That the Bill be read a second time.

My Lords, the legislation before us forms part of a long-standing debate on the regulation of UK party funding, and this is the context in which it must be considered. I think it is therefore worth briefly reminding noble Lords of the recent history which has informed the Bill’s objectives and provisions, before turning to the detail of the Bill itself.

In 1998, the Government asked the Committee on Standards in Public Life—the CSPL—chaired by the noble Lord, Lord Neill, who will, I am delighted to say, be speaking in this debate,

“to review issues in relation to the funding of political parties … and make recommendations as to any changes in present arrangements”.

The Committee’s report recommended an overhaul of the system of party funding and expenditure based on tighter controls on spending; restrictions on who could make political donations in the United Kingdom; and greater transparency.

These principles—which I believe all parties continue to support today—formed the basis of the Political Parties, Elections and Referendums Act 2000, which established the Electoral Commission and required parties to record and report to the commission donations above certain thresholds. These reforms were enacted in the spirit of consensus across the political spectrum and support from the public.

Notwithstanding this, and the indisputable fact that the 2000 Act represented a significant step towards a more transparent and better regulated political system, it is now clear that it has not fully addressed all of the concerns which exist about the financing and expenditure of political parties. Where there has been agreement on what change is necessary, the Government have sought to take this forward. It was in this vein that we incorporated provision in the Electoral Administration Act 2006 to subject loans to parties and other donees to the same disclosure and permissibility rules as donations.

In 2006, the Constitutional Affairs Committee recommended further reform to the system; and in 2007 the CSPL recommended changes to the governance and powers of the Electoral Commission. The recommendations of both committees attracted widespread support.

In March 2006, Sir Hayden Phillips was appointed to carry out a general review of political party funding and expenditure in the United Kingdom. His final report, published in March 2007, found that there was significant pressure on parties to raise and to spend large amounts of money, and proposed a package of reforms designed to tackle its effects on the political system. His proposals had three main strands: first, tighter and more comprehensive spending controls; secondly, a cap on donations coupled with increased public funding to mitigate its effect on political parties; and, thirdly, a strengthening of the regulatory capacity of the Electoral Commission. However, subsequent inter-party talks designed to produce an agreement on the way forward were suspended in October 2007 on the basis that there was no prospect of a comprehensive agreement being reached.

The Government are clear that any reforms in the area of party funding must attract broad consensus. Without that, they would lack legitimacy, and we would risk making these matters the focus of partisan dispute, which would be to no one’s advantage. The Government regret that fundamental reform was not possible. We are also clear, however, that the absence of agreement on the model of long-term reform put forward by Sir Hayden should not prevent us taking what steps we can now—that is, where there is broad party political agreement on them—to make improvements to the system and, in the process, help to increase public confidence in politics and politicians.

The Government’s White Paper, Party finance and expenditure in the United Kingdom, published in June last year, therefore proposed some immediate steps in the areas where we believed that consensus existed. These measures formed the basis of the Political Parties and Elections Bill, as introduced last July in another place.

The Bill before us today has evolved significantly from the Bill which had its Second Reading in another place. It has benefited from constructive engagement and scrutiny and, in its amended form, reflects the Government’s commitment to moving forward on the basis of consensus and willingness to listen to representations from all those who place the health of British politics above partisan concerns. This is the spirit in which my right honourable friends guided the Bill through another place; I hope to do the same here.

I turn to the provisions of the Bill. Clause 1 clarifies the Electoral Commission’s regulatory role, in line with a recommendation of the CSPL. Clause 2 strengthens the commission’s powers to compel the disclosure of information. It was the subject of detailed discussion in another place, and has been extensively amended to take account of the concerns expressed there about the extent of the powers in the clause as introduced.

Clause 3 gives the commission access to a flexible range of civil sanctions, again following a CSPL recommendation. The range of sanctions and the safeguards to which they are subject very closely follow the scheme established by the Regulatory Enforcement and Sanctions Act 2008. I should like it to be clear that none of the 93 offences and requirements currently in the 2000 Act will be removed from the criminal sphere by this Bill or by subsequent secondary legislation. This clause was also amended in another place to take account of concerns expressed there about how the commission might apply sanctions.

Clauses 4 to 7 reform the Electoral Commission’s governance arrangements so that it can benefit from commissioners and staff with more recent experience of politics. Here, again, we are implementing recommendations made by the CSPL.

