Consideration of Commons amendments and / or reasons in the Lords
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Lord BachLabour- Quote
- That the House do not insist on its Amendments 11 and 12 to which the Commons have disagreed but do disagree with the Commons in their Amendments 12A to 12F in lieu and do propose Amendments 12G to 12N in lieu of those Commons Amendments.
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- My Lords, I beg to move Motion A, that this House do not insist on its Amendments 11 and 12, to which the Commons have disagreed, but do disagree with the Commons in their Amendments 12A to 12F in lieu and do propose Amendments 12G to 12N in lieu of those amendments. These amendments propose to add to the permissibility and declaration requirements relating to donations and loans from individuals. They respond to the amendments tabled by my noble friend Lord Campbell-Savours in this place, which were well supported across a wide spectrum of the House. They were debated extensively in another place a week ago, and I believe that, in their revised form, they strike an appropriate balance between addressing the concern that is clearly so well supported and ensuring the new restriction is fair and proportionate. These amendments propose to add to the existing criteria in the 2000 Act that govern the permissibility of individuals making political donations or loans. They provide that individuals giving or loaning more than £7,500 to a political party or other regulated recipient must be resident, ordinarily resident and domiciled in the UK for the tax year in which the relevant donation or loan is made. This requirement applies irrespective of whether the donation or loan exceeds the threshold singly or in aggregate over the course of a calendar year. Individuals must make a statement that they are resident, ordinarily resident and domiciled in the UK and provide this along with their donation or loan. Making a false statement is a criminal offence, and a party cannot accept such a donation without the requisite declaration. This requirement is additional to the existing requirement for individuals making political donations or loans to be on a UK electoral register. Importantly, however, the additional restriction applies only to more significant donations or loans: those above £7,500. The existing permissibility requirement of inclusion in an electoral register remains in force at the lower threshold, currently £200, but it is proposed to increase it by this Bill to £500, as I have already mentioned. We propose the new restriction to apply to the higher threshold of £7,500 for reasons of fairness and proportionality. That is key and largely addresses a significant concern the Government had with the amendments tabled by my noble friend. As I outlined in debates in Grand Committee and on Report on this Bill, we were concerned at the low level of the restriction in my noble friend’s amendments, which in our view amounted to an unfair restriction on individuals’ ability to participate in our democratic system. Setting the threshold at £7,500 is much fairer, allowing, as it does, an individual who is not resident, ordinarily resident and domiciled in the United Kingdom to retain the ability, albeit in a newly restricted way, to make donations as a way of participating in our democratic system. The higher threshold also has the important advantage of reducing the burden of compliance for political parties and donors. Enabling an individual who does not meet the new permissibility requirement still to make significant donations that do not exceed £7,500 in a calendar year deals, in our view, with any concern of the sort that was expressed by Members of the Opposition in the other place about the compatibility of these proposals with EU law and the ECHR. I should briefly outline how the amendments work in respect of aggregation of smaller donations towards the £7,500 threshold. The amendments propose to require donations above the recordable threshold—£500, as proposed by the Bill—to the same donee to be accounted for where in aggregate they exceed the £7,500 threshold. This means that if a donor gave a series of donations of £2,000 to a political party, the fourth such donation would need to be accompanied by a declaration and the donor would need to be resident, ordinarily resident and domiciled in the UK at the time of making that donation.
