This is not about taking the big money out of politics. These groups are not about getting elected. They are about giving a voice to the unrepresented and the unheard. They are a key part of our democracy and perhaps that is what the Government do not like. They have not responded to the concerns of these groups. The Electoral Commission—the Government’s own adviser—says:

“Because the Bill brings some kinds of activity into the regime for the first time, we have said to the Government that the wording that defines controlled spending needs close consideration and scrutiny … to assess the cumulative impact … on campaigners, taking into account … the scope of controlled spending … lower thresholds”,

which we will come to, “lower spending limits”, which we will come to,

“new limits on spending in constituencies”,

which we will come to, and, “concerns about administrative burdens”. We will come on to these points, but they all flow from this clause, which extends the scope. The Electoral Commission urged the Government to think very carefully about the wording. As we have heard from the noble and learned Lord, Lord Hardie, those concerns remain or he would not have moved his amendment.

I am sorry that some noble Lords seem to think that this is a Second Reading issue. To me, this is a part of Committee, a way of saying to the Government that if what they intend is transparency and this Bill fails to produce it but instead produces unintended consequences of fear, of people not campaigning when they want to, surely this is the point for us to say to the Government that the wording of this clause is not good enough. The Government should both explain why they have failed to find a solution to the concerns that were raised at Second Reading and give a reason to the House why this clause should stand part of the Bill.

5.30 pm

Lord Wallace of Tankerness: My Lords, I thank all noble Lords who have taken part in this important debate on the core definition. In particular, I thank the noble and learned Lord, Lord Hardie, for moving his amendment, which initiated the debate. The noble Baroness, Lady Hayter, indicated correctly that the stand part debate was part of this group. Actually, the next group also includes amendments relating to Clause 26.

Clause 26 seeks to amend the definition of what is regarded as controlled expenditure for recognised third parties. I want to be clear about what we are doing and what we are not doing. Yes, we are widening the range

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of activities for which campaign expenditure by a recognised third party will be treated as “controlled expenditure”. Schedule 3 inserts a new Schedule 8A into the Political Parties, Elections and Referendums Act 2000. The new Schedule 8A expands the activities that will count in a way that closely reflects the scope of the rules for political parties. That change means that not only will written “election material” be regulated but so will other events such as media work associated with an election campaign by a third party. The next group of amendments goes over these changes in some detail.

What we are not doing is widening what the spending must be about. Expenditure is only controlled expenditure if it,

“can reasonably be regarded as intended to promote or procure electoral success”

of a party or candidates. I am particularly grateful to my noble friend Lord Greaves—who I hope will continue to be an election agent for many elections to come—for summing it up. He said that in seeking the objectives of greater transparency, we should not have a chilling effect. That is an objective that we share and seek to implement in this Bill. We do not want our national politics taken over by super-PACs—as he said, “big bucks from big boys”—and we do not want a situation where it is possible for a third party organisation to spend more than the candidates can legitimately spend. I agree that what we are seeking to do is a listening exercise. The noble Lord, Lord Rooker, summed it up correctly. What Governments do in Committee is listen, get the mood of the House and reflect on what has been said, and that is certainly what we intend to do.

We are aware of the concerns expressed by charities and voluntary organisations that the proposed test will impact upon their normal day-to-day activities. The Government believe that, by not changing the existing test for controlled expenditure, charities, voluntary organisations and other campaigners should be reassured that their normal engagement with public policy will not be subject to regulation as long as it cannot,

“reasonably be regarded as intended to promote or procure electoral success”

of a party or candidate.

I will pick up two specific concerns that were expressed. The noble Earl, Lord Sandwich, expressed that concern about small charities—we will come on to the thresholds later—but he also mentioned the importance of volunteers working with small charities, which I certainly recognise. I can indicate to the noble Earl and to the House that volunteer costs will not have to be included in the calculation of staff costs because volunteers are excluded from the calculation of staff costs by virtue of Section 87(2)(b) of the 2000 Act.

My noble friend Lord Hodgson asked about hustings meetings if not all candidates are invited. My noble friend Lord Phillips made reference to Charity Commission guidance on this. My understanding is that the Electoral Commission has said that it expects non-party campaigners to apply a similar approach to current hustings guidance. Subject to any change of approach in that guidance as a result of the review that is taking place, this would mean that the costs of

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a hustings event involving political parties will be controlled spending under the non-party campaigning rules only if all the following conditions apply.

Those conditions are: the event features party spokespeople—hustings events that feature only local candidates will be covered by the candidate spending rules, as at present; that the event is open to the public, rather than just members of the organisation that is organising the hustings; that the event features party spokespeople and not all parties contesting the election are invited to attend; and that organisers cannot provide objective reasons for their decision as to which parties to invite, such as the parties’ prominence or track record in previous elections. I recognise that this is an issue and I will certainly write to the noble Lord and ensure that that letter is available, not only, I suspect, to Members of the House but to those who have a wider interest in this matter.

The test that I am referring to has been in existence since 2000 and was in place for the 2005 and 2010 general elections. These elections did not see charities and other campaigners being prevented from engaging in and influencing public policy, although I take the point that it is “other activities” and any possible changes to the threshold that are giving rise to concern.

The amendments in the name of the noble and learned Lord, Lord Hardie, would amend Clause 26 so that only activity that can reasonably be regarded as intended for the “principal purpose” of promoting or procuring the electoral success of a party or candidate is covered. However, we believe that the introduction of a “principal purpose” test could lead to greater regulatory uncertainty, as well as an obvious avenue for avoidance, which could undermine the rules as a whole.

On the point of regulatory uncertainty, the Electoral Commission has expressed concerns that we would be retaining a familiar test but introducing a new subjective element which could lead to significant regulatory difficulty. Determining the “principal purpose” of any expenditure adds a new layer of judgment and complexity to the test and therefore could complicate rather than clarify.

The test also creates an obvious avenue for avoidance; for example, a regulation campaign presented as mainly trying to recruit members and donors could clearly also be seen to be promoting electoral success, and in these circumstances might not be covered. Under the “principal purpose” test, the fact that there was a clear intention to support a party or candidates would therefore be immaterial and not subject to regulation.

This issue was looked at by the Committee on Standards in Public Life back in 1998, which led to the establishment of the 2000 legislation. Paragraph 10.78 of the committee’s report refers to activities in the 1959 general election—I can just about remember accompanying my parents to a polling station and having the day off school. It says that,

“a privately owned steel firm, Stewarts and Lloyds, ran a series of advertisements in daily and Sunday newspapers, most of which were thought to have large Labour readerships. The advertisements were clearly intended to discourage voters from voting Labour. That is not, however, what they said. On the contrary, the Stewarts and Lloyds slogan insisted: ‘It’s not your vote we ask for, it’s your voice. Speak up against state-owned steel’. In one advertisement,

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published in the pro-Labour Daily Herald, the firm stated baldly: ‘This advertisement is not trying to sway votes in any political election’”.

The committee goes on to say:

“It is clear to us that advertising of this kind … has as one of its objects or one of its foreseeable effects, though not necessarily the only one, promoting the electoral prospects of one or more political parties and damaging the electoral prospects of one or more others. It is simply naive to imagine that organisations that send out explicitly political messages in the midst of election campaigns, or shortly in advance of them, are engaged innocently in generalised, nonpartisan promotional propaganda”.

That is why there is concern about introducing a subjective element.

The first recommendation of the most recent report of the Commission on Civil Society and Democratic Engagement, on the definition of regulated non-party campaigning, says:

“PPERA and the Lobbying Bill include a definition of non-party campaigning that is both ambiguous in meaning and makes too many campaigning activities subject to regulation that are not intended to promote or procure the election of a registered party and its candidates”.

If the campaigning is not intended to procure that, by this very definition it will not be regulated or controlled expenditure. The only difference is whether there is a subjective test or an objective test. For reasons of trying to minimise avoidance, the objective test is the proper one. Amendment 159B tabled by the noble and right reverend Lord, Lord Harries, amends Clause 26 so that any campaign which can reasonably be regarded as intended to promote or procure electoral success involving legislation going through Parliament during the regulated period would not count as controlled expenditure. Again, to incur controlled expenditure a third party must be carrying out an activity that it would be reasonable to regard as intended to promote or procure the electoral success of a party or candidate.

I take issue with one thing that my noble friend Lord Greaves said relating to campaigning during a Scottish parliamentary election or a European election over issues in Parliament at Westminster. He said that he thought that normal campaigning activities ought not to be prevented. I am interested in the words he used: “ought not to be prevented”. There is nothing intentional here to prevent activities. If it is an activity which would pass the threshold and be seen as intended to promote or procure an electoral advantage for a party or for a candidate, then it is for registration for regulation. The purpose is not to prevent it. I understand why he said that; it is a common slip of the tongue. Indeed, the noble Baroness, Lady Hayter, asked how many of Beatrice Webb’s campaigns would be ruled out. There is nothing here that would rule them out unless they reached the spending limit, which the Green Party did not even reach at the last general election.

However, I take on board the perfectly legitimate concern that I have heard at a number of the meetings I have had about the possibilities of a chilling effect. That is why it is important that we look at these issues and try to ensure that we have proper transparency without introducing a chilling effect. I plead guilty at some of the meetings to a slip of the tongue that this will rule out a particular sort of campaigning. It is not

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surprising that some charities and third-party organisations get the impression that they will not be allowed to campaign, but that is neither the purpose nor the effect of this part of the Bill. If you are going to undertake campaigning activities which would procure or promote the electoral advantage of one party or a candidate, then if you reach a particular threshold you should be registered and there will be the transparency that goes beyond that. We can debate the size of the spending limit it would be subject to, but many of the charities which have expressed concerns would come nowhere near the top spending limit that has been suggested in their normal activities.

Lord Greaves: I accept everything that my noble and learned friend said about the difficulty of getting absolutely clear in our minds what we are talking about. We are of course talking about whether expenditure comes within the regulation, not whether it is ruled out. However, let us imagine that during a UK general election the Scottish Parliament is considering a Bill that is highly controversial in Scotland and that is being promoted by the present SNP Scottish Government but opposed by everybody else. If organisations in Scotland lobby on that Bill during the regulated period running up to a UK general election, will they be caught or not? That is the question I am asking.

Lord Wallace of Tankerness: Our view is that if it could reasonably be seen that the purpose of that lobbying was to get the Scottish Government to change their mind, then no, the organisations would not be caught. However, if to further that campaign they were to say, “And by the way, in this general election don’t any of you vote SNP because that will only encourage them”, then I think that would cross the threshold. But if the focus and intention was to try to change the policies of the Scottish Government with a particular piece of legislation, it would not be a campaign that was intended to influence the outcome of the United Kingdom general election.

5.45 pm

Lord Harries of Pentregarth: Is this not a fundamental threat to democracy? Let us take an English example. One party wants an extra runway at Heathrow. That is opposed by another party. If this is going through during an election year, surely campaigning groups should not be hindered in any way. They should have no curb on their election expenditure at all. It is a fundamental fact of democracy. They should be allowed to campaign.

Lord Wallace of Tankerness: My Lords, of course they will be allowed to campaign. I agree that it would be a travesty if they were not allowed to campaign. But if that campaign then crosses a line from campaigning on a perfectly legitimate issue to saying, “In our campaigning we advise you not to vote for A, B, C and D and to vote for F, G, H, J and K”, it is not that they are stopped from doing that; it is just that it becomes a regulated activity and they will have to account for the funds that they spend on promoting the election of particular candidates or the non-election of others—and there would be a top limit, just as political parties have limits on what they are allowed spend.

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There is no question of them not being allowed to campaign. I fear that sometimes this debate has been unfortunate—as I say, we have all possibly been guilty of using loose language at times—because the impression has been given that we would not be allowed to campaign. It is not that we would not be allowed to campaign; it is just that if a campaign moves from a campaign on an issue to a campaign that seeks to promote or procure the election of a particular party or candidate, it becomes regulated expense.

Lord Harries of Pentregarth: I am sorry to delay the Minister further, but with due respect I do not think he is really facing up to the difficulty of the present definition of qualifying expenses. I agree with him that if a particular campaigning group says, “Therefore you must vote A, B or C”, of course that would need to be regulated. But it still might be liable to be regulated even if it did not do that, because the Bill is quite clear that you do not have to mention a particular party, and that it does not have to be your primary purpose. It could be reasonably interpreted that if one party is supporting an expansion at Heathrow and one is opposing it, by implication the campaigning group wants one party elected rather than another. There are fundamental difficulties here.

Lord Wallace of Tankerness: That reflects some of the amendments tabled by my noble friend Lord Tyler, to which the noble and right reverend Lord, Lord Harries, lent his support. We are grappling with real issues here as to the clarity or otherwise of when people will cross a line. I accept that there are some cases which are quite clearly on one side of the line and others that are nearer the margins. The noble Baroness, Lady Hayter, said that some people had been advised by the Electoral Commission that what they were proposing to do would be regulated. I would say to them, “Take the advice of the Electoral Commission. If it says you should be regulated, then register”. There is nothing stopping people campaigning. In fact, they might campaign with a lot more confidence if they know that they are doing the right thing because they have taken the advice of the Electoral Commission.

Baroness Hayter of Kentish Town: I dread going on to other clauses, because I am going to get told off, but this is rather important. Registration is a threat to many of these organisations. They do not have the staff to fill in the forms. Charities are worried that by being registered with the Electoral Commission rather than the Charity Commission, it will look as if they are political because of the word. The bureaucracy of it frightens them. Some organisations will be responsible for 15 or 20 local groups. They will get caught by coalition funding. The Minister says, “Let them register”. The problem is, that in itself is a threat. Maybe he has misunderstood the threat of registration to these organisations.

