rose to move, That the draft order laid before the House on 11 March be approved.

The noble Lord said: The purpose of the order is to introduce provisions for the regulation of loans to political parties in Northern Ireland. The order mirrors measures currently in place to regulate donations to political parties in Northern Ireland, and noble Lords may find it helpful if I set out the background to the legislation that we are considering this evening.

Noble Lords may recall that the Political Parties, Elections and Referendums Act 2000 created a regime for the regulation of donations to UK political parties. However, the scheme did not extend to Northern Ireland at that time because special arrangements needed to be made in relation to donations to Northern Ireland political parties.

For that reason, the Northern Ireland (Miscellaneous Provisions) Act 2006 amended the provisions of the 2000 Act to allow for Irish citizens and prescribed Irish bodies to make donations to Northern Ireland political parties. It also contained arrangements for the Electoral Commission to hold reports on donations confidentially until 2010. That Act contained the broad outline of the special arrangements that were needed in Northern Ireland.

However, the detail of the scheme was set out in secondary legislation: the Political Parties, Elections and Referendums Act 2000 (Northern Ireland Political Parties) Order 2007. That order set out the conditions that Irish citizens and bodies must meet to donate to Northern Ireland political parties. It also set out the steps taken by the Electoral Commission to verify that reports on donations are accurate during the confidential reporting period.

Noble Lords may also recall that the Electoral Administration Act 2006 created a new regulatory regime for the making of loans to political parties across the UK. As with donations, further legislation will be required to ensure that the loans regime operates effectively in Northern Ireland. That is precisely why we are here this evening. As with the donations regime, the Northern Ireland loans legislation must be introduced in two stages. The order before us this evening is made under Section 63 of the Electoral Administration Act 2006 and will set out in broad terms the special arrangements that will apply in Northern Ireland. The detail of how the regime will operate will be set out in a second order that we would lay subject to the House approving the order this evening.

Noble Lords may—as everyone else associated with this does—understandably ask why two orders are required. We have consulted the Joint Committee on Statutory Instruments on the matter, and have concluded that two orders must be made in sequence. That is because the power to make the second order is contained in the order before us. It is not possible for the material in the second order to be made directly under the original statute.

The order before us will allow Irish citizens and prescribed Irish bodies to make loans to Northern Ireland political parties. We intend to set out the conditions that an Irish citizen or body must meet to make a loan to a Northern Ireland political party in the second order—which, of course, will be debated in your Lordships' House. Those arrangements will acknowledge the special place that the island of Ireland and the Republic of Ireland occupy in the political life of Northern Ireland.

The order also addresses potential concerns relating to the possible intimidation of persons and businesses that wish to make loans to Northern Ireland political parties. Northern Ireland has rejected the path of violence and embraced a peaceful and democratic future. However, a small minority still uses violence and intimidation to attempt to achieve its ends. These individuals must not be allowed to undermine the people of Northern Ireland’s right to participate in the democratic process.

For this reason—as with the regulation of donations— the order provides for legitimate loans to the Northern Ireland political parties to be reported to the Electoral Commission in confidence. The confidentiality period is temporary and will end in 2010. The period may be extended by order with Parliament’s approval, but we hope that that will not be necessary.

During the confidentiality period, the Electoral Commission will verify reported transactions and will release information contained in a report if,

“it believes on reasonable grounds that the regulated transaction was entered into with an unauthorised participant”.

The steps that the commission must take to verify information contained in reports on loans will be set out in the second order.

This order represents a step forward from the current unregulated state of affairs regarding loans to the Northern Ireland political parties towards a level of accountability that the rest of the UK now enjoys. It also acknowledges the important relationship between the people of Northern Ireland and Ireland and protects those who would wish to contribute to political parties in Northern Ireland from the potential threat of intimidation and violence.

For those reasons I hope that the order will be supported this evening. As I said, much of the detail of how it will work will be covered in the second order which we will lay as soon as we can. Discussions are on going and drafting technicalities are being dealt with. However, there will be no undue delay on our part in laying the order before the House so that it can be fully debated. I beg to move.

Moved, That the draft order laid before the House on 11 March be approved. 14th report from the Joint Committee on Statutory Instruments.—(Lord Rooker.)

My Lords, I thank the Minister for presenting this order. For Hansard’s clarification, and with all due respect to the Minister, could he just clarify something that he stumbled over in relation to the island of Ireland? I think he meant to say that this is in recognition of the special place that Ireland occupies in the political life of Northern Ireland. I hope he will forgive me for that small correction.

I am more than happy to do that, my Lords. I still cannot get used to the fact that we do not refer to the Republic of Ireland. I stumbled over that part of my brief because I saw “Ireland”. Yes, I did mean the special role that Ireland plays in the political life of Northern Ireland.