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Lord TylerLiberal Democrat- Quote
- My Lords, I am afraid I still feel that the Bill is a sad example of a terribly wasted opportunity. Ministers’ obsession with the illusory consensus has meant that they have never been able to step up to the mark and use the Bill to clean up big-money politics. Because they were so determined to do nothing to cause anxiety to the Conservative Party, they have ended up doing next to nothing about serious reform. I think all parties said they were determined to achieve such reform, so we regret this. However, we are delighted that the consensus across your Lordships' House in support of the amendment tabled by the noble Lord, Lord Campbell-Savours, and US has at least led to the blocking of a very important and dangerous loophole in the law. The amendments put before us by the Minister are certainly a considerably improved package, which we welcome very much. We in this House, across all parties, were determined to prevent multi-millionaire tax exiles from continuing to buy parties and constituencies on a scale of intervention which has hardly been matched since the corruption of pre-1832 rotten boroughs. These amendments seem reasonably effective, but in correspondence with the right honourable Mr Michael Wills, the Minister responsible for the Bill in the other place, I raised two continuing concerns, part of which have been addressed in his opening remarks by the Minister, but I want to press him on some details. First, throughout all stages of the Bill, we have been anxious to ensure that the thresholds for reporting and recording donations could be bypassed by making a series of payments, each individually below the threshold, but in aggregate greatly exceeding them. That is obviously an issue to which the Minister paid attention just now. For example, there would seem to have been a danger that a tax exile who is not a permissible donor could simply donate £7,499 on a number of occasions each year and avoid the provisions of this legislation. In his response, Mr Wills wrote in his letter that, “multiple donations to the same political party, or same MP, which over the course of a year exceeded £7,500, must be accompanied by a declaration of the tax status of the donor, and the donor must be ROD in the UK”. ROD apparently stands for “resident, ordinarily resident and domiciled in the UK”. Mr Wills continued: “This aggregation requirement applies to donations to different accounting units where those units report to the Electoral Commission via the central party. However, the aggregation requirement does not apply to multiple donations to different recipients (e.g. a party and an MP). This is because we do not believe it is fair to require donors to keep track of their interaction with different entities”. It is that latter qualification to which the Minister has just referred which really adds to our concern. I hope that the Minister will be prepared to give an explicit assurance that everything possible will be done to monitor the situation and, if necessary, to take steps to avoid any exploitation if a new loophole is discovered. We really need the Government’s intention on the record if we are fully to fulfil the intention of your Lordships' House in passing the original amendment. Incidentally, I have some difficulty with the suggestion from Mr Wills that donors may be given special treatment if they give money to several MPs. Surely their parliamentary duties are now well funded by official sources, which is something that we have all learnt over recent weeks, and there should be no special treatment for those who donate for their party-political campaigning. What would be the position if a tax exile multi-millionaire decided to give a donation below the threshold to every MP of a particular party? The implication in Mr Wills’s letter is that MPs should be treated differently from parliamentary candidates of a different party who stand against them. Surely that cannot be right. Our second area of concern has been expressed in both Houses during the passage of the Bill; that is, very proper restrictions should now be put in place to avoid any circumvention by companies controlled by those who are not permissible donors. Mr Wills tells me in his letter: “Section 56 of the Political Parties, Elections and Referendums Act 2000 requires donations which are made on behalf of another person to be declared as such”, and referred to an “agency”. It is far from clear whether the constraints of the present Bill are sufficient to make it a firm requirement that any declarations from a company in this category are as rigorously controlled as from a tax exile individual. Again, I hope that the Minister will be able to give us a firm assurance on the record that it is intended that such companies should not be used as a bypass for donations that would otherwise be illegal. There are one or two other key changes in the government amendments now before us when compared with those that were considered by the other place. For example, the Government have changed their mind about the reference to the tax year, which is going to be relevant. Previously we were told that the current tax year was unworkable as a reference point, but now we are told that it is possible. Again, perhaps the Minister can enlighten us. Having briefly identified two areas of anxiety, I must again reassure the Minister that we think the Bill is somewhat improved by these amendments. As my honourable friend David Howarth said at Third Reading in the other place, we are delighted that the artificial consensus has at last broken down on this specific issue, but we simply regret that it did not break down earlier and more generally. I think that the noble Lord, Lord Campbell-Savours, would agree that it is an important change to which we should all give a warm welcome. If all legislation were dependent on Conservative acquiescence and no reform could proceed without all-party support, where would we be? Indeed, at an earlier stage I asked the Minister whether his addiction to consensus would prevent action if his party and the Conservatives were in cahoots on a particular issue and we, the Liberal Democrats, disagreed, but answer came there none. If this Bill fully reflected the intentions of the Hayden Phillips discussions, it would have had more teeth and there would have been more chance of a general reform of the funding of political parties and elections. Nevertheless, we welcome this U-turn and believe that it strengthens the Bill.
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Lord BatesConservative- Quote
- My Lords, I welcome this chance to speak to the Motion before us. If the House will bear with me, it is worth taking a few minutes to recap as to how we come to be in the position we are now in. An attempt was made by Mr Prentice to table an amendment on Report in the other place. The government business managers decided that they did not want the matter to be debated and therefore it came to this place. The noble Lord, Lord Campbell-Savours, took up the amendment and with his characteristic skill and ability in Committee, again on Report and at Third Reading, brought it back here. At that point there was quite strong opposition to it. I shall come to my views shortly, but first I shall quote the Minister: “The Government have stated their firm belief that it would be wrong in principle to create an anomaly by introducing extra restrictions on only one form of participation without considering”, other forms. The other forms to which that remark relates are mentioned earlier in the Minister’s speech where he says: “As we have said before, the Government recognise and understand the sentiment behind the amendments … We also recognise, however, that making a donation is just one way in which an individual can participate in our democracy. There are many other ways, ranging from exercising the right to vote in an election to standing as a candidate”.—[Official Report, 15/6/09; col. 914.] In this sense, by introducing two specific additional tests in respect of donations, the Government said that we would be in danger of creating an “anomaly”. I am sure that the Minister will be able to confirm that those were very much his sentiments which he set out in Committee and repeated here. A very high quality debate then took place in which many excellent contributions were made. A Division was called and the amendment tabled by the noble Lord, Lord Campbell-Savours, was carried. It went down to the other place, and after what I should say what was a slight delay on the part of the business managers in bringing the Bill back to the Floor of the other place, every indication was given to the press—it was reported in the Guardian, no less—that Mr Straw, the Secretary of State, had stated that the Government Benches would be whipped to vote against the noble Lord’s amendments. That was a clearly stated position. Something happened then, we know not what, but there was a Damascus road conversion in the other place and we found that some six pages of amendments, where previously the noble Lord, Lord Campbell-Savours, had sent down a paragraph, were put forward in the other place for consideration. It is interesting that those six pages of amendments have now been superseded by another six pages of different amendments, which brings us to where we are now. It is worth putting on record the circuitous route taken by the legislation and that the previous publicly stated positions of the Minister and the Secretary of State have been turned on their head for no apparent reason.