Lord Wallace of Tankerness: My Lords, I do not think that I have, because I indicated that one of the concerns we have is the potential chilling effect. I am trying to make it clear that the threat is not that they cannot campaign at all. I regret sometimes the language used. It may be inadvertent, but the problem is that if

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we as politicians dealing with the Bill say that people will not be allowed to campaign on certain issues, it will be picked up outside and people will believe that they might not be allowed to campaign on certain issues. I hear what the noble Baroness says about the threat. I do not believe that registration is necessarily a threat. It is part of trying to secure transparency, as my noble friend Lord Tyler said. It is trying to secure the right balance, because the more transparency you have, the more likely it is that you will have more regulation. We are doing an important task as a Committee, which is to put up issues to make sure that we try to achieve the right balance.

In relation to other amendments, my noble friend Lord Greaves sought to exempt activities relating to research, press conferences, meetings and the lobbying of government and other legislative bodies. Again, the same explanation applies. The day-to-day activities of third parties, including working with legislative bodies across the United Kingdom, is not, and under the Bill would not be, subject to regulation under PPERA. Only activities which a reasonable person would regard as intended to promote or procure electoral success are captured.

Amendment 159D is about the same issue: issues being debated in another legislature. In the European election, the European Parliament cannot determine whether Britain continues its membership of the European Union, but it is not impossible—it does not need too much imagination—to think that it might be what third parties might be campaigning on in the forthcoming European elections. If that is what they are campaigning on to promote one party over another, it is not unreasonable, if they meet the thresholds, to require them to register.

The noble Lord, Lord Walton, talked about the all-party groups and the important work that was done in relation to muscular dystrophy. I understood him to ask whether the charities that support those groups with staff will be covered. It is difficult to see how the work of all-party groups—he knows this, as he showed in his remarks—could be caught or how the groups could be promoting electoral success in the reports they produce. However, the difference might be if one of the charitable bodies that had been supporting the all-party group were to turn around and say, “We helped produce this report. Member X and Member Y are really good people and people should go out and support them”. I am not suggesting for one minute that they would do that, as charity law might make it very difficult for them, but that would be trying to procure an election result and so on. Simply supporting an all-party group doing the very valuable work that the all-party groups do could not be seen as promoting a particular—

Lord Walton of Detchant: If, say, an all-party group on heart surgery had decided, on excellent scientific advice, that it wished to support the continuation of paediatric cardiac surgery in one centre but not in another, which was in a different constituency, would that be regarded as being in breach of the law?

Lord Wallace of Tankerness: In all these hypotheticals, you hesitate, but I cannot see how supporting what must essentially be a medical judgment by a group to

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support a particular centre over another—it is not supporting a particular candidate or party over another—would constitute trying to promote a political party. It might be promoting a particular medical centre, but that is not the same as a political party.

Baroness Royall of Blaisdon: My Lords, I accept that the issue relating to APPGs is difficult, but I am sure that there is—forgive my ignorance—an anti-smoking APPG that may well be wholly in favour of standardised packaging for cigarettes. We know that we all agree on this measure, at the moment, but if, six months before the election, this had not been resolved and the APPG still seemed to support the introduction of standardised packaging on cigarettes—which is something that the coalition used to be against and we were in favour of—would that be caught by the new law?

Lord Wallace of Tankerness: I find it difficult to see how an all-party group, supported by all parties, would fall foul of something, because by its very nature that would be difficult. The noble Baroness raises a point that was at the core of the points made by my noble friend Lord Tyler about when there is a change in a particular policy. This brings us to an important issue about what should be in the Bill and what should be left to guidance. This point was also made by the noble and learned Lord, Lord Hardie, who asked about groups changing their policy position in the middle of the controlled period.

Lord Hardie: I was not speaking about a group changing its position but about a group remaining constant and a candidate then adopting the campaign. I accept that retrospectively the expenditure is protected, but what about prospectively? What about future expenditure?

Lord Wallace of Tankerness: I apologise; I misrepresented the point. What happens if the group maintains its campaign and one party suddenly comes on board and, presumably, one party breaks rank and retreats? The Electoral Commission’s guidance is clear that if a party or candidate subsequently adopts a campaigning organisation’s policy, it will not be caught unless the campaigning organisation draws attention to the fact or increases its campaigning as a result. In addition, a group must be reasonably regarded as intending to procure electoral success. If at the time a party or candidate does not have a policy on the subject of the organisation’s campaign, it is very difficult to see how it could be seen to be promoting that candidate or the party. Indeed, it would seem to be impossible to objectively argue that a policy campaign by a third party could be intended to favour a party or candidates if those parties’ or candidates’ views on the policy were unknown at the time.

A question was also asked about the scorecard count. A third party setting out a scorecard 11 months before an election could reasonably be regarded as trying to get parties to change their policy, not necessarily to promote electoral success. However, a third party publishing a scorecard a week before election day might be regarded as promoting the electoral success of a party or candidate.

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The noble and right reverend Lord, Lord Harries, put his finger on it by saying that many of the groups he has talked to would rather that this was in legislation. On the scorecard issue, I sought to show that there were shades of this. It can sometimes be very difficult if you try to pin it down too much in legislation. Often when we legislate with specific examples—I have heard this on other subjects in your Lordships’ House—we can do more damage and cause more uncertainty by what is left out than by what is there. It does not allow the flexibility to take full circumstances into account.

What has been raised is a perfectly legitimate point for this Committee to express views on. We as a Government should consider whether it is better to have these things set out in statute, subject to the misgivings that I have expressed about inflexibility—once it is there, it takes primary legislation to repeal it—or whether it is better to allow that position to be determined by guidance.

The next paragraph in the report from the Committee on Standards in Public Life states:

“That said, we acknowledge, of course, that in some cases it will be hard to determine whether the advertising and other propaganda undertaken by an individual or organisation other than a political party is or is not intended to affect an election outcome. Ultimately it will be up to the courts to decide in such cases, but one role we envisage for the Electoral Commission”—

which did not exist when this was written—

“is in giving authoritative but not legally binding advice on such matters”.

It would appear that those who set all this in motion some 15 years ago saw giving guidance as a proper role for the Electoral Commission. As I indicated in my opening remarks on the previous amendment, we engage with the Electoral Commission and believe that it would be helpful to have draft guidance available. I also accept—this is something that we want to reflect on—the views that have been expressed in the House that some of this would be better put in primary legislation. That said, as I indicated, there are drawbacks with that as well.

I hope that in that spirit I can invite the noble and learned Lord, Lord Hardie, to withdraw his amendment.

Lord Hardie: I thank noble Lords on all sides of the House for participating in this full and interesting debate. It is quite clear that there is a certain consensus that it is essential we get the balance right in the Act, avoid unintended consequences and clear up grey areas. I note from the noble and learned Lord the Advocate-General that the Government will consider the extent to which the legislation should be amended. In light of that, I will reflect on everything that has been said today. In the mean time, I beg leave to withdraw the amendment.

Amendment 159A withdrawn.

Amendments 159B to 159F not moved.

6 pm

Amendment 159G

Moved by Lord Morris of Aberavon

159G: Clause 26, page 13, line 19, at end insert—

“(5A) Before subsection (5) insert—

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“( ) Any limit applying to campaign expenditure under this Act where that expenditure is incurred by or on behalf of third parties in connection with the production or publication of election material which is made available to the public at large, or any section of the public in Wales, shall not include costs incurred by the translation of those materials from English into Welsh or from Welsh into English.””

Lord Morris of Aberavon (Lab): My Lords, this amendment is in my name and that of my noble friend Lord Elystan-Morgan. I shall not take up too much time as I hope that the Minister will give assurances that I, and those concerned with the Welsh language, have nothing to worry about. The Welsh language is a devolved matter under Schedule 20. It is a matter for the Welsh Government. However, we must always be vigilant when Westminster legislation may affect it and might injure the proper use of the language. The foreword of the Westminster Welsh Language Act 1993, regarding the setting up of a board to promote and facilitate the use of the language, states,

“in the conduct of public business and the administration of justice in Wales the English and Welsh languages should be treated on a basis of equality”.

I can claim that, as a young Member of Parliament as far back as 1962, I was the first in a document to the Government of the day to use the expression “equal validity”. It was subsequently adopted and is now enshrined in Westminster legislation. Nothing should be done that might undermine that principle, even unwittingly. I have received representations from the Welsh Language Commissioner seeking assurances on this point.

Part 2 of the Bill regulates more closely the spending during election campaigns by those who are not standing and are not registered as a political party. It also reduces the number of spending limits by non-political parties and registered third parties. Organisations must comply with “controlled expenditure” limits for that organisation. This is defined as the expenditure associated with the production of material made available to the public at large. The Welsh Language Commissioner is concerned that the cost of translating election material falls within this definition and I tend to agree with her. The Bill makes no provision to reduce or offset the cost of such translation in relation to the Welsh language and could therefore adversely affect the present situation. Reduced expenditure as proposed in the Bill would adversely affect the provision of bilingual election material in Wales. It is possible to envisage a situation where some non-political parties and third parties chose not to issue bilingual election material for fear of reaching or exceeding the threshold. Hence, I need an assurance that the proposed spending limits should take account of the additional costs that come with providing election material in Wales. My amendment is drafted to seek to ensure that the limit in the Bill on expenditure shall not include costs incurred by the translation of those materials to Welsh or to English as the case may be. I beg to move.

Lord Harries of Pentregarth: My Lords, I will speak to Amendments 165B, 161A and 165C in my name, which I put forward on behalf of the Commission on Civil Society and Democratic Engagement. First, I

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pass on the apologies of the noble Lord, Lord Cormack, who has a long-standing engagement and could not be here this evening. His name is added to the commission’s amendments. He has promised to be here on Report not only to speak but to vote for any commission amendments. Many noble Lords have been kind enough to recognise the quality of the report brought forward by the commission. I ought properly to pass on the thanks to those to whom it is properly due—the team of people from charities and campaigning organisations who have been working night and day in order to produce it.

Charities and campaigning organisations accept that a wider range of activities needs to be taken into account. It is part of their wider conviction that charities should be regulated and be transparent. There is absolutely no problem about that. As Amendment 165B points out, there are real difficulties about including staff time in expenditure that counts as a qualifying expense. There is the difficulty of separating staff time used on campaigns generally from that which is directed specifically towards elections, particularly if this is to take place during a whole year—the regulatory burden on charities would be quite disproportionate. The Royal Society for the Protection of Birds says in the report:

“Widening the activities that count towards controlled expenditure would require significant new reporting procedures, including time sheets to account for staff time connected with campaigns and systems for recording spending in regional offices. This would siphon money away from conservation work and amount to an unnecessarily onerous regulatory burden: more than the £0–800 per organisation for implementation estimated in the Impact Assessment”.

It is also important to note that the Electoral Commission, though its long-term view is that staff time should be included both for third-party organisations and political parties—for which at the moment it is not included—says quite clearly in its latest briefing that such are the difficulties of including this that it should not be included before the 2015 campaign. That is a very clear and strong recommendation.

Subsection (1)(b) of the proposed new section in Amendment 165B concerns translation. We firmly support what the noble and learned Lord, Lord Morris of Aberavon, has said. The cost of translation from Welsh to English and English to Welsh should not be included. Our amendment goes slightly wider than simply translation because it would also include things such as Braille. The Electoral Commission also supports this although it says that production costs should not be included. I do not think the Commission on Civil Society and Democratic Engagement would agree with that because the production costs are also extra as a result of the translations. It is not just the job of hiring a translator but also the costs of printing the extra pages in Welsh.

Proposed new subsection (1)(c) concerns safety and security. This is obviously one of the concerns that arose from Northern Ireland. At the moment our amendment refers to safety and security for meetings. The Electoral Commission has very valuably added that “rallies” should be included here and I think the Commission on Civil Society and Democratic Engagement would certainly support that. Proposed new subsection (1)(d) refers to documents making

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material available for people who are either physically or in any other way disabled. That, again, is an extra expense which should not be counted as part of the qualifying expenses. I hope that the Government will also bring forward an amendment to ensure that extra expenses by disabled groups—for instance, to get them to meetings, which can amount to quite a lot—would be included in subsection (1)(c) of the proposed new clause, which obviously concerns the safety of disabled people at meetings and rallies.

Proposed new subsection (1)(e) refers to communications with supporters. A clear distinction is made in the legislation between the general public, who are brought into the regulation, and supporters. However, “supporters” is defined rather narrowly in terms of donations. Of course, the modern understanding of “supporters” over all sorts of different media is much wider than that. The commission believes that it has a way of solving that by reference to the Data Protection Act, whereby those who have given consent to be contacted by the organisation, in accordance with the Data Protection Act, should count as “supporters”. We hope very much that the Government will look sympathetically at that as a way of making a sharp distinction between those who are supporters and the general public.

Amendment 161A refers to market research. The commission does not believe that general market research should count as a qualifying expense. It should only do so for the purpose of assessing people’s polling intentions; clearly, if it is designed to find out people’s polling intentions, it should be brought within the regulatory framework.

Amendment 165C would ensure that this entire clause could only be changed by primary legislation. The commission believe that this is such a fundamental issue of democratic rights that it should not simply be amended by a government Ministry. It should only be changed as a result of primary legislation.

Finally, I have added my name in a personal capacity to Amendment 163A in the name of my noble friend Lord Best, to which I am sure he will speak. The National Council for Voluntary Organisations did research independent to that of the commission but came up with virtually identical recommendations and one or two more. This is a recommendation that the NCVO was particularly keen to see implemented, which would exclude rallies and meetings from the list of activities which are to be counted as “controlled expenditure”.

Lord Elystan-Morgan (CB): My Lords, I support the amendment of my old friend, the noble and learned Lord, Lord Morris of Aberavon, and also support a parallel point which was advanced by the noble and right reverend Lord, Lord Harries of Pentregarth, about Braille.