Clauses 4 and 5 will allow the appointment of four commissioners with recent political experience. Each of the three largest parties represented in another place will be entitled to make nominations for appointment as a nominated commissioner. Clause 5 originally required the nomination of two or more people by each party, but was amended at the request of the Speaker’s Committee so that parties may nominate a single person. The remaining nominated commissioner will be selected by the Speaker’s Committee from among the nominees of all other qualifying parties represented at Westminster. The recruitment and selection process for the appointment of electoral commissioners is ultimately a matter for the Speaker’s Committee, and the Government have sought to ensure that the provisions in the Bill provide for a selection process which is acceptable to it.

Clauses 6 and 7 increase the overall number of commissioners to nine or 10 to ensure that the nominated commissioners will be in a minority, and relax the restrictions that apply to political activities for other commissioners and Electoral Commission staff.

Clauses 8 to 15 relate to political donations and expenditure. The House will be relieved that I do not intend to go through each of these in detail, but I shall touch briefly on those which have been amended significantly in another place.

Clause 8 is intended to increase the transparency surrounding the true source of donations. It places a new responsibility on donors giving over £7,500 to political parties and members’ associations, or over £1,500 to party accounting units and holders of elective office, to declare whether they have received money or benefits with a value in excess of these thresholds,

“with a view to, or otherwise in connection with”,

the donation. The intention is to ensure that, when an individual or organisation may be making a donation as an agent for another, is made clear to the recipient of the donation, as the law already requires. The Government amended the thresholds at which donations must be accompanied by declarations in another place in response to concerns about the administrative burden which the new provision might place on parties.

Clause 10 allows MPs and other office holders to appoint compliance officers to help them to fulfil the requirements of the 2000 Act in relation to reporting donations. The Government added this provision to the Bill in another place in response to representations received there. I stress that holders of elective office will remain liable for breaches of the law. Clause 12 was added to the Bill in another place to address concerns that there is less transparency of donations from unincorporated associations than those from other types of donors. It requires unincorporated associations, giving donations to regulated donees in excess of the recordable thresholds in the 2000 Act, and which in total amount to more than £25,000 in a calendar year, to provide information about the source of significant gifts which have been made to them during a three-year period.

Clause 13 increases the threshold in the 2000 Act for recording donations from £200 to £500; the threshold at which individual donees and party accounting units must report donations to the Electoral Commission to £1,500; and the threshold at which national parties must report donations from £5,000 to £7,500.

My Lords, does not the increase from £200 to £500 represent an increase way above the current rate of inflation? Why is that?

My Lords, as I understand it, the Electoral Commission suggested that there should be an above-inflation or large increase in this figure. The problem with keeping it too low is that it adds huge bureaucracy for all the parties in having to deal with donations of those amounts. I agree that there is potentially some controversy about the figure that we suggest it is raised to, but in our view this was the appropriate thing to do at this time.

My Lords, would it not have been possible to have investigated the situation from year to year, rather than come to a figure now, which is very difficult to justify?

My Lords, I do not think that it is difficult to justify, but I am sure that from now on it will be looked at on the basis of year to year. Perhaps we can come back to this issue at a later stage.

My Lords, I am grateful to the Minister. He has cited the commission in support of what the Government propose, but the commission made a clear statement that, in its view,

“an increase of this level has the potential to reduce public confidence in the transparency and integrity of political funding”.

I wonder whether he can reconcile his statement with the view expressed by the commission.

My Lords, as I understand it, the commission suggested that the figure of £200 was too low. Later today I shall come back to the noble Lord and, if I am wrong, I shall withdraw what I said about the commission. As I understand it, that is what it said. It may not approve of the actual figure but it wanted an increase, and it seems to us common sense that there should be an increase.

The Government brought forward these provisions as amendments in another place to address concerns shared across the House that the current thresholds imposed a high burden of compliance that was not proportionate to the benefits. As my right honourable friends made clear in another place, while we are committed to transparency, this must not be achieved at the cost of overburdening political parties; and we have agreed to consider whether the reporting threshold for individual donees and party accounting units should be further raised.