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Lord Campbell-SavoursLabour- Quote
- My Lords, I intend to be very brief as I spoke at great length in Committee and on Report. I thank parliamentary counsel and those who drafted these amendments, which tidy up the amendments which we originally moved, for the considerable effort they have made during a very short period. I also thank my noble friend Lord Bach, Mr Wills and Mr Jack Straw for all the work and effort they have put into ensuring that these ideas and principles are transformed into legislation. However, I also wish to clarify the following point. At no stage during the handling of this amendment in this House, in Committee or on Report have I ever indicated that it was intended to target any individual. I have always recognised that people in all political parties might be affected by this. My view has always been, and remains, that this is an issue of principle. It is on that basis that I have moved these amendments. I am grateful to all those, particularly the Liberal Democrats and the Cross-Benchers, for their support on the night of the rebellion when we overturned the Government’s measure.
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- Lord BachLabour
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- My Lords, I thank all noble Lords who have taken part in today’s debate. I shall discipline myself and not respond at length to this matter. The House has important matters to debate today and tomorrow. I am grateful to noble Lords who have thanked the Government for taking the stance that they have. It is not an easy issue and I do not pretend for a moment that it is. However, we have found our way through the thicket. We were always sympathetic to the principle that my noble friend raised but were concerned about its practicalities. I do not say that all those concerns have gone away, as that would not be true, but we think that we have found a way through by retaining the principle there and the ability to implement this provision in due course. The noble Lord, Lord Tyler, asked me a number of questions, which I shall deal with shortly. Aggregation is not a loophole. The approach in these amendments reflects the approach in the PPERA legislation of 2000. We do not believe that it is workable or fair to expect different recipients of donations to act in the knowledge of donations received by others, which they have no way of knowing about. The approach taken by these amendments is consistent with the 2000 Act. It would be very difficult—even onerous—to expect an MP or other individual party member to check what donations had been received in the same year by other MPs or party members of the same party. It is not at all clear how we could realistically expect someone to go about that task. We must remember that an MP represents a constituency in his or her individual capacity, not as a member of a party, and might well receive donations on that basis. We do not want to undermine that principle. A donor could seek to get round the new restriction by giving donations below £7,500 to a large number of MPs of the same party. However, MPs are required to report donations that they receive at the lower threshold of £1,000, to be raised to £1,500 by the Bill, so such behaviour would soon become apparent. Recent events suggest that the public is not well disposed towards those who seek to operate only within the letter of the law without also respecting its spirit. As far as companies are concerned, which was the second point raised by the noble Lord, the amendments restrict the permissibility of individuals to give political donations; they do not restrict the permissibility of donations from companies. Amendments on company donations would be out of scope. However, Clause 8 of the Bill requires a declaration to accompany donations above £7,500 about the source of the donation. That is intended to ensure that any agency arrangement is properly declared. Therefore, if an individual gives money to a company, another person or entity with the intention that that money is given as a political donation, that arrangement ought to be declared and the individual treated as the donor. We have and continue to have sympathy with the point made by the noble Lord, Lord Tyler, on this, but there remains a serious concern about how such a restriction could be introduced in practice. In particular, there would be no easy way for parties to establish the make-up of a company’s shareholder register. Those amendments were therefore not accepted and were returned to at a subsequent stage of the Bill. The noble Lord’s last point that I want to answer was that Members of Parliament could receive up to £7,500 each from non-residents for tax purposes but candidates could not. He made that distinction. Where candidates are members of a political party, they are regulated under PPERA as a regulated donee and, as such, are covered by these amendments. Independent candidates are only regarded in the period preceding an election under the Representation of the People Act 1983, as amended. As such, they are not subject to the requirements in PPERA nor to these amendments. To suggest that donations to candidates are unregulated is not strictly fair or true. Indeed, most candidates are party members, so are captured by these requirements. I do not seek to try to answer all the points made by the noble Lord, Lord Bates. I am sure that he enjoyed himself immensely in his speech by pointing out what had been said in earlier debates on the Bill. If that gave him and the House satisfaction, so be it.