I accept the arguments forcefully put by the noble and learned Lord, Lord Morris of Aberavon, but one can take the matter slightly further. The issue is whether the translation of certain documents from Welsh into English or English into Welsh should be regarded as relevant expenditure under Clause 26. The next issue is whether the position of the Welsh language is so

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different from all the other cases of which one can conceive in this matter as to make it unique; that is also important.

To deal with that, I ask the Committee to indulge me for a few minutes in looking at the Act of Union of 1536; I appreciate that not many of us were around at that time. However, it has cast a long shadow over the land and nation of Wales over many centuries. The opening words of that Act were:

“ALBEIT the Dominion, Principality and Country of Wales justly and righteously is, and ever hath been incorporated, annexed, united and subject to and under the Imperial Crown of this Realm”.

It then goes on to say that there is therefore no Wales and never has been any Wales at all, as a land and nation.

6.15 pm

Parallel with that general declaration, which must be one of the most drastic and impudent in legislation, was an attack upon the Welsh language. Nothing would count in so far as the validity of documents in court was concerned unless they were in the English tongue. There have been many amendments to that; one was the Welsh Courts Act 1942, which dealt with the minor matter of the right of witnesses and parties to speak the Welsh language in a Welsh court. The main Act, referred to by the noble and learned Lord, Lord Morris, was the Welsh Language Act 1967, which brought about the principle, which one cannot overstress, of equal validity. That meant that anything that was done in Welsh was of equal validity as if it had been done in English. That would be the case, for example, for a will, a conveyance, a lease, an instrument of transfer, a deed of settlement or anything of that nature. Where it dealt with an official form, there was a machinery set up to produce such forms with that automatic validity. If the amendment is not conceded, I submit that one would be undermining that principle of equal validity. It is a small, narrow and confined matter, but one of absolute principle.

I have dwelt on these historical background features also for this reason. I regard the noble and learned Lord as a person of considerable reason and good will. Even in this season of good will, however, it may well be that he will be mildly tempted to say, “Ah well, much as we appreciate the position of the Welsh language and admire its situation—one of the oldest living languages in Europe, spoken for at least 1,500 years and probably more—we do not think this necessary, nor that we should do it. We are afraid that a whole Babel of other languages will be brought into consideration at the same time, and there will be people from all parts of the world using different languages in our British community saying, ‘Let us have the same position as the Welsh language’”. If that argument were advanced—and it may be that I do the noble and learned Lord no justice whatever—it would be utterly spurious. The position of the Welsh language is defined in statute by the Acts I have mentioned, those of 1942, 1967 and the Welsh Language Act 1993. That last was brought about by the initiative of our late colleague Lord Roberts of Conwy, a splendid statesman of a man; we miss him very much. Those three Acts put the Welsh language in a wholly unique position.

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Lord Wigley (PC): My Lords, I am grateful to pursue the theme that has been running for the past few minutes, and to give support to the amendment in the name of the noble and right reverend Lord, Lord Harries. As the noble Lord, Lord Elystan-Morgan, said, it is a poignant moment for the Welsh language, in that the late Lord Roberts of Conwy is no longer with us. He played a major part in the 1993 Act and many other aspects of the Welsh language gaining status. Of course, the noble and learned Lord, Lord Morris of Aberavon, and the noble Lord, Lord Elystan-Morgan, played roles as government Ministers when the 1967 Act was passed. That Act changed the status of the Welsh language fundamentally, bringing in the concept of equal validity. However, for equal validity to work, it presumed that the individual could have access to both languages. The corollary to this was the development of the availability of forms and information in Wales through the medium of Welsh as well as English in order to respond to that principle and put flesh around it.

Over the past 40 or 50 years, there has been tremendous acceptance of Wales as a bilingual community. Campaigning organisations in the voluntary as well as the governmental sector have come to recognise the need, in order to allow citizens to have their full rights with regard to the language, to pursue, as far as is practical, a bilingual policy. Official bilingualism is what makes personal and private equal validity a meaningful concept. Some organisations may feel the additional costs that inevitably go along with publishing things in two languages to be a burden. Some organisations may, frankly, be glad of an excuse not to do it. If that were the case, it would be a step backwards—a step that might start unwinding the consensus that has been achieved with considerable difficulty and after a lot of campaigning across the political sectors. I therefore urge the Minister to give serious consideration to the principles behind this amendment and to agree, if assurances regarding the fears that have been expressed cannot be given now, that at least some thought will be given between now and Report to how these can be accommodated.

The principle of access to information is equally valid for disabled people. I have campaigned very long and hard for many years to make sure that disabled people get the information that they need. Very often, that means providing an approach in individual circumstances, sometimes in group circumstances, as opposed to providing generality. One does not generally see Braille going to every household in case an individual might need it. One might argue that it should, but it is not generally the case. However, with the Welsh language, there is a general approach; both arguments are valid, but valid in slightly different ways and in slightly different circumstances. I hope that the Government will find a way to respond to these different circumstances as they consider these amendments.

Baroness Mallalieu (Lab): My Lords, I support the amendments in my name and that of the noble and right reverend Lord, Lord Harries, to which he has spoken so fully. I have one or two points to add. First, on staff costs, I respectfully suggest that one has to remember that as the regulated activities are going to

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be expanded, it is inevitable that the staff costs associated with them will grow. How those activities are to be expanded is another matter, but we all agree that there are matters that should now be included that have not been up to now. The growth in staff costs is a further reason for increasing the threshold of spending, not just from the level in the Bill, but from the existing PPERA level, in order to give a fair approach.

Secondly, on translation, I slightly hesitate to raise this matter, but it is sometimes necessary to communicate with communities that do not have English as their first language. Although there has been special pleading on behalf of Wales, which I totally accept and endorse, there may well be other communities for which that may be a legitimate expense in certain circumstances. It may be necessary to communicate, perhaps in Urdu, in relation to a particular campaign. I submit that, in order to enable a campaign to communicate, translation is something that the Minister ought to have uppermost in his mind. It is also right to say that safety and security, which the commission looked at, relates not just to Northern Ireland—although particularly so there—but also to those who steward meetings and so on. That is an expense that is very often essential and ought not to be included in regulated expenditure.

It also seems wrong to proceed with part of the recommendation of the Electoral Commission about staff costs and leave the other part behind. I have in mind the review of the Electoral Commission back in June, which suggested that rules should be widened to include staff costs for political parties. The Bill, of course, does not deal with the political parties, but it seems wrong to advance one and not the other. There should be parity between non-government organisations and political parties in respect of declared expenditure. The Electoral Commission accepted that, so far as political parties were concerned, the matter would be difficult, not straightforward, and would require more consideration because it was so complex. In making the same recommendation for non-party campaigning, it again said that it was complex, potentially controversial, which it certainly is, and needed further consideration.

It seems that there is no real urgency about the question of staff costs being included for the 2015 election. I may be wrong. A spectre was raised by the noble Lord, Lord Greaves, and I have also heard it from Ministers: what about the as yet unidentified ogre who comes out of the woodwork carrying bags of money to throw into an election campaign, perhaps in a particular area, and to distort the democratic process? What about the US-style zillionaires, of which, I have to say, there is no sign in this country? This scenario seems unlikely because we have rather different rules for television advertising and so on. However, if such people really are lurking, ready to come in and try to buy the electoral process here, surely it is for the Government to produce an amendment to the Bill that deals with that situation, rather than simply taking a big stick and thrashing all around, hitting smaller charities and organisations as well. I ask the Minister to agree that, at this stage, it is not really important to include staff costs for the 2015 election, given that we are going to have a review which should take in political parties as well.

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Lord Tyler (LD): My Lords, it must be apparent to the Committee already that a number of amendments in this group have similar objectives. I am very sympathetic to those which have already been mentioned, but I want to concentrate, before my voice gives out, on Amendments 160J, 165A and 165D. These all result directly from discussions I have had with a wide range of organisations.

The group deals with Schedule 3 and how particular activities might be excluded from the list of those which come under controlled expenditure. There is a principle in current electoral law that communication with one’s own members is not “election material”, and therefore it is excluded from the sort of controls and transparency that is being looked at here. However, membership is becoming—sadly, many of us feel—an almost outmoded concept. Organisations do not need members in order to have clear, regular supporters. Many prefer to seek funding through periodic contributions rather than through the straitjacket of an annual membership subscription. The concept may well have been more appropriate, more formidable and more general at the time of the 2000 Act, but it is surely disappearing rather quickly now. It is in that context that I believe there should be some degree of flexibility in relation to Schedule 3.

It is particularly in the nature of a non-party campaign that you can be on board on one issue, but not on another. You simply lend your support as you see fit from time to time, but you are still a committed supporter of that organisation or campaign. This idea of a committed supporter is one which the Electoral Commission itself has recognised, so it seems sensible that the Bill should pick that up and define it more clearly. Our Amendment 160J does just that. It defines a committed supporter as someone who has made a donation, or who in the past 12 months has either communicated directly with the organisation or expressly consented to receive the organisation’s communications.

The noble and right reverend Lord, Lord Harries, and his colleagues, have tried to deal with that problem in their Amendment 165B—so we are on the same track. My difficulty with their amendment is that it sets a very low bar for becoming a committed supporter. Anyone who uses e-mail knows how much correspondence we all get from people to whom we have given permission under the Data Protection Act for contact to be made. It is very easy—too easy—to give that consent. So I am afraid that the Data Protection Act is, in this context, insubstantial and insufficient. Our amendment sets the bar a little higher, so that a supporter is not just the passive recipient over decades of many quickly deleted e-mails, as might be the case with that so-called protection.

6.30 pm

Campaigners nowadays usually e-mail asking that you click a link to sign a petition, or that you donate. That requires an active participation and active support rather than just a reactive response. These activities would count toward making someone a committed supporter of the organisation under our amendment. Simply receiving the e-mail and ignoring it would not make you a supporter, just as receiving a cold call from a salesperson and not buying their

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product does not make you a customer of the salesperson’s company. We think this is a fair level at which to draw the bar for who counts as a supporter, since otherwise communications to millions of quite passive non-supporters could be excluded from counting as election material. That would not be transparency, and we do not think it would be right. Our amendment provides a fairer, more effective and balanced approach.

Amendment 165A deals with the staff issue, which is a matter of considerable concern to organisations large and small. The Electoral Commission supports counting staff costs for political parties’ election expenses, as the noble Baroness said. That is something to which another Parliament will doubtless return—I hope very soon. Our amendment again seeks a balance on this issue. We do not think a blanket exemption on all staff costs is right, because staff costs can be very important. They already have to be recorded by non-party organisations for the production and distribution of election material, and rightly so, for the simple reason that they could otherwise directly employ people to run around constituencies delivering leaflets, and it would not count against the expenses limits. Likewise, we think it right to include staff costs for paid canvassers. If someone employs people to canvass on their behalf, in an attempt to promote or procure electoral success, that is surely significant and should be recorded—it should be transparent. However, we do not believe that it makes sense to include the internal staff costs associated with booking a venue for a press conference or rally, or travel time to attend it, for example—a few half hours in the day, or whatever it might be, which would not normally be recorded, particularly by smaller organisations. These are things of a kind that are very unlikely to matter in the end to the likely electoral outcome, but they add a level of bureaucracy that a lot of organisations would regret. Charities would not like to pay yet more administrative costs against the main purpose of their charitable enterprise. All of us involved in charities are well aware of their sensitivity in trying to avoid additional bureaucracy and administration.

It is unnecessary to ask organisations to try to account for a half hour here or there spent booking a room, by someone whose annual salary is perhaps £30,000 and who is paid all the rest of the year for doing something totally unrelated to elections. Our amendment seeks to exclude staff costs from the activities relating to press conferences, public meetings and transport. We believe that this would remove unnecessary burdens on organisations that would otherwise have to open up great loopholes for multimillionaires.

Finally, Amendment 165D echoes something that has already been suggested in dealing with future amendments to Schedule 3. I need hardly draw the Committee’s attention to the controversy that this legislation has caused. We need to be very careful about the potential to amend this crucial schedule without due process; at the very least, it should be with consensus between Parliament and the Electoral Commission.

Lord Horam: My Lords, I add my voice in paying tribute to the commission chaired by the noble and right reverend Lord, Lord Harries, who very generously

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pointed out that it was a team effort. I am sure that it was, but it is remarkable that his report has been produced in only five weeks.

In the particular area that we are discussing on these amendments, it shows how, if the Government listen to the commission’s report and take account of it, there is a way forward whereby we can achieve what we are all looking for—to protect democracy but not see it overwhelmed by outside lobbying of a particular kind, although that lobbying may be worthy in its intention. I would slightly disagree with the noble Baroness, Lady Mallalieu. I am new to this House and may be misinterpreting things, but I do not think that we should always take a package as a whole—either the Government’s or the commission’s package. I do not think that that is the spirit of this House. What we can do, in reference to her view that we should have a view about the role of civil society, is to take into account the spirit of what lies behind the views expressed in detail, point by point, in the commission’s report. The Government would be well advised to do that.

I refer, too, to remarks made by my noble friend Lord Greaves. With regard to what he said on an earlier amendment, we are in some danger in looking just at charities and non-political party campaigners and forgetting the main body of people—the PBI, or poor bloody infantry of an election, the candidates and parties who have to go through the whole wretched business of fighting elections. That is something that we should not forget in concentrating, as we obviously are today, on the problems for charities in the electoral process. Let us not forget what a general election is all about. I know it very well, having fought 10 elections myself, with varied success.

To come to the point of the amendments, there is sense in exempting directly employed staff for the 2015 general election. It is true that the Electoral Commission has said in principle that party staff who are directly employed and full time should be included in election expenses; that would be something that it would want to press. But one accepts that in the context that we are now talking about, in the short time before the next general election, sorting all this out would be very difficult and would pose huge problems for many charities, which may have very large staffs. Most associations that fight general elections have extremely small staffs—almost no full-time staff, in many cases—and exist entirely on volunteers. We tend to forget that. I am not speaking on the Electoral Commission’s behalf, as I keep stressing, but that is something that it has wisely said.