My Lords, I thank the Minister. Apart from that, I have in the past had some concerns over how this was going to work. I was much more concerned in some ways that this could not leak from Ireland and Northern Ireland into the United Kingdom. However, having had some conversations with officials and others, I am quite satisfied that this statutory instrument is as watertight as it can be and I hope will be. I support it.

My Lords, we on these Benches also welcome the order, which we believe improves transparency. We also welcome the involvement of the Electoral Commission, which will verify the information given to it in the transaction reports. That is very important.

The steps that the commission must take are to be prescribed by order, as the Minister said. Was that what the Minister was describing, the order that will come before us? When might such an order come before the House? I gather that it is for the future. As the prescribed period begins in July, one hopes that Parliament will be given adequate time to scrutinise such an order before then. I hope the Minister can give that assurance. Otherwise we support the order.

My Lords, I join other noble Lords in thanking the Minister for outlining this order. I do not wish to make heavy weather out of it, because there is no heavy weather to be made out of it. The Minister said that the order is necessary in the improving state of affairs in Northern Ireland. We look forward to a day when it will not be totally necessary, which may be after 2012.

The order indicates that it allows Irish citizens and Irish bodies to enter into financial transactions. What about people who live in the Irish Republic and are not UK-registered voters but who do not regard themselves as Irish citizens—they regard themselves possibly as British citizens or as British-type organisations? They are not Irish, and under the Belfast agreement they are entitled not to be Irish if they do not wish to be. How does the order cope with them? Apart from that one query, the group to which I subscribe will be supporting the order.

My Lords, I should like first to apologise to the Minister for missing the first two minutes of his speech—which again, as in July last year when we discussed these cognate issues, was very fair and effective. I wish to speak in broad agreement, as has the noble Lord, Lord Laird.

I do not want to revisit any issue from last July when we talked about the family legislation which dealt with donations. It is now 10 months on. It is now May 2008, and there is an awkward symbolism in the fact that the Government are telling us that they still believe that it is necessary to keep donations or loans secret because of the safety factor for individuals. At the same time, this is the month that our Government had said was in principle the right moment for the devolution of policing and justice for Northern Ireland. There is an awkward symbolism there. There is nothing to be done about it, but I think it should be noted this evening.

There is also the fact that this issue is becoming more important in Northern Irish politics because of the increased discussion of the role that Fianna Fail might play in the politics of Northern Ireland. Some of our concerns regarding donations and loans from outside Northern Ireland seemed somewhat academic 10 months ago but now seem considerably less so. We are in a new place in both those respects. None the less, broadly, I have to concede that there are anomalies in life and particular anomalies in the peace process, and what the Government are doing tonight is acceptable. I only ask the Minister to reassure us that the intention is for the Government to look at this again in 2010 and that their view at this point is not that these arrangements are in any sense permanent.

My Lords, I would like to reassure the Minister that my contribution will be no longer than that of any other noble Lord who has spoken. I am much in his debt for having explained the background to this, which I would have had a little difficulty in following had he not done so. It is clear from the welcome that the order has received around the House that your Lordships approve of what the Government are doing.

Since I am by nature an optimist, and since I recall with vividness the remarkable way in which the late great Lord Williams of Mostyn, who was once responsible for Northern Ireland affairs in your Lordships’ House, turned the Bill on voting, postal votes and registration in Northern Ireland electoral matters totally around between Second Reading and Third Reading in this House, the Bill having already gone through the House of Commons where Mr Desmond Browne was not able at that stage to exercise the degree of influence that Lord Williams of Mostyn used, I believe the tremendous success of that legislation in regulating Northern Ireland affairs could very well be emulated across the face of the United Kingdom. If at any stage the Government choose to extrapolate from the example of Lord Williams of Mostyn, I think they will find that that also is welcomed on these Benches.

My Lords, my late friend Lord Williams of Mostyn was a class act and is much missed by the House. In this legislation we are seeking to catch Northern Ireland up with what currently happens in Great Britain. I love the phrase in my speech—I am trying to stick to the brief—which says that we now enjoy the benefit of donation and loans regulations. It was not always considered a benefit, but it was certainly found to be a necessity. From that point of view, there is a different experience in Northern Ireland.

I do not have the title of the second order as it is not ready yet. There is still some drafting work to be done and some discussion to be had, although it is our intention to lay the Political Parties, Elections and Referendums Act 2000 (Northern Ireland Political Parties) Order 2008 as soon as we can. It is our intention for all the orders to be enforced by 1 July so there will be no undue delay and there will be plenty of time for debate in your Lordships’ House. It will therefore be laid as soon as possible after this first order is agreed by Parliament. This first order has of course already been through the other place—I think it was last week or the week before.

We have also had the benefit of the donations legislation for Northern Ireland for a short period; it came into force last year. There is nothing for me to report from the Electoral Commission on using the new legislation. Procedures in that legislation prevent leakage from Northern Ireland to Great Britain’s political parties to prevent the brass-nameplate operations in Ireland being used as a front for money to the north. The rules about substantial functions of a business or other organisation are all there.

