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Companies (Political Expenditure Exemption) Order 2007

Volume 693: debated on Tuesday 3 July 2007

rose to move, That the Grand Committee do report to the House that it has considered the Companies (Political Expenditure Exemption) Order 2007.

The noble Lord said: As part of the implementation of the Companies Act 2006 the Government have laid the draft Companies (Political Expenditure Exemption) Order to replace the existing order, SI 2001/445. This order is drafted in simpler language to correspond with the simpler format and drafting of the 2006 Act. It is being made under Section 377 of the Companies Act 2006, and its content was debated in a previous form in this House in 2001 in a very short debate. I am hoping that we will be able to follow the same form today.

I make it absolutely clear that this is not an order relating to party funding or party governance. It relates to corporate governance and how companies manage their affairs between the shareholders and the directors. Under Section 366 of the Companies Act 2006, companies must seek prior authorisation from their shareholders for political expenditure. This draft order exempts companies such as newspapers and other companies whose ordinary business includes the preparation, publication or dissemination of news material from having to seek authorisation. The only substantive change from the existing order is to extend the exemption to independent election candidates. Political expenditure under the 2006 Act is defined as any expenditure incurred on any publicity material or activities that may be intended to affect public support. This now includes public support for independent election candidates as well as political parties and political organisations. The exemption applies only to political expenditure. Companies that fall under this exemption will remain subject to the full requirements of the Act in respect of political donations.

The Companies Act 2006 has simplified and modernised company law. It has substantially rewritten company law to make it easier to understand and more flexible, especially for small businesses. This exemption order supports the objective of the Act, which is to pursue the principles of better regulation. It would be impractical to expect companies involved in journalism and news to pass resolutions to publish editorials or comment of a political nature. This draft order maintains a framework of company law that is proportionate and does not impose unnecessary burdens on business. As was also highlighted several times in the debates held on the existing order in 2001, the draft order supports the important principle of press freedom enjoyed in British public life. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Companies (Political Expenditure Exemption) Order 2007. 20th report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

I got quite excited about this order. I thought that I was going to get up and save the unions, as it were, but then I discovered that it did not apply to them at all. So I can only agree that this is an administrative measure, designed to replace the Companies (EU Political Expenditure) Exemption Order 2001 with one relating to the Companies Act. As such, we have no substantive points to make and I am happy to sit down.

Having heard my intervention on a question from the noble Baroness in the Chamber on the previous occasion, the Minister might not have expected me to have another swipe at those who will benefit from this change. If we were being awkward, we might well ask why we should not make it more difficult for quoted newspaper groups to influence voters in a referendum on European matters, which would of course be the effect of the order not being passed. As I understand it, were there to be a referendum on the treaty, which it does not look as though there will be, then the quoted newspaper groups—I think that there are probably two whose editorials on the referenda we could write—would have constraints imposed on them under the Companies Act 2006. Having said that, that is probably not the way to constrain what I like to refer to as the foreign-controlled press, but I should be interested to know the genesis of this order. Who has complained? Who has said that there is a problem? Reading the previous legislation, one would assume that it was covered anyway. Therefore, is this a case of people gearing themselves up for a campaign on issues where we would probably disagree with them, and have the Government been lobbied to bring in this order to that effect?

I am advised that the order is very similar to the one passed in 2001. We brought it forward again due to changes in the Act. I absolutely take on board the point made by the noble Lord, Lord Razzall. When I was being briefed, I thought about the role of book publishers in this regard, because they publish political books. Would it be sensible to go to the shareholders every time you published Peter Mandelson on the Blair revolution? The answer is no. For me, the bottom line is freedom of the press. Going back to the earlier question in the Chamber, one may not like what the papers say but it is essential that they have the right to say it.

The noble Lord has not specifically answered my question, so perhaps I may rephrase it. Is this simply regarded by his officials as a tidying-up exercise which should have happened earlier or have organisations been lobbying on this point?

I gather that there has been no lobbying and that this is a tidying-up exercise.

On Question, Motion agreed to.