I disagree with my noble friend Lord Tyler, in that I do not think that it would help to try to differentiate between the activities undertaken by paid staff; you either exempt them as a block or you include them. In the case of the next general election, as it says in the briefing from the Electoral Commission, they should be excluded temporarily, while the whole business of whether full-time staff should be included in future could be looked at in the review that the Government have promised for after the next general election.

Lord Greaves: I am grateful to my noble friend for giving way, and for his kind words. However, would he not agree that there is a difference between somebody

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who works for a charity or political party taking part in an election campaign as part of their normal job and somebody who is taken on to deliver leaflets? Political parties cannot take on people to canvass, because it is illegal to pay people to canvass, but a third-party organisation could do so. So if you pay people who normally do not work for you to deliver leaflets, surely that should be included.

Lord Horam: There is clearly a difference there, and I think that it probably should be reflected in the Bill. The fact is that the two situations are quite different.

The other issue is translation. Our noble friends from Wales put it very eloquently. It is almost an abuse to call this a translation, as though Welsh were a foreign language. This applies to other languages too. Then there is the question of making documents available to those with physical or learning disabilities and, as I mentioned in my remarks on Northern Ireland, exempting costs relating to safety or security measures. This is something which the Government have already implicitly begun to accept.

Therefore, I think this is an area where, prima facie, there can be some discussion and resolution which will be helpful to the charities, and I hope that the Government will consider this.

Baroness Hollins (CB): My Lords, I speak to Amendments 160H and 164A, in my name and in the name of my noble friend Lady Finlay, both of which are probing amendments on the subject of controlled expenditure and qualifying expenses. There may be a sense of déjà vu around some of my concerns, in the light of the debate on the previous group of amendments, so I shall try to be brief. I am grateful to the noble Lord, Lord Wallace of Saltaire, for meeting me and colleagues from the BMA to discuss these issues and I declare an interest, as past president of the British Medical Association and the current chair of the BMA’s Board of Science.

In paragraph 1 of the new schedule “Controlled expenditure: qualifying expenses”, under the heading “List of matters” sub-paragraph (1) refers to:

“The production or publication of material which is made available to the public at large or any section of the public (in whatever form and by whatever means)”.

This description is so wide that it could cover anything and everything. I would welcome clarity on whether this would include, for example, evidence-based policy reports aimed at policymakers. Many organisations have expressed worries and are unclear as to how they will be able to engage in reasonable debate on matters of public policy in the run-up to a general election. I know that some of this has already been discussed, but I have some particular points which I want to explore.

Many organisations publish reports collating evidence to highlight areas of public policy that need further development or action. The BMA’s Board of Science, which I chair, promotes the medical and allied sciences, contributes to the development of effective public health policies and supports medical research. Through the publication of policy reports, web resources, guidance documents and briefings, the BMA plays a role in

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contributing to wider debate and public opinion on public health issues for the benefit of doctors and patients. Aside from the public health and scientific publications from the board, the BMA also regularly publishes factual, evidence-based reports, covering a full range of issues, from health service reform to ethical issues. Examples of policy reports across these areas include publications on: child health and well-being; drugs and dependence; transport and health; a vision for general practice; and medical ethics.

While the Bill as drafted states that only publicly available,

“material which can reasonably be regarded as intended to promote or procure electoral success”,

of a political party or candidates are regulated, there is still some uncertainty as to what this means in practice. Such publications from the BMA as I have described are factual and are geared towards policymakers rather than towards the electorate, but these reports often make recommendations in areas that may be politically contentious. For example, recent reports from the BMA’s Board of Science have made recommendations for standard packaging for tobacco and for a minimum unit price for alcohol, both of which are subjects of much current public debate. I am keen to have the Government’s reassurance that publications such as policy reports would fall outside the Bill’s regulation, should they appear ahead of an election. I welcome thoughts on what would happen if the recommendations in such publications were reported in the media in a politically biased way. Would third sector organisations be at fault, even if they had been careful to present their reports neutrally?

One aspect I want to explore further through Amendment 164A is the explicit exemption of annual conferences of third sector organisations. In the “List of matters” to be counted as controlled expenditure, Schedule 3 includes:

“Public rallies or other public meetings or events”,

After earlier debate, the Government have helpfully clarified this further:

“it is public rallies and events that are being regulated; meetings or events just for an organisation’s members or supporters will not be captured by the bill. We will also provide an exemption for annual events – such as an organisation’s annual conference”.

This is reassuring, but there is still an ambiguity as to what meetings will be included.

There are two particular areas on which I should like further detail. The first is to establish whether a membership organisation which has more than one conference annually would also be exempt. There are some organisations which hold more than one annual conference and this is still part of their normal, democratic, decision-making process. It is unclear, for example, whether the BMA, which holds multiple conferences annually for its members, would fall within the annual conferences exemption. Quite apart from our annual general meeting, there are also annual conferences for all the different specialty sections, such as general practitioners, consultants, junior doctors, public health doctors, and so on. Could the Minister clarify whether expenditure associated with such conferences would count towards the relevant electoral spending cap?

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Although it is reasonable to expect that this could be addressed in guidance to follow from the Electoral Commission, an assurance from the Government about their intention on the scope of the exemption would be welcome. It would be helpful to know what would occur if such an annual conference attracted a great deal of public interest. Would it then become a public meeting that should be captured under the Bill? A members-only conference with a public element could happen in a number of ways, for example by inviting comment on health issues, the attendance of observers, or providing access to the conference via a webcast or through the media. I raised this question at Second Reading and I would welcome clarification from the Minister as to the position of members-only annual conferences in this regard, too.

6.45 pm

Lord Ramsbotham: My Lords, I rise to speak to Amendments 165B, 161A and 165C, to which I have added my name. I find it rather distressing that, here again, we have another issue where there is no evidence from the Government that the current arrangements result in undue influence of non-party campaigning in elections. Where is the justification for starting down this route?

On Amendment 165B, I declare two interests, first, as chairman of the All-Party Parliamentary Group on Speech and Language Difficulties and, secondly, as chairman of the Criminal Justice and Acquired Brain Injury Interest Group. I was concerned to read that paragraph 1(1) of the proposed new schedule to be inserted by Schedule 3 states that “Controlled expenditure: qualifying expenses” includes:

“The production or publication of material which is made available to the public at large or any section of the public (in whatever form and by whatever means)”.

Both at Second Reading and in my consideration Motion, I mentioned the problems experienced by organisations working in this area in the criminal justice system. We shall come back to them when we discuss coalitions.

One of the areas that we have been considering in Bill after Bill has been the problem of those with learning difficulties and learning disabilities who require special arrangements to enable them to understand the legal process in which they may become involved. This requires both written material and the provision of people who can explain things to them, because the police and others may not necessarily be able to do so. I am therefore asking the Minister if what we have here is a cross-counting nonsense because, in Bill after Bill, we have been trying to impose or introduce something to enable people to engage with the criminal justice system in this way. Yet, if you take what is written in this Bill, it would seem that this is now to be impossible.

I fully support Amendment 165B which has the list of those things which ought to be included in the Bill and excluded from the expenses. I am not going to discuss the staff expenses at this stage because I agree with my noble and right reverend friend Lord Harries of Pentregarth and with the noble Baroness, Lady Mallalieu.

I turn briefly to Amendment 161A. I am concerned that the word “research” might be removed. At the

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moment, we are conducting research into the number of prisoners with acquired brain injuries as we want to find out whether special arrangements need to be made for them. An experiment carried out in Leeds prison has discovered a large number of such prisoners and the people involved say that supporters are needed to help these people back into the community. However, such an initiative would be subject to the election provisions in the Bill. Why? It has nothing to do with elections, so why threaten such a sanction and why make the people concerned in this very important public service unnecessarily alarmed if that is not going to happen?

As regards Amendment 165C, I find it very distressing that the Bill states:

“The Secretary of State may by order make such amendments of Part 1 of this Schedule as he considers appropriate”.

Surely, such a measure ought not to be included in the Bill. It should not be up to the Secretary of State to make such amendments as he considers appropriate when so much work has gone into the Bill.

Baroness Tyler of Enfield (LD): My Lords, I add my support to Amendment 160J, to which my name is attached. As I was heavily involved in the Care Bill and the Children and Families Bill, I was unable to speak at Second Reading of this Bill, for which I apologise to the House. I should also mention my interests as president of the National Children’s Bureau, vice-president of the charity Relate, and chair of the Making Every Adult Matter coalition of charities. I will speak about charity coalitions on later amendments.

Amendment 160J is intended to clarify exactly what is meant by “committed supporters”. The fear here, which has already been expressed, is that contacting people, charities and other campaigning organisations that bodies consider to be supportive will be classed as regulated activity and therefore come under “controlled expenditure”. I wish to make two main points. First, as my noble friend Lord Tyler said, these days, membership of charities and other campaigning organisations is generally not defined by an annual subscription. It might have much more to do with following the organisation on social media, actively agreeing to receive e-mails or some other way of actively engaging with the organisation concerned. Certainly, my experience of the organisations for which I have worked, and which I continue to support, perhaps in connection with children and families or campaigning for older people, is that you might feel very strongly indeed about a particular issue, perhaps to do with health, a specific disability or housing, and therefore lend your support to it. Indeed, you might be very actively engaged with it from time to time but do not necessarily support every activity and issue that the organisation concerned is involved in. However, you should still count as a very committed supporter of the relevant organisation.

Although there are other amendments in this group, and Amendment 165B clearly also tries to get the right definition of “committed supporters”, I support Amendment 160J as it sets the bar in the right place in terms of having to have some sort of active engagement with an organisation rather than simply being a passive recipient of e-mails, for reasons we have already heard. Amendment 160J would improve the Bill, if it were accepted.

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Lord Aberdare (CB): My Lords, I support the amendments in the name of my noble and right reverend friend Lord Harries of Pentregarth, especially Amendment 165B. I also welcome the amendment in the name of the noble and learned Lord, Lord Morris of Aberavon, which seeks to make specific provision in the Bill for the Welsh language. I want to make only one point. Even the heroic efforts of the civil society commission, which so many of your Lordships have spoken about, and which I fully endorse, could not resolve all the issues raised by the Bill. The commission has made it clear that some of its recommendations are the best that it could come up with in the time available and should apply until the next election, but then should be reviewed in detail. Therefore, my question is really one of process because it seems to me that our views on the Bill could be very different if we are looking at something that will do up until the next election. For example, I believe that in the longer term staff costs will need to be incorporated in some way because they could make a real difference in terms of promoting or procuring electoral success. However, at the same time, I would not want to see an unacceptable burden imposed on the “small platoons” who would find it very difficult to account for those costs.

If we are talking about a process whereby we come up with something that people can live with until the next election, and the Government will then review it and look at how these things work in practice and examine what the real issues are that we are trying to guard against, I would be much more comfortable about the debate we have had this afternoon, and not need to dot all the “i”s and cross all the “t”s, as my noble friend Lord Ramsbotham indicated.

Lord Morgan (Lab): My Lords, I did not intend to speak in this debate but I wish to comment briefly in support of the amendment moved by my noble and learned friend Lord Morris of Aberavon, which was supported by the noble Lords, Lord Elystan-Morgan and Lord Wigley. It seems to me that if that amendment is not accepted, the consequence would be both unfair and illogical. It would be unfair because the Welsh language would be regarded as a burden and an additional incubus on an organisation rather than as something that ought to happen naturally, and which was sanctioned by the law in 1967 and 1993. It would also be illogical because it would run counter to what has happened over many decades in civil society in Wales and elsewhere such as local government, the social services and, in my own experience, in higher education. When I was vice-chancellor of the University of Wales, which is now almost defunct, significant procedures were in place for translating papers into Welsh and back into English and facilities for simultaneous translation. These were a natural part of our working processes in the university and, importantly, did not impose an extra charge. They did not take money away, as it were, from education, teaching or research.

This brief debate has shown that constitutional law and legal proceedings have often lagged behind what is happening in civil society or, frankly, have lagged behind common sense. I was struck by that when I listened to the comments of the noble Lord, Lord Elystan-Morgan. He referred to the Act of Union of 1536, which was an almost totalitarian measure intended

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to extinguish the Welsh language for public purposes. However, it was nullified by other developments in Wales at that time, not in the legal or political spheres but particularly by developments in religion. The most important phenomenon of that century was the translation of the Bible into Welsh by Bishop Morgan, although I am afraid that I cannot claim him as an ancestor. That seems to be a way in which civil society has civilised and nullified the effect of constitutional law, and I hope that it will do so again.

7 pm

Baroness Lister of Burtersett: My Lords, I declare my interests at this point. They are quite wide-ranging in relation to charities and non-charitable organisations, and they are listed in the legislative scrutiny report of the Joint Committee on Human Rights.

I want to declare my support for the amendments tabled on behalf of the Commission on Civil Society and Democratic Engagement. While I take the point of the noble Lord, Lord Horam, that it is not unusual for this House to take a number of amendments together, I point out that the Electoral Commission emphasised that we have to consider the cumulative impact of a number of different parts of this legislation. This was also a point emphasised by the Joint Committee on Human Rights, so it is not inappropriate for us to consider the way these amendments hang together. I think they do hang together.

I simply want to highlight very briefly a few of the points covered by them. The first is the question of access to information for disabled people, which has already been talked about very powerfully. This is a question of equity. It costs more to provide that information and it is only equitable that that is taken into account.

The second point, which we have not talked about as much, is the question of public meetings. The NCVO in its latest briefing picked this up, referring to the report of the Joint Committee on Human Rights and our concern about the possible impact of this part of the legislation on the human right to freedom of association. That is very important. The NCVO refers to a number of organisations having flagged this up, particularly with regard to disability, welfare and social security reform issues. The concern is about the high cost associated with organising a rally of some form and the subsequent impact this would have on campaigning activity through the rest of a regulated period. I hope the Government might consider looking again at public meetings being covered by the legislation.