There is also the citizenship issue. The noble Lord, Lord Laird, asked in a roundabout way—I think I have got his question right—whether UK citizens resident in Ireland can make donations to parties in Northern Ireland if they are on the UK electoral register. The answer is yes. If they are not, however, they cannot. That would count as a foreign donation because those are the rules; you must be on the electoral register. I was about to say that it is as simple as that, although from one or two cases that we have read about recently, people are learning from experience. There is this sensitive issue—I appreciate that—but the rules are quite clear; we are talking about Irish citizens. That was defined in the other legislation and it will be set out in some considerable detail in the second order that I will lay before the House.

My Lords, does that discriminate against British citizens who live in the Irish republic and who are not voters in the UK, as opposed to their next-door neighbours who are Irish citizens and can donate money to parties in Northern Ireland?

My Lords, if there is an impediment to people being on the UK register, I am afraid they cannot make donations. That is the basic tenet of our ensuring that “foreign” money does not come into UK political parties. You can do so if you are eligible to be on the UK register. If you are not eligible, your donation does not count. So far, as I said, I have nothing to report from the Electoral Commission about donations. The rules will be broadly—I cannot say exactly—the same for loans as they are for donations.

The noble Lord, Lord Bew, mentioned time. I fully accept his point. He mentioned that this month was forecast in the original legislation for the possible devolution of policing and criminal justice, which clearly is not taking place. We do not see this as a permanent arrangement. The confidentiality of loans and money to political parties must be temporary; otherwise there is no transparency in democracy. Therefore there is that limit. It can be extended, but it is not our intention either to extend the limit that we have now or to wish to do so when the time comes. There is a finite date of 2010. We are in a transition period in which Northern Ireland can enter normal civil society, which it is doing very fast. Part of that involves transparency in funding to political parties. We see no difficulty in the parties coming to the table in 2010 and being fully transparent.

Unless I have missed out anything, I think I have covered the central thrust of the questions. As I said, the House will probably have the other order in a few weeks’ time, when we can debate the detail and the nuances of the nature of the society and the organisations that will be eligible to make loans.

My Lords, I am slightly perplexed about one issue. Perhaps the Minister can write to me. The noble Lord, Lord Laird, asked about British people living in Ireland and how they can donate funds to Northern Ireland political parties. If they are living in Ireland and maintaining a British passport, and bearing in mind that they are entitled to have two passports—an Irish one and a British one—I would be surprised if they were not entitled to the same benefits or rights as other Irish citizens in this context. I have not thought this through before, but when I listened to the small debate between the Minister and the noble Lord, Lord Laird, I was left a little uneasy that there might have been some confusion.

My Lords, I hope that I do not add to the confusion. As far as I can see, the position is absolutely clear. In order to donate, or indeed to loan, to a political party, you are required to be on the electoral register. It is a mechanism to stop any attempt to channel money to Great Britain. In other words, there is a ring-fence around Great Britain for all the main parties. Some of the main parties in Northern Ireland operate legally, although they may not put up candidates. This is an attempt to ensure that money is not passed from one to the other to undermine the GB restrictions, as much as anything else. It is quite clear that if you are eligible to be on the UK electoral register but are not on it, you still cannot donate. You must be on the UK electoral register to make a donation. If you are an Irish citizen living in Ireland, the order will allow you to donate as long as you are an Irish citizen or an Irish organisation—a company or otherwise—that functions in Ireland and is not a brass nameplate. The rules make that clear in the case of loans, so the rules in respect of this question will be the same for donations as they are for loans.

My Lords, this is still not clear. It is not a question of being on the electoral register. This is special legislation to facilitate people in the Republic of Ireland financing political parties in Northern Ireland. It is totally discriminatory. It allows Irish citizens living in the Republic of Ireland to finance and support parties in Northern Ireland that are generally nationalist and anti-British, and it forbids British citizens living in the Republic of Ireland to support other parties that may be pro-British.

Yes, my Lords, but it does not prevent British citizens living in England, Scotland and Wales from donating or making loans to Northern Ireland political parties. This is not a one-sided operation at all.

My Lords, I draw the Minister’s attention to the example of the 25,000 people along the borders with Northern Ireland who could consider themselves to be British and not Irish. They have been recognised under the Belfast agreement and get parity of esteem and total equality, but under this order they do not. The Orange Grand Lodge of Donegal cannot give money—it operates in the Irish Republic but is maintained and operated by people from a British background who consider themselves to be British—while its next-door neighbours, the Ancient Order of Hibernians, can. Does that seem fair and in the spirit of the Belfast agreement?

My Lords, as I have said, the rules for this will be exactly the same as they are for giving donations. This has been agreed by Parliament. As I have already said, I have had no negative vibrations from the Electoral Commission on the way in which the system is working.

On Question, Motion agreed to.

My Lords, I beg to move that the House do now adjourn during pleasure until 8.24 pm.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.50 to 8.24 pm.]