a particular party? The implication in Mr Wills's letter is that MPs should be treated differently from parliamentary candidates of a different party who stand against them. Surely that cannot be right.
Our second area of concern has been expressed in both Houses during the passage of the Bill; that is, very proper restrictions should now be put in place to avoid any circumvention by companies controlled by those who are not permissible donors. Mr Wills tells me in his letter:
"Section 56 of the Political Parties, Elections and Referendums Act 2000 requires donations which are made on behalf of another person to be declared as such",
and referred to an "agency". It is far from clear whether the constraints of the present Bill are sufficient to make it a firm requirement that any declarations from a company in this category are as rigorously controlled as from a tax exile individual. Again, I hope that the Minister will be able to give us a firm assurance on the record that it is intended that such companies should not be used as a bypass for donations that would otherwise be illegal.
There are one or two other key changes in the government amendments now before us when compared with those that were considered by the other place. For example, the Government have changed their mind about the reference to the tax year, which is going to be relevant. Previously we were told that the current tax year was unworkable as a reference point, but now we are told that it is possible. Again, perhaps the Minister can enlighten us.
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