The final point is on the question of the definition of “supporters”. I was struck that the commission’s report pointed out that this matter was simply not considered by the House of Commons during its debates. I went to the launch of the commission’s second report, where one of its members spoke very convincingly about the importance of taking account of how membership of organisations has changed and said that the legislation has not caught up with this. The commission’s report states:

“We heard evidence about the need for a definition of supporters which reflects the contemporary way in which members of the

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public lend their support to organisations and campaigns including by email and social media—not just financial supporters”.

I am not sure which of the competing amendments is right, but it seems to me essential that one of these amendments should be accepted, and that we have a more up-to-date understanding of what it means to support voluntary organisations.

Lord Best (CB): My Lords, I shall speak to Amendment 163A, another in this rather large group. I declare my interest as a member of the advisory board of the National Council of Voluntary Organisations, the NCVO, which is a key organisation in seeking amendments to the Bill and supplementing the brilliant work of the civil society commission chaired by the noble and right reverend Lord, Lord Harries of Pentregarth. I am grateful to him for his support for this amendment, and to the NCVO for its briefing on this amendment.

This amendment joins so many others in seeking to preserve the freedoms of not-for-profit organisations seeking to influence government and decision-makers. In the case of this amendment the issue is the new list of activities, the costs of which count as qualifying expenses and lead to regulation. The list now includes public rallies or other public meetings where expenses include costs in connection with the attendance of persons at the event, the hire of premises and provision of goods, services and facilities. So this is about all costs associated with freedom of association at rallies and other public meetings. A potential problem here is acknowledged by the Government’s human rights memorandum, which noted that,

“more things (such as for example, costs associated with the organisation of rallies and events) will count towards spending limits and require control. This engages Article 10 and 11”.

The Joint Committee on Human Rights has expressed concern about the possible impact of the broadened list of activities on the freedom of association. The noble Baroness, Lady Lister, has just referred to this. A number of organisations, notably those interested in disability and welfare reform issues, have flagged the concern that the high costs associated with organising a rally of some form would have a major impact on campaigning activity throughout the rest of a regulated period.

Perhaps I could share three examples of organisations and their activities that would be covered by the new rules and lead to disproportionately onerous bureaucracy and burdens, which could effectively prevent those organisations campaigning in ways that they have done in the past.

The first is the case of the Countryside Alliance’s opposition to the hunting ban in 2001 and 2005—an example that is known to a number of your Lordships. In the run-up to the 2001 and 2005 general elections, the alliance mobilised its supporters and the general public against the hunting ban—activities which in total required a pretty high level of expenditure, including demonstrations and rallies against the hunting ban, press conferences to promote the event, transport costs for those attending the events, and producing and distributing leaflets to promote the events. The Countryside Alliance is not linked to any one political party. However, because the issue of hunting can be seen as highly partisan, with the hunting ban more

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associated with the Labour Party, all the costs incurred in these events would have counted towards the alliance’s expenditure. Had the Political Parties, Elections and Referendums Act 2000 been amended as the Bill proposes at the time the hunting Bill made its way through Parliament, the ability of organisations such as the alliance to oppose the proposed ban and organise marches and rallies would have been severely curtailed.

Secondly, in the run up to the Copenhagen climate change summit in 2009 and the UK general election in 2010, the organisations in the Stop Climate Chaos coalition worked on a range of events, including outdoor rallies; the Wave, a march through London attended by 50,000 supporters; and schools’ conferences held with schools from across England to talk about climate change, with MPs invited to a panel debate. Under the new rules proposed by the Bill, even if lower spending limits are not pursued, it is likely that the various activities carried out by the coalition would have exceeded the maximum amount allowed, forcing the coalition to stop its campaigning.

Thirdly and finally, the Women’s Institute’s Great Food Debate involved a programme of work on food security and was launched at an event in York in December 2012 with a report on food security. The event was free, open to the public and included a panel at which the Environment Secretary, Owen Paterson MP, gave a keynote speech. Members of the WI and members of the public attended the launch and debate, with another in Cardiff the following month. The Great Food Debate is designed to explore the concept of pressure on the food system and provide an opportunity to engage with the public. The National Federation of Women’s Institutes encourages WIs all over the country to replicate its national work by hosting their own local and regional Great Food Debates. All this generated significant media coverage, including local and regional coverage. The Great Food Debate is certainly not supportive of any particular party but the media reporting of the events placed the debates and work programme in a political context, as exemplified by headlines such as the following in the Daily Mail:

“Put cooking back on the national curriculum to tackle obesity timebomb and stop pupils wasting food, urges WI”.

The Daily Telegraphread:

“TV cooks should give us recipes for leftovers to cut waste, says Minister”,


“Teach all children to cook in schools, says Women’s Institute”.

In addition, the Environment Secretary used the platform as an opportunity to call for further consideration by the public of GM and agritechnology. If the Bill is passed and these events were held in the 12 months before one of the elections covered by it, the related costs would take the National Federation of Women’s Institutes over the registration threshold, with all the consequences that that would imply. All local WIs and federations would have to register as third-party campaigners with the Electoral Commission because the NFWI would have spent more than the registration threshold in creating the materials to help members hold their own debates. Federations and WIs in this scenario would then have to take on all the regulatory burdens associated with that.

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It is good to hear that the Government will be bringing forward changes that will increase substantially the cash thresholds for registration. Amendment 163A helps that process by taking out one element that could disproportionately affect the total spending by voluntary bodies in this grey area of non-partisan campaigning. It diminishes the unintended chilling effect of the Bill, which otherwise seems likely directly to deter voluntary bodies from organising the free association of people at rallies and public events, and indirectly to reduce engagement of the sector in important campaigning activity.

Baroness Royall of Blaisdon: My Lords, I am grateful to noble Lords for a giving such a thorough explanation of why the Government need to take away Schedule 3 and think again. The many increases in activities that count towards qualifying expenses in this part of the Bill account for a great deal of its unworkability, and for the concerns and fears that have been raised in civil society. My noble friend Lady Lister rightly spoke of the cumulative effect of the various measures in the Bill, but I suggest that this schedule has a profound effect on people’s views of it.

The Minister, the noble and learned Lord, Lord Wallace, said that volunteers would not be covered in the Bill, but that is not enough. It is clear that the main problem with Schedule 3 is the inclusion of staff costs as a qualifying expense. Political parties are not subject to this requirement and it is therefore unclear why the Government believe that charities and NGOs should be. It is worth looking at the original document from the Electoral Commission that the Government claim as the inspiration for some of the Bill. It said, as regards counting the staff time of political parties:

“Bringing directly employed staff costs within the scope of the spending controls would have significant implications, which would need to be considered before the change could be implemented. It would impose new administrative burdens on parties, and the detail of what spending is covered would need to be carefully considered and defined”.

The report continued:

“It could take up a significant part of the larger parties’ campaign spending under the current spending limits and the spending limits would therefore need to be re-visited”.

If this is the case for political parties, the same would apply to charities and NGOs. Indeed, they have presented a great deal of evidence about the burden that would be placed on them. Amnesty International has pointed out that during an election period it produces manifestos on human rights, organises hustings, undertakes pledge-card activity and co-ordinates media activities. These activities could mean that the new spending thresholds would be met, and therefore staff time would have to meet new reporting requirements that would seriously draw on resources—a reminder that with this Bill it is often the new provisions taken together that would work to stifle democratic expression. That is what the larger organisations fear. The smaller ones, however, would struggle to an even greater extent to meet the onerous reporting requirements.

The NCVO has presented a case study that amply demonstrates this. If, for instance, a small disability charity campaigning on welfare reform employs an additional member of staff to run local campaigns in the run-up to the election, the charity must account

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for the person’s time and monitor which activities undertaken by local groups could amount to controlled expenditure. Even if a simple approach were taken by looking at a yearly salary, this could immediately bring the organisation over the threshold—for example, one public affairs officer on £30,000 per year. Surely the Government, who talk so often and so loudly about reducing red tape, are not prepared to place such a regulatory burden on charities. The noble and right reverend Lord, Lord Harries, cited the example of the RSPB, which contends that the impact assessment prepared for Part 2 understates the extent to which it will mean that charities and NGOs will have to spend money on administration rather than on their core work. The RSPB states:

“This would siphon money away from conservation work and amount to an unnecessarily onerous regulatory burden: more than the £0–800 per organisation for implementation estimated in the Impact Assessment”.

7.15 pm

Unfortunately, staff costs are not the only additional requirement. The noble Lord, Lord Tyler, also raised the important point that charities understandably are mindful of staffing costs. Fortunately, noble Lords have in many of the amendments in this group presented the Government with options that they can use to remove the increased burden that the Bill presents. We heard many compelling instances and speeches, not least the preceding one made by the noble Lord, Lord Best, citing the case made by the excellent NCVO. The case of the Countryside Alliance and the hunting ban is instructive, and I hope that the Minister will answer that specific point. The noble Lord, Lord Best, was also right to point out that it is the media that put a political perspective into many of the campaigns. I am not entirely sure how one can provide for that in the Bill.

The amendment in the names of my noble and learned friend Lord Morris and the noble Lord, Lord Elystan-Morgan, takes the critical step of excluding from campaign expenditure translation into Welsh or English. As my noble and learned friend said, English and Welsh should have equal validity, which should not be jeopardised by the Bill. Noble Lords have spoken of Lord Roberts of Conwy, who did so much for the Welsh language. I have to say that were he here this evening, I have no doubt that he would support the amendment. As my noble and learned friend pointed out, the Bill as drafted could mean that an organisation might choose not to publish its campaign material in Welsh in order not to breach the spending limits. Not only would this be bad, but it could turn out to be illegal in relation to the 1993 Act.

Amendments 161A and 165B, in the name of the noble and right reverend Lord, Lord Harries, carry the weight of authority that stems from a genuine consultation. Like other amendments, they have the effect of removing staff costs and the costs of translation services from the list of qualifying expenses. They also make a number of other proposals for expenses that should not be included. The cost of security, mentioned by the noble Lord, Lord Horam, is important in the context of Northern Ireland. Given the sympathy that the Minister earlier expressed with regard to the specific

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circumstances in relation to Northern Ireland, I imagine that the Government will wish to take up this suggestion, as they will with the cost of making documents accessible to the visually impaired, or those who are disabled or who have learning difficulties—or, indeed, the transport costs of people with disabilities.

I am sure that the Minister will accept these sensible suggestions, otherwise there is effectively a higher marginal regulatory burden for charities and NGOs that want to campaign around issues surrounding disabilities. That would not be fair. Access to information for disabled people should be a right that should not be curtailed. I was interested in the points made by the noble Lord, Lord Ramsbotham, about the needs of people with learning or other disabilities who are grappling with the justice system. I sympathise with his question: why should people be put into fear simply because of sloppy or inappropriate drafting? I cannot imagine that that is what the Government would have wished to include in the Bill.

I note Amendment 160J in the name of the noble Lord, Lord Tyler, and other amendments in the group and will return to them at a later stage. I certainly support Amendment 165C, which removes the power of the Secretary of State in Schedule 3 to amend Part 1 by order. I have a deal of sympathy with the noble Baroness, Lady Hollins, in respect of research papers and look forward to the Minister’s reply, as well as his reply in relation to the issue of conferences that might unintentionally be judged to be political in the run-up to an election. I hope that when the Minister responds, he will be able to allay the fears of those who have spoken, and will promise that when the Government return on Report, they will have made significant changes to the kinds of spending that count as qualified expenses.

Lord Gardiner of Kimble (Con): My Lords, I thank your Lordships for an extremely wide-ranging debate on qualified expenses in controlled expenditure. I will endeavour to go through all the points that were made. If there are any that I have not picked up on immediately, I will reflect on all of them—as will my noble and learned friend—because clearly there are a number of issues in this group that the Government will certainly want to bring back at Report.

Schedule 3 inserts a new Schedule 8A into the PPERA Act 2000. That new schedule expands the activities on which expenditure by a recognised third party will be controlled expenditure. Under existing legislation, only expenditure on election material made available to the public is controlled expenditure. This is retained as an activity that counts towards controlled expenditure within this Bill. However, the new schedule extends the range of activities that are qualifying expenses for the purposes of controlled expenditure. These include: market research involving the public or canvassing; public rallies and other public events, excluding annual conferences; press conferences or other organised media events; and transport.

Again—I emphasise this—the essential qualification is that these would count as controlled expenditure only if the expenditure could reasonably be regarded as being intended to promote or procure the electoral success of a party or candidate. Where the activities

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were unconnected—for some other charitable, campaigning or commercial purpose of an organisation, for example—they would not be included.

The list of activities in the new schedule closely aligns the activities of third parties that incur controlled expenditure with those of political parties. This was recommended by the Electoral Commission in its June 2013 report, A regulatory reviewof the UK’s party and election finance laws: Recommendations for change.

I now turn to Amendment 159G in the name of the noble and learned Lord, Lord Morris of Aberavon. This would amend Clause 26 so that costs incurred by third parties translating materials from English to Welsh or Welsh to English would be excluded. I am very conscious of the Welsh Language Act 1993, and, as I was reflecting on the debate today, I considered precisely what my late friend Lord Roberts of Conwy would have thought about these matters. He was such a well respected figure in this House on all sides, and I am pretty confident as to what he would be telling me now.

It is the case, interestingly, that under that Act—which places an obligation on public bodies—political parties, candidates and third parties do not fall under the definition of a public body. Therefore, there is no legal obligation to translate election materials from English to Welsh or Welsh to English. However, having said that, the Government believe that the Welsh Language Act 1993 includes an obligation to treat Welsh and English on an equal basis and that there is a strong and compelling case for translation costs to be excluded. The noble Lords, Lord Elystan-Morgan, Lord Wigley and Lord Morgan, made that very clear as well, with references to 1,500 years of language and the Act of Union, so the Government will consider how this exclusion would operate and will want to return to this important issue on Report. I hope that that will be helpful to the noble and learned Lord.