Clause 14 introduces more effective controls on candidate spending in certain parliamentary general elections. The Bill originally proposed a spending limit that would regulate all spending for the purposes of a candidate’s election, including that used before he or she is formally defined as a candidate. Debate on this provision during Public Bill Committee in another place was curtailed: but it was clear that the measure did not enjoy the support of opposition parties. I know that my honourable friends were disappointed that they had not been able to secure agreement to that proposal. Nevertheless, in the spirit of consensus, they listened to the views put forward by honourable Members and tabled the group of amendments which is now Clause 14.

Under current legislation, an individual generally becomes formally regarded as a candidate only at the point of dissolution of Parliament, with the result that expenditure by candidates on their expenses is currently regulated only from dissolution onwards. Having accepted that the earlier triggering proposal did not command consensus, Clause 14 introduces a second regulated period for candidate expenditure. This second limit would regulate candidate election expenditure during the period after 55 months of a Parliament have elapsed and before the date on which an individual formally becomes a candidate. At that point, the new limit would come to an end and the existing candidate expenditure limit would take over to regulate candidate spending from that point onwards. The Government are aware that Clause 14 does not represent an ideal solution—it may well be that no ideal exists. It will not tackle the problem of unregulated, pre-dissolution expenditure for shorter Parliaments. It will, however, improve the current system of regulation and does, we believe, command cross-party support.

The final group of clauses in the Bill, Clauses 16 to 23, relates to elections and electoral registration. With the exception of Clauses 22 and 23, these provisions are relatively straightforward and I will not go into detail now. Clauses 22 and 23 make provision for the piloting of data-matching schemes which will allow electoral registration officers to receive data from public authorities for the purposes of improving the comprehensiveness and accuracy of their registers. The pilots, which will be evaluated by the Electoral Commission, will help us to identify what data and what data-matching techniques are most useful for maintaining electoral registers.

As my right honourable friend Michael Wills made clear when he introduced these clauses in another place, the Government are entirely clear that any data matching must be carefully scrutinised and controlled. The clauses contain a number of safeguards: data must be relevant to electoral registration and can be used only for the purposes specified; public authorities providing data will be consulted on the release of information and proper safeguards will be put in place to ensure compliance with the Data Protection Act; and any order putting in place a data-matching scheme must be debated and approved by this House and another place, and can be made only following consultation with the Electoral Commission and the Information Commissioner. We have sought the views of the Information Commissioner who has indicated that the measures seem proportionate and sensible in view of the strong public interest in ensuring that the register is as comprehensive as possible.

Noble Lords who followed the debate on these clauses in another place will know that they form only one part of a much wider package of reforms. My right honourable friend Michael Wills outlined the significant steps that the Government have already taken, and continue to take, to improve the electoral register; and announced that the Government would be bringing forward amendments in this House to facilitate the move to individual registration in Great Britain on a fixed timetable; but that timetable will have at its heart the twin principles of the comprehensiveness and accuracy of the register. These principles were welcomed and accepted by all sides in another place and I hope that they will be similarly supported here. As they will be a significant feature of the debates on the Bill in this House, I should like to say a little about the Government’s intentions now.

In summary, the Government will bring forward amendments to put in place a statutory timetable for the introduction of individual registration; to begin the rollout of measures to prepare both the public and the electoral system for that change; and to put in place a series of tests that will be independently assessed by the Electoral Commission to ensure that the shift is made only once the system is ready for it. We intend to bring forward amendments which will make provision for electoral registration officers to collect personal identifiers from electors on a voluntary basis alongside the existing process of household registration from August 2010 until August 2015. At this point, and subject to certain tests which I will come on to, the provision of identifiers would become compulsory and household registration would effectively end. The period of overlap between the two systems would allow the Electoral Commission to work with EROs to identify any issues that are likely to arise from the move to individual registration, including what identifiers are most appropriate and which groups may have difficulty providing them.

From autumn 2015, all new registrations would have to provide the identifiers to be put on to the register. Anyone already on the register in autumn 2015 who did not provide their identifiers would be carried forward for two further years, to 2017. From that point, we would have full individual registration; that is, everyone on the register would have provided identifiers. However, we also intend to provide that that shift in 2015 would proceed only if two statutory tests, which would be assessed by the Electoral Commission no earlier than January 2014, were met.

My Lords, can the Minister tell the House at what stage those amendments will surface? Will they surface in Committee or on Report?

My Lords, it is our intention that they will surface in Committee—probably at a later