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- Lord BatesConservative
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- My Lords, the Minister cannot get away with that. It is not a question of satisfaction. It is a question of what the Government said in this place—what he put on record, speaking on behalf of Her Majesty's Government—and what Her Majesty's Government then said in the other place just a couple of weeks later.
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- Lord BachLabour
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- My Lords, the strength of feeling that the noble Lord showed today on this issue was not shown in the Division Lobby on Report when he led 40 of his own side into the Division Lobby in the vote that, I acknowledge, Her Majesty's Government lost. There was a lot of feeling on this side, as well as in other parts of the House, against the Government's position. Now, what do we do? We look and see what the strength of feeling is. We know that there were 218 names on an Early Day Motion in another place, well before the matter came to this House. We had the result of the vote in this place on Report. There clearly was a great deal of feeling in both Houses of Parliament that, on this issue, the line that the Government had taken was not the right one. So are Governments to be entirely stubborn, or should Governments do what they can to try to make what we have always argued is a good principle—I do not think that the noble Lord argues against the principle—practical? That is what we have attempted to do. I shall try to deal with some of the noble Lord’s points. He makes a legitimate point when he says that transparency about residence status and the lack of statutory definition makes it difficult to determine status. He is right; it does. However, there will be material to assist. First, the Electoral Commission will produce guidance, which is significant. Secondly, there is existing HMRC guidance, too. Thirdly, someone giving a donation of more than £7,500 who is unsure of their status can seek professional advice, because giving a false declaration is an offence only if it is given recklessly or intentionally. Someone who takes steps to satisfy themselves of their status will not have committed an offence. The noble Lord quite understandably also refers to the ECHR. Of course we have considered whether the ECHR is possibly infringed. We think that the statement in relation to these provisions being ECHR-compliant stands. This amendment could be said to restrict rights to freedom of expression—which I think is the point that the noble Lord was getting at—or association, but we believe that the difference is that it does so proportionally. Donations of up to £7,500—not £500—can still be paid by non-domiciles. That is a clear protection, as I said in my opening remarks, and is very relevant to the ECHR argument. In short, we are satisfied that these amendments are compatible with the EU and ECHR. The noble Lord also made a point about party treasurers. Those of us who have been party treasurers at a very low level in our parties can only have some sympathy for the position in which they sometimes find themselves under the present law. The amendments make it clear that parties will in most cases be able to rely on declarations from the donor in order to satisfy the requirement to take reasonable steps to verify that a donation is permissible. In practice, we expect that this would need to go beyond that only when they have reasonable grounds to think that a declaration is incorrect. Even in that scenario we do not expect party treasurers to have to understand and apply concepts of residence and domicile. We expect, for example, that they could ask the donor for a letter from his or her accountant asserting that the donor is a UK resident and domiciled. We have drafted amendments to ensure that the burden on political volunteers is minimised. I hope the noble Lord thinks that, in principle, that is the right thing to do—to make it easier for volunteers rather than more difficult. The noble Lord made a point about previous and current tax years. We have changed the requirements so that the amendments propose requiring a donor to be resident or ordinarily resident and domiciled—ROD, in short—in the year of giving the donation or the loan. The version of the amendments debated in the other place referred to the previous tax year. Why did we make that change? We made it in the light of discussions with Her Majesty’s Revenue and Customs and Her Majesty’s Treasury. Fundamentally, we believe that it would be bizarre and an unintended effect if an individual who was not ROD but had been last year was a permissible donor whereas someone who was ordinarily resident and domiciled in the current year but had not been so in the year before was not a permissible donor. So we recognise that for some people it will not be clear in-year what their tax status is. If a donor or recipient is in doubt about the permissibility of their donation, they should not give it without independent advice to satisfy themselves of their position. He also makes a fair point about the complexity of the tax system. It is certainly an argument that we have employed, and it still exists: the tax system is still complicated in this field. Of course we are not claiming that it is straightforward but—and I go back to something I said a few minutes ago—what we have proposed is a workable and effective means of addressing a clear decision from Parliament, not least from this House on Report. When these matters went back to the other place and were debated through the Government’s then amendments, there was of course no Division called at the end of that debate this time last week. Finally, on why the anomaly is not a problem now, we took and stand by the view that it is better to tackle these issues in the round. The House decided that this issue ought to be addressed now, not at some time in the future, and we have sought to give effect to that decision. This does not prevent further consideration of the wider issue in due course; indeed, I would be very surprised if there were none.
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