I also want to raise the issue of committed supporters. Amendment 160J, in the name of my noble friend Lord Tyler, amends Schedule 3 so that costs associated with sending material to committed supporters would be excluded from the calculation of cost-controlled expenditure. The costs of sending material to members or certain supporters are already excluded, as PPERA and the Bill make clear. The material or activity must be available or open to the public, which for these purposes would not include those members or supporters. As the existing Electoral Commission guidance makes clear, the exact nature of a committed supporter will vary between organisations, but could include regular donors by direct debit, people with an annual subscription or people who are actively involved in a third party.

However, this amendment goes very much further than that: it defines committed supporters as those who have made a donation to the recognised third party, those who have made a direct communication to the recognised third party, or those who have consented to receiving communications from it in the past 12 months. In the Government’s view, this would greatly, and unacceptably, widen the exclusion. At present, the Electoral Commission does not consider people to be committed supporters if they have simply signed up to a social networking site or tools, or to appear on mailing lists that may have been compiled for general commercial, campaigning or other purposes.

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The Government believe that the Electoral Commission guidance is the correct approach to outlining a committed supporter. This was also the view the other place took when, in reverting to the existing definition of controlled expenditure, it removed the specific definition of committed supporter from the Bill as introduced. Of course, the Government also acknowledge that in discussion with third parties, from community groups to charities, the need for clear guidance is of vital importance. The Electoral Commission is aware of the important role its guidance plays and is committed to providing such guidance in good time for campaigners.

I now turn to Amendment 160H, tabled by the noble Baroness, Lady Hollins. She said it was a probing amendment, but it would remove election materials from the list of activities for which third parties would incur controlled expenditure. As I am sure noble Lords are aware, the PPERA Act 2000 stems from a report from the Committee on Standards in Public Life. Both that report and Parliament, through the passing of the 2000 Act, made clear that it was reasonable and sensible for third parties who sought to, or could reasonably be regarded as intending to, promote or procure the electoral success of a party or candidate should be subject to regulation. Under the Act, recognised third parties incur controlled expenditure only on election material that is made available to the public and that seeks to promote or procure electoral success. Election material covers items such as leaflets, unsolicited mail to electors, and manifestos. It does not include factual policy documents aimed at policymakers.

As I have three godchildren studying medicine, I am very conscious that the BMA plays a very important part not only in public life but in furnishing the debate on what we all seek to do, which is improve the nation’s health. The noble Baroness, Lady Hollins, will know very much better than I that the BMA publishes factual, evidence-based reports on a full range of issues covering ethical, scientific and public health matters and health service reform. Examples of such documents include publications on child health and well-being, drugs of dependence, transport and health, and a vision for general practice. These publications are factual and, as the noble Baroness said, geared towards policymakers. They are not aimed at the electorate with a view to procure or promote the electoral success of a party or a candidate and do not fall under the regulatory regime set out in the Bill or indeed current legislation.

7.30 pm

Noble Lords will be aware that for items such as leaflets, unsolicited mail and manifestoes to be brought into the regime they must be promoting electoral success. I emphasise that where this is not the case, a third party, be it a charity or a voluntary organisation, will not have to account for this spend as controlled expenditure.

The Government are keenly aware that campaigners will want to understand how to comply with the provisions of the regulatory regime as amended by the Bill. Indeed, this has been a recurring theme of the meetings that my noble friend Lord Wallace of Saltaire and colleagues have had with charities, voluntary

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organisations, campaigners and the commission of the noble and right reverend Lord, Lord Harries. The Electoral Commission is already planning comprehensive guidance for campaigners and charities. The Government stand ready to support that work.

The exclusion of electoral material dealt with in the amendment of the noble Baroness, Lady Hollins, would strike at the heart of the regime. PPERA’s controls would be worthless. Therefore, the amendment would not be supported by the Electoral Commission.

On issues relating to market research and polling intentions, Amendment 161 in the name of my noble friend Lord Greaves would amend Schedule 3 so that market research would not be an activity that would count as controlled expenditure. Instead, only canvassing undertaken by a third party, with members of the public, would count as controlled expenditure.

Amendment 161A would amend Schedule 3 so that controlled expenditure on market research and canvassing would be incurred only where this was for the purpose of ascertaining intentions. The Government, in close consultation with the Electoral Commission, have been specific as to the activities that will count towards controlled expenditure. Market research was included alongside canvassing to capture activities that could be seen as promoting or procuring the electoral success of a party or candidate. Because of the different nature of the activities of third parties, it goes wider than just canvassing for polling intentions and covers more specifically party activity.

I turn to an example of this, which is push polling. It is a marketing technique in which an individual or organisation attempts to influence or alter the view of respondents under the guise of conducting a poll. Many push polls are negative attacks on candidates. They may ask questions such as, “If you knew that candidate X was being investigated for corruption, would you be more likely to vote for him, or less likely?” The question does not state that any investigation has taken place, so it is not a lie, but it puts in the respondent’s mind the idea that candidate X may be corrupt. Push polling is an effective way of maligning an opponent. I sense that this may be a new concept.

Lord Rooker: In Australia.

Lord Gardiner of Kimble: To answer the noble Lord, Lord Rooker, this is a technique used widely in America. Although it is not prevalent here, if we leave an unregulated space for it we run the risk that we will see it here. I do not think that any of your Lordships would want something like this to take hold as it has in America. By removing market research from the list of activities which incur controlled expenditure, we believe that we open up a potential gap. Therefore, we have these concerns.

Amendment 162, which deals with media events, would amend Schedule 3 so that only press conferences organised by a recognised third party would count as controlled expenditure. Organised media events are included alongside press conferences to capture activities with the media which could be seen as promoting or procuring the electoral success of a party or candidate, but which is wider than just press conferences. We

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recognise that the normal meaning of “press conferences” is likely to catch most organised media events, but we do not want to leave reasons for doubt as to what may or may not be covered by that specific term. That would create unnecessary ambiguity.

The Government have therefore worked closely with the Electoral Commission and interested parties to ensure that the correct balance is struck in terms of the media activities we are seeking to bring into the regime. We do not want, nor does the Bill provide for, ad hoc dealings with the media to be regarded as controlled expenditure. However, where a third party organises a press conference or other media event which could reasonably be regarded as promoting or procuring the electoral success of a candidate or party, that is activity that should be regarded as controlled expenditure and accounted for by means of transparency accordingly. By removing other media events from the list of activities that count as controlled expenditure, we open up a potential ambiguity and a potential gap in the regulatory regime.

Turning to the amendments dealing with transport, Amendment 163 would amend Schedule 3 so that controlled expenditure would not be incurred in respect of transporting people to a place or places with a view to obtaining publicity. The Government acknowledge the particular issues that this may raise for campaigners or for those working with people with disabilities, and that costs associated with the transport of people with a disability may need to be excluded from controlled expenditure. The Government wish to consider this issue carefully and will revisit this subject on Report.

A number of amendments deal with public rallies and conferences. They would extend the exclusion of conferences to all conferences, not just those held annually, and confirm that costs associated with persons attending a public rally or other public event would not be included as controlled expenditure. The amendments would remove public rallies from the list of activities.

This is so important so I repeat that only public rallies or public events that promote or procure the electoral success of a party or candidates would count as controlled expenditure. The Government listened to the concerns of charities and trade unions and brought forward an amendment in the other place to exclude annual conferences. That is the same exclusion applicable to political parties.

I wanted to say to the noble Baroness, Lady Hollins, that I am assured that all annual conferences of the BMA would be excluded, as would those of any other organisation that had more than one annual conference. Additionally, if a recognised third party were to hire a conference centre and invite only its members or committed supporters, that would not count as controlled expenditure.

However, if a third party were to hold a rally or meeting in a public park or hold a protest in Whitehall seeking to promote or procure the electoral success of a party or candidates, the Government believe that this activity should count as controlled expenditure. I emphasise that the Bill does not prevent such activities taking place, just that such activity is properly accounted for.

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I want to refer to the Countryside Alliance, as I spent 15 years of my existence supporting that excellent organisation. I was on the barricades many times with the noble Baroness, Lady Mallalieu, and I think that we had right on our side. But we were punctilious about not promoting or procuring the electoral advantage of a party or candidate. I am conscious that the noble Baroness sits on the opposite Bench from me; in fact the person who chairs the organisation sits in the other place as a Labour Member of Parliament. We were punctilious about these matters.

The noble Lord, Lord Best, spoke about Great Food Debate events. I simply cannot see how they would promote the electoral success of parties or candidates. In other words, I do not see that a reasonable person would suggest that a Great Food Debate was about promoting parties or candidates. They are about engaging in the political process; certainly not about promoting electoral success.

The Government are keen to strike the correct balance because we want to ensure that where there is promotion and procurement of electoral success, there is transparency, it is understood and is open to the public. However, we are very conscious that we need to preserve the freedom to speak out on issues that we expect and want civil society in this country to enjoy. It is part of the essence of our democracy that civil society should not feel that this is a Bill which presents them with these difficulties.

The Government acknowledge, for instance, that there is a case for excluding the costs associated with security and safety around a public rally. A number of noble Lords have mentioned Northern Ireland in this respect, and it comes very much as part of the recommendations made by the Commission on Civil Society and Democratic Engagement. The noble and right reverend Lord, Lord Harries of Pentregarth, raised Northern Ireland in particular, so the Government will consider this issue carefully and return to the matter on Report.

Further amendments have been tabled on staff, translation, accessibility, and security and safety costs. My noble friend Lord Tyler, speaking to his Amendment 165A, talked about whether the costs associated with staff directly employed by the third party would be excluded from the calculation of costs for controlled expenditure on transport, press conferences, organised media events, and public rallies and events. Staff costs would be included for electoral materials, canvassing and market research.

A further amendment from the noble and right reverend Lord, Lord Harries, concerns the costs associated with staffing for the provision of materials in translation or in an accessible form for those with physical or learning disabilities, safety and security measures, and communications with third parties, with committed supporters being excluded. The PPERA Act 2000 has always required third parties to account for staff costs, a point made specifically by my noble friend Lord Tyler. The Bill, while extending the range of activities that may incur controlled expenditure, retains the need for staff costs to be excluded. I know that concern has been expressed by third parties regarding staff costs and by your Lordships today: first, that third

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parties have to account for these costs while political parties do not; and, secondly, to the difficulties for third parties in calculating staff time. On the issue of third parties having to account for these costs while political parties do not, noble Lords will be aware that when Parliament passed the PPERA Act, it was felt to be transparent and proportionate for a third party to account for staff time. This was on the basis that a third party undertakes activities rather than political campaigning where the third party enters into political campaigning to procure the success of a candidate or party. There was a feeling then that spending on these purposes should be transparent.

All of that said, the Government acknowledge that there are genuine concerns regarding the issue of the calculation of staff costs. It is important that a balance is struck between transparency and proportionate reporting requirements. In terms of excluding the costs associated with translating materials, making materials more accessible to those with physical or learning difficulties—the noble Lord, Lord Ramsbotham, and the noble Baroness, Lady Hollins, specifically raised this issue, and rightly so—the Commission on Civil Society and Democratic Engagement covered these points in an extremely valid way. The Government support ensuring that materials are accessible to all electors and they have received representations related to translating materials. We have heard from campaigners, and some very important points have been made about Northern Ireland, particularly by the noble Baroness, Lady Mallalieu. I want to confirm again that the Government will be considering these issues carefully in the light of today’s debate and we will return to them on Report.

The Government also acknowledge that in discussion with third parties from community groups to charities, there is a need for clear guidance; that is of vital importance. The Electoral Commission is aware of the important role its guidance plays and it is committed to providing such guidance in good time for campaigners.

I turn now to the order-making powers and a number of amendments which have been tabled in this regard. The Electoral Commission’s regulatory review, published in June 2013, made it clear that the PPERA Act does not provide the flexibility to update the rules on non-party campaigning through secondary legislation. This is in contrast with the list of items defined as controlled expenditure for political parties, which can be amended through secondary legislation. The Government support the recommendation of the Electoral Commission, and provision has been provided in the Bill. The order-making power, as with other similar powers in PPERA, will apply either after consultation with the Electoral Commission or to give effect to a recommendation of the commission. Parliament will be able to scrutinise and debate any order that is put forward in the usual way. The order-making power is subject to the affirmative resolution procedure. Such a power allows the regulatory framework to respond to changes in campaign activities and methods of campaigning. This flexibility would be greatly reduced and the regulatory regime could be undermined if such changes could be made only through primary legislation.

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7.45 pm

Lord Rooker: I would like to ask the Minister a question. When this was raised by a colleague—I do not know who it was—it related to Schedule 3 which, on page 58 in paragraph 3 of new Schedule 8A, sets out the power to amend Part 1. Is there a connection between sub-paragraphs (1) and (2)? Sub-paragraph (1) reads as:

“The Secretary of State may by order make such amendments of Part 1 of this Schedule as he considers appropriate”.

That stands on its own, but sub-paragraph (2) states that he,

“may make such an order”,

after he has received a recommendation from the commission. Surely it should read that he may make an order “only” after he has a recommendation from the commission. Is sub-paragraph (1) dependent on sub-paragraph (2)? The Minister may not answer me now, but I hope that he will do so at some point because it looks like a real Henry VIII power and it is not explained properly. There is no connection between sub-paragraphs (1) and (2), but I think there should be.

Lord Gardiner of Kimble: I suspect that I may want to avail myself of the noble Lord’s very kind suggestion. In order to get the intricacies of this right, I probably need to look at it. It is important that we get this right throughout the process.

Perhaps I should say to the noble Lord, Lord Aberdare, that I think that my noble and learned friend has made it clear that the Government fully intend there to be a review as part of the amendments that will come through on Report. There will be a review after the general election in 2015.

This group of amendments reflects the fact that the Government want to get this absolutely right. Points have been made on all sides of the Committee which the Government will return to on Report. Given the hour, I hope that noble Lords will forgive me that if there are any outstanding points I find in Hansard, I will respond to them.

Baroness Royall of Blaisdon: My Lords, perhaps I may ask for a point of clarification. In responding to the questions about the Countryside Alliance and the hunting Bill, I think the noble Lord talked about being very careful not to promote the electoral prospects of a party. However, Clause 26 talks about “prejudicing” the electoral prospects of other parties or candidates. That relates to the Countryside Alliance and the ban on hunting, but I would also cite the example of the demonstrations held against the Iraq war. They could have been seen to be prejudicial to the electoral prospects of a certain party, in that case my own. I would be grateful if the noble Lord could clarify that either this evening or on a future occasion, because it is a terribly important point.

Lord Gardiner of Kimble: I will want to reflect precisely on that but will just reaffirm that the Countryside Alliance was punctilious because it was an apolitical organisation. The person who chairs it is

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the Member of Parliament for Vauxhall, and I very much doubt that there was any suggestion at all that she was in any way going to be subject, shall we say, to an attack for an anti-Labour stance. I will reflect on the two points that the noble Baroness has made.

In conclusion, I will respond to any outstanding points, but at this juncture, I wonder whether the noble and learned Lord might consider—

Lord Harries of Pentregarth: Before the Minister sits down I express my appreciation of the fact that he has obviously given very detailed attention to a lot of very specific points and has indicated he will be responsive to them. I would just urge him on one thing. A particular concern for charities and campaigners, which he perhaps did not emphasise much, was this overall question of staff costs. They believe that it either is unworkable or would impose a huge regulatory burden. Will he take seriously the recommendation of the Electoral Commission that, for the 2015 election at any rate, they are excluded altogether?

Lord Gardiner of Kimble: I will want to reflect on that particular point. I am not in a position to say how the staff costs issue will be dealt with but I reassure the noble and right reverend Lord that it is part of the considerations. Perhaps I might ask the noble and learned Lord again whether he might feel in a position to withdraw his amendment.

Lord Morris of Aberavon: My Lords, I welcome the Minister’s very careful reply and thank him for it. I will withdraw my amendment, but take the opportunity, since Wyn Roberts was mentioned, to say that he was a great and distinguished Member of this House and a friend to many noble Lords, in my case long before he became a Member of Parliament. His long tenure in the Welsh Office is reflected in part—and only in part—by the 1993 Act, to which I have referred and which will always be his memorial in Wales. However, my case of course goes further back than that, to the 1967 Act on the Welsh language, introduced by Cledwyn Hughes. Furthermore, even the 1942 Act, referred to by my noble friend Lord Elystan-Morgan, dealt specifically with the issue of costs in the courts.

The Minister has told us that there is a strong and compelling case for costs to be considered and that the Government will want to return to that point. I listened to that and am grateful for it. I am surprised that the Welsh language issue was not taken into account in the preparation for this Bill. That perhaps shows that the Bill, as we go on to debate various amendments in Committee, may become more and more unworkable. However, on that basis, I beg leave to withdraw my amendment and thank the Minister for his careful consideration.

Amendment 159G withdrawn.

House resumed. Committee not to begin again before 8.54 pm.

16 Dec 2013 : Column 1101

Financial Services (Banking Reform) Bill

Commons Reason

7.54 pm

Motion A

Moved by Lord Deighton

That this House do not insist on its Amendment 41, to which the Commons have disagreed for their Reason 41A.

41: Insert the following new Clause—



Amendments of FSMA 2000

Professional standards

After section 65 of FSMA 2000 insert—

“65A Professional standards

(1) The regulator will raise standards of professionalism in financial services by mandating a licensing regime based on training and competence.

(2) This licensing regime must—

(a) apply to all approved persons exercising controlled functions, regardless of financial sector;

(b) specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct and revised Banking Standards Rules;

(c) make provisions in connection with—

(i) the granting of a licence;

(ii) the refusal of a licence;

(iii) the withdrawal of a licence; and

(iv) the revalidation of a licensed person of a prescribed description whenever the appropriate regulator sees fit, either as a condition of the person continuing to hold a licence or of the person’s licence being restored;

(d) be evidenced by individuals holding an annual validation of competence;

(e) include specific provision for a Senior Persons Regime in relation to activities involving the exercise of a significant influence over a controlled function under section 59 of the Act.

(3) In section 59, for “authorised” substitute “licensed” throughout the section.””

Commons Disagreement and Reason

The Commons disagree to Lords Amendment No. 41 for the following reason—

41A Because Lords Amendments Nos. 42 to 57 make more appropriate provision about the standards of those working in the financial services sector, and Lords Amendment No. 41 is incompatible with the provision made by those Lords Amendments.

The Commercial Secretary to the Treasury (Lord Deighton) (Con): My Lords, I am recommending that your Lordships do not insist on this amendment and I of course support the reason the other place has put forward. I hope that I will be able to convince your Lordships, and especially the noble Lord, Lord Tunnicliffe, that the amendments the Government put forward in this House address the concerns of the noble Lord and the Official Opposition.

In essence, the Opposition are seeking to bring in a regime of annual licensing for bankers operated by the regulators, which would be supported by requirements about professional qualifications and minimum levels of competence. They also seek a code of conduct for

16 Dec 2013 : Column 1102

bankers. I am grateful to the noble Lord for his constructive and thoughtful contribution to the debate on these professional training standards. First, I will set out how the amendments tabled by the Government, following the PCBS recommendations, already deliver the improved professionalism and higher standards of conduct that Amendment 41 seeks. Then I will explain the ways in which Amendment 41 is incompatible with the PCBS proposals, which had at their heart the need for banks to take responsibility for standards in their organisations, which is essential if the culture of banking is to improve.

First, on the code of conduct, Lords Amendment 54, tabled in Committee, already provides for the regulators to make rules of conduct for all bank staff. The regulators will be able to create a set of banking standards rules for people working in banks, just as the PCBS recommended. These banking standards rules will be able to do everything that a code of conduct would do.

Secondly, on ensuring a minimum standard of professionalism and qualifications, Lords Amendment 45 provides for banks and PRA-regulated investment firms to check that candidates for regulatory pre-approval to perform a specified function are fit and proper before they submit an application to the regulator for that approval. As part of this process, they will have to have regard to whether the candidate has obtained a qualification, has been trained or is undergoing training, or possesses a level of competence set out in the regulator’s rules. The regulator will of course have to confirm that those candidates are fit and proper, including by virtue of having the appropriate qualifications, before approving candidates to specified functions.

Thirdly, Lords Amendment 53, which provides for the new certification regime recommended by the parliamentary commission, requires banks and PRA-regulated investment firms to certify that candidates for significant-harm functions are fit and proper, including by having regard to whether the employee has obtained the qualifications, training or competence set out in a regulator’s rules. This certification will have to happen each year, so there will be an ongoing requirement to consider the training and competence of their staff.

In sum, the government amendments provide for a code of conduct, emphasis on ensuring that candidates for working in functions that could significantly harm the bank have minimum qualifications and annual certification. Those are the three central elements of Lords Amendment 41.

I will explain briefly why Amendment 41 is incompatible with, not complementary to, the PCBS proposals. Lords Amendment 41 would impose the requirement for annual validation and checking on the regulator, not the banks. The whole thrust of the PCBS recommendations was that primary responsibility for maintaining standards should reside with the banks themselves. The PCBS said:

“Banks should not be able to offload their duties and responsibilities for monitoring and enforcing individual behaviour on to the regulator or on to professional bodies. The tools at their disposal have the potential to be much more usable, effective and proportionate for the majority of cases than external enforcement”.

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8 pm

The heart of the new regime is that the banks cannot hide behind the regulator in enforcing standards, but that is what Lords Amendment 41 would go back to. In Commons consideration of Lords amendments, the chair of the PCBS, the honourable Member for Chichester, Andrew Tyrie said:

“The purpose of licensing, or certification, is to ensure that banks themselves have identified those employees—whether traders, senior salespersons, financial managers or whatever—who can do serious harm to the bank or to markets … It should be the responsibility of banks, using methods that best fit their organisation, to maintain a certification system, and it should be the responsibility of regulators—using periodic checks—to ensure that they do. Just to be clear, it should certainly not be the job of the regulators to try to identify all these staff themselves. That would guarantee the return of the very bureaucratic box-ticking that we want to leave behind with the abolition of the APR.”—[Official Report, Commons, 11/12/13; col. 266.]

As Mr Tyrie alludes to, the independent regulator will be central to this new regime but will, instead of doing the banks’ job for them, be more properly focused on setting the standards of conduct, determining the significant-harm functions, deciding the necessary qualifications and, crucially, holding banks to account for their compliance with the regime. For example, a bank’s failure to properly abide by the certification regime would be a breach of the requirement under the Act, which could lead to enforcement action by the regulator.

Therefore, I put it to the House that the amendments put forward by the Government to implement the recommendations of the parliamentary commission will deliver the results that the noble Lord, Lord Tunnicliffe, and the Official Opposition seek. In addition, they will ensure that the banks cannot hide behind the regulator in enforcing standards. I hope, therefore, that the noble Lord, Lord Tunnicliffe, will agree that this House should not insist on Lords Amendment 41. I beg to move.

Motion A1

Moved by Lord Tunnicliffe

As an amendment to Motion A, leave out from “House” to end and insert “do insist on its Amendment 41”.

Lord Tunnicliffe (Lab): My Lords, I speak on behalf of my noble friend Lord Eatwell. We are in but, we hope, moving towards the end of the worst financial crisis in most of our lifetimes. We will not agree on the reasons for this crisis, as we have proved when we have touched on it over the past several months. However, I think all noble Lords agree that some part of it related to the regulation and structure of the banking sector. We have had several White Papers on this subject and the Vickers report. We have had two financial Bills, of which this is the second. Half way through this process, there was a discontinuity when the LIBOR scandal changed the mood and grounds of the debate. We all hoped it was a one-off, just as we hoped RBS and Northern Rock were one-offs, but from that scandal onwards unease about the sector has continued to grow. Other banks—HSBC and the Co-op—were involved in mis-selling, but what really hit me was the latest report on the Lloyds Bank

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issue, which brought out how deep mis-selling has gone in these organisations. The FCA press release states:

“For a Lloyds TSB adviser on a mid-level salary, not hitting 90% of their target over a period of 9 months could see their base annual salary drop from £33,706 to £25,927; and if they were demoted by two levels their base pay would drop to £18,189—almost a 50% salary cut. In the worst example that the FCA saw, an adviser sold protection products to himself, his wife and a colleague in order to hit his target and prevent himself from being demoted”.

This final debate is about the whole issue of standards and culture. As a result of the LIBOR scandal, Parliament decided to set up the Parliamentary Commission on Banking Standards. As Mr Tyrie said in the other place today, its role was to,

“consider and report on professional standards and culture of the UK banking sector”.

We hope to tease out this issue by insisting on this amendment.

We are not happy—nobody can be happy—with the way this Bill has progressed. It started in your Lordships’ House 35 pages long and it was more than 200 pages long when it left. In the other place, it had a two-hour debate. The Minister had barely got to Amendment 41 in his winding-up before the debate was terminated by the guillotine. This is unsatisfactory. Other elements of the Bill have, in many ways, been a model of good practice which I hope will be taken up in future. My parliamentary experience is not long enough to be sure, but I think the Parliamentary Commission on Banking Standards is an innovation. It has been a good one, roundly approved by all sides of the House and I thank its members, two of whom are in their place tonight.

I also commend the Government for the graceful way they have bowed to the wisdom of the commission and the size of our voting power. The combination of the two has been, in most places, most satisfactory. What is now left between the Official Opposition and the Government? One thing that is not left is the duty of care. We wish we had carried that amendment, which could have made a big impact on standards and culture in the future. Unfortunately, we were unable to persuade the House. We are left with professional standards and it is on these that we want to emphasise our differences. I wish the process had not ended up with 150-plus pages of the Bill being discussed in two hours in the other place. More extensive and thoughtful work on this area might have achieved the level of consensus that the Minister hopes for.

I wish to make four points about the amendment which are subtly, but importantly, different. The first relates to the term “licensing”: the amendment calls for a licensing regime. For 10 years, I carried in my pocket—actually it was a little too bulky for that, so I carried it in my briefcase—a licence to fly an aircraft and carry passengers. At one point in my career I was privileged to carry up to 400 passengers, so society imposed on me the requirement to have a licence. We were very serious about that licence, the validity of which cost three days a year to maintain. You had a simple, clear concept of what a licence was. It is therefore important that the word “licence” should be used. In the rest of industry, such as the railway

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industry, from which I come, the concept of licensing is growing in strength. It is a good idea and we should call this a licensing regime.

Secondly, the amendment requires that we,

“specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development”.

The Government’s amendment does not set out that these areas must be specified in the regime. This is a modest, but important, difference.

Thirdly, our amendment sets out that there should be a set of “Banking Standards Rules”. These were referred to by the commission, in paragraph 107 of its summary of conclusions and recommendations, paragraph 634 of the total document. Paragraph 2.18 of the Government’s response states:

“The Government will also take forward the Commission’s recommendation to replace the existing statements of principle (and codes of practice) for Approved Persons with banking standards rules”.

We believe it is important that banking standards rules should be set out, with the implication that this is a universal document for all parts of the industry to know of and take account of.

Finally, our amendment calls for,

“an annual validation of competence”.

I am happy to be corrected on this, but the tone of the government amendment suggests that in the previous 12 months the individual has not been found out—been found to be incompetent—because it talks about issues, errors or problems being recorded and being passed on to other employers. We want this to be a positive thing. Just as it was in my day, when I had to prove my right to hold a licence, we want bankers to go through a similar process, which looks positively over the previous 12 months at the continuing professional development and professionalism of the individual, and validates that annually. For those reasons, I beg to move.

Lord Turnbull (CB): My Lords, perhaps I might go back over the history a little. The banking commission found that the approved persons regime had proved pretty toothless and that virtually no senior figures had suffered any serious sanction, and recommended a two-tier system: the most senior tier would require prior registration, and the second tier would require the banks to attest that the people working for them were fit and proper.

Both the Opposition and the PCBS found that the original government proposals were unsatisfactory, and each put down their own amendments. The one put forward by the Government, which was supported by the PCBS, was passed—but so, too, was the Opposition’s Amendment 41. They are different in some significant ways, but they do not differ in their attempt to define the standards that this generality of employees in trading or serving the public should be asked to reach.

The Opposition’s amendment refers to,

“minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct”.

The Government’s Amendment 53 contains something that is more or less identical. It refers to a “fit and proper” person who has,

16 Dec 2013 : Column 1106

“obtained a qualification … undergone, or is undergoing, training … possesses a level of competence, or … has the personal characteristics”.

On that there really is no difference at all between us. The difference is the mechanism by which this is achieved.

The noble Lord, Lord Tunnicliffe, prefers the word “licensing”. I cannot really tell the difference between that and “certification”. On the question of defining minimum standards, I have just explained that those are true of both these proposals. On the question of annual approval, in the Government’s case all these characteristics are,

“required by general rules made by the appropriate regulator in relation to employees performing functions of that kind”,

and the certificate issued is valid for 12 months—so, again, we do not really have any difference between us; or at least the differences are tiny.

As has been pointed out by the Minister, the one important difference is that in one case the enforcement goes directly from the regulator to the regulated person, and in the government amendment, which follows the PCBS’s approach, it is the bank—paradoxically called an approved person—that has to identify those people who are capable of causing harm to the bank, its customers or its regulation, and to ensure that they meet the right standards. You have to make a choice about which you think is the better system.

The Opposition’s amendment would involve the direct regulation of tens of thousands of people, and in the alternative system it would be the bank that is, in a sense, the first line of regulation, but according to standards that the regulator has set. I think that that is a superior approach, and therefore I will certainly support the retention of Amendment 53 rather than voting to allow Amendment 41 to prevail.

8.15 pm

Lord Flight (Con): My Lords, following on from what the noble Lord has just said, I would have thought that recent history suggested that regulators were not particularly good at being the bodies finding out the bad eggs in banking institutions. Most of the staff of the PRA have come from the FSA. They were the regulators for the period during which the banking system in this country took on board the awful problem of a lack of integrity.

There is agreement across the House and the country that the question is: how do we get integrity back into our banking system? I do not see that rules are going to do it. We should have focused more on the role of the shareholders of banks in making sure that their boards and executives are proper people, and on the role of the auditors in this area, but I do not see any sound basis for being of the opinion that the regulators are going to be much good at it.

I broadly support the concept of licensing, although I agree with the point: what is in a word? It seems to me that you can license people in regard to their academic qualifications and job experience but not for integrity. People have either got integrity or they have not. We want to get to a situation where the managers of our banks have got integrity and give key effort to making sure that their banks are run with integrity.

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That leads me to the next big area. My view over 40 years in the City has been that the main cause of this trouble has been that an oligopoly was allowed to develop. If one looks at economic history, wherever there have been cartels and oligopolies, there has always been bad practice. One reason that the oligopoly got worse is that there was a mistaken view back in the 1980s after the failure of Johnson Matthey that led to the doctrine that the lender of last resort only stood behind banks that were too big to fail. That led to a shrinkage of the number of banks. Many, because they were not deemed to be covered by the lender-of-last-resort doctrine, were closed down.

I remember having extensive discussions and correspondence with the late Sir Eddie George on just that issue back in the early 1990s. What was allowed to happen was a moral hazard. The oligopoly was there with its ticket that it had lender-of-last-resort support and it took the view, “Make money in any way you like and pay the fines”—they were a natural cost of business if you were in breach. That led to a complete deterioration of the standards of integrity in the banking system. That is the truth of what I observed.

I repeat, I personally do not see the regulator as being a huge force in turning round integrity. Punishing those that basically act immorally is quite an important ingredient, but above all we need to get sound management into banks. Maybe the regulator has some role in helping that process, but bank managers must run their banks on the basis of integrity. How far down does the regulator go if he is responsible for ensuring that staff have integrity? It seems to me that this would not work.

Lord Tunnicliffe: I commend the noble Lord, Lord Flight, on his ongoing campaign for small banks and more diversity—not that I dissent from it, but it is consistent. What I have more trouble with is the concept of competence and integrity in the banking system, and the idea that somehow we should more readily trust the banks than the regulator. The banks have not got much of a record over the past three or four years in terms of either competence or, frankly, integrity. There is virtually no major bank that has not shown some errors in terms of integrity or shown some failure in competence or ripped off customers through mis-selling. The poor FSA might not have done brilliantly, but it did investigate these areas and produce perfectly sensible reports. As far as one can see, the FCA has got off to a good start. It is producing good and competent reports. I want to express my belief that the regulator is doing, and will continue to do, a good job.

The amendment is quite rightly interpreted as saying, “The regulator shall do”. If our amendment were to succeed, I could readily see some drawing back from that. My own experience in the airline industry is that the regulator creates the framework and checks the checkers—in other words, checks the senior management—but that the spreading of annual testing and so on goes into the companies in a trusting framework. There are ways of doing it without having thousands of inspectors around. Our general thrust is in the right direction. However, I get a sense from what

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is happening in the House tonight that the chances of me persuading people on this point are slim, so I will not press this to a Division. I beg leave to withdraw the Motion.

Motion A1 withdrawn.

Motion A agreed.

8.23 pm

Sitting suspended.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Committee (3rd Day) (Continued)

8.54 pm

Clause 26: Meaning of “controlled expenditure”

Amendment 160

Moved by Lord Phillips of Sudbury

160: Clause 26, page 13, line 19, at end insert—

“( ) In subsection (8)(a) after “body” insert “(except a body which is a charity)”.”

Lord Phillips of Sudbury (LD): My Lords, Amendment 160 is very short and innocuous, but it is of significance in terms of its impact on the Bill in that it would remove charities from the scope of the Bill and the 2000 Act. Like everybody else, I must declare interests, which are largely to be found in the register, but I should add that I have been for 40 years a charity lawyer—if that does not sound a contradiction in terms—and have great sympathy with all those trying to get their head around the relationship here between charity law and electoral law because it is far from simple.

Thanks to the work of the Library staff, I got an insight into the debates when the 2000 Act was legislated. It is fair to say that charities got short shrift. In fact, during the passage of the 2000 Act, the awareness in the Chamber was pretty extraordinary and at no point did a clear statement on the impact on charities find its way into print. I am sure your Lordships will also have noticed that the vast majority of charities are as amazed as anyone that they have ever been part of the 2000 Act. Most of them went through the previous election in complete ignorance of that fact.

I fear that the misunderstandings that attend this Bill are not inconsiderable. I am afraid that that misunderstanding finds its way even into the Harries report, if I can so call it. I, like everybody else, greatly admire the energy and astuteness that has been put into this report and I agree with the vast bulk of it. I happen not to agree with recommendation 11, which is that charities should not be exempt from regulation. To make my point and because it is germane: recommendation 11 is preceded by three statements. The first—in favour of my amendment, so to speak—is that the commission heard evidence from charities of the “disproportionate regulatory burden” on them registering as third parties. That burden is at the heart of my wish to see charities removed from this Bill and the 2000 Act.

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There are two reasons given for the recommendation about not exempting charities. Incidentally, it is fair to say that the commission itself was made up of representatives of the charities sector and the non-charity NGO sector. The first reason is that,

“the regulatory system should not be structured such that the status of being registered as a charity could be a mechanism for avoidance”.

That is a little gnomic, perhaps, but were we to agree to take charities out of the Act and this Bill, the authors of the Harries commission report decided that this would represent a mechanism for avoidance. I beg to differ. Charity law and electoral law are in all essentials the same. Being bound by charity law rather than electoral law is not a soft touch. Indeed, some charities have made the point that they are afraid of not being part of the Bill—and therefore under the aegis of the Electoral Commission—because they fear that if left to the devices of the Charity Commission alone things might get rather more brutal than they already are.

The second reason given for that recommendation is that,

“campaigning with non-charities is so central to many charities’ activities”.

That is as if to say that if charities were not part of the Bill, they would not be able as they currently are to campaign with non-charities. Again, that is completely misconceived. The position of charities vis-à-vis joint campaigning—coalition campaigning, if you want to call it that—will not be affected significantly; in fact, I could not put my finger on any single difference between being outside and inside the Bill. I repeat: charity law on its own is very severe and, as I shall explain, very similar to electoral law on this point.

9 pm

Finally—and I had a word with the noble Lord, Lord Best, so he knows that I am going to mention this—a wonderful example of the misunderstanding generated by the Bill is the comments made by the noble Lord just before supper on the food campaign of the National Federation of Women’s Institutes. The NFWI is a charity; I acted for it for 20 years. The gist of the noble Lord’s remarks was that under the Bill, the NFWI would be in real trouble in running a campaign such as it has. Again, that is a complete misunderstanding. If charities remain in the Bill, the NFWI will be able to do in future exactly as in the past. The fact that we have a great deal of confusion around this aspect of the Bill is perhaps no surprise: the law is difficult and obscure. Indeed, one reason why I want charities right out of the Bill is to avoid the double confusion and complexity that will ensue if they remain within it, because they will then be subject to two completely separate branches of law: electoral law and charity law. Although, as I have said, they are very similar in essentials, you can none the less be quite certain, especially given the brouhaha surrounding the Bill, that all charities of any size will be extremely cautious.

They will be cautious because the boards of charities are volunteer boards, and if they step outside the confines of charity law, the consequences can be disastrous. It does not make any difference if it is a charity in

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corporate form; the trustees are personally liable for any mis-spending of charity funds. It is very rare that the Charity Commission requires charity trustees to put their hands in their pockets, but that is the position. That is why this chilling effect, to which not much reference has been made tonight but which is generally accepted, is now running around the charity sector: the chill of concern that charities will be caught by the Bill in a highly complex, bureaucratic web which will curtail their activities come an election—indeed, come one year before an election.

There is no point in pretending that this does not have a severe and real effect. We have had it from a hundred lips tonight and outside this place. The Harries commission has had it. I have had it from the many charities and charitable organisations to which I have talked. The Government have had it. The charity sector is very worried. You can be absolutely certain that those charities which have paid staff—which is of course only about 5% of them, about a third of a million in this country—will be required to check with their lawyers and to make sure that every step of an election campaign is consonant with the provisions of this complex legislation. The waste of fees and time, the bureaucracy, the demoralisation, the diversion of philanthropic effort into playing safe in what is—I am sorry to keep repeating the word—a ludicrously complicated piece of legislation; most legislation is these days, and this is no different—adds up to a very worrying situation. In so far as there is reference in the commission report to disproportionate regulatory burden, that is a burden on the charities themselves.

My claim is that the inclusion of charities is wholly unnecessary because, first, charity law is strong and clear; it is a 500 year-old branch of law—only the Anglophone countries have a separate branch of charity law. Secondly, as I have said, the Charity Commission holds the sector to account as a very competent, long-standing regulator with good, solid legal skills. The commission produces guidance, as many noble Lords will know, on politics and campaigning and produces a supplement about campaigning during election time. That came out a couple of years ago, it will be updated in time for the next election and that guidance alone came to roughly 40 pages. The Charity Commission expects the sector to pay close attention to it and, by golly, it does. As a lawyer in the field—there are not many of us—I can tell you that we are constantly being asked by charities, “Is this all right?”, “Is that all right?” and “What does clause 27 of the CC9 guidance mean?”

The courts are extremely protective of charity law. There is no branch of English law that has the attention of the courts in quite the way that charity law does. Again, it is common knowledge that charities cannot have political purposes. It is as simple as that: no political purposes. Secondly, although they can engage in campaigning and politics, under CC9, they cannot engage in partisan campaigning and politicking—that is verboten, out. Many references have been made to the hazy line between what is in and what is out, between what is okay and what is not okay. I totally sympathise with that—it happens to have kept me in a reasonable living for 40 years, so I must not complain too much—but, seriously, there is no way of avoiding

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it. With the sort of issues that the wording of any legal rule will involve, one cannot avoid, I am afraid, the complexity of interpretation of whatever line one draws and wherever one draws it in terms of what is permissible and what is not.

We have a situation here where we have regulation, we have regulators and there have been no complaints that I have been able to lay hands on, so to speak, concerning charities at the last election. It seems to me to be bizarre that here we are, unless we watch it, about to shackle the most highly regulated sector in our society, which is the only sector that exists within the constraints as to purposes that the Charity Commission lays down. Do not forget that charities have to behave and be exclusively for the public benefit. No charity can do anything that is not exclusively for the public benefit as defined by charity law. It seems not just unnecessary but almost perverse to shackle this sector, of all sectors, with two regulators when those in the NGO world that are not charities have only one regulator. The NGO world that is not charitable can have any purpose it likes, as long as it is not in breach of the law of the land, and can adopt any means it likes to pursue those purposes, as long as it does not involve criminality, and yet that branch of the NGO jungle, if we want to call it that, has a single regulator while the regulated and highly specific charity sector is to have two regulators, with all that that will mean in terms of demoralisation, expense, confusion, muddle and the rest. I hope that, before the day is done, we will accept all that and not proceed along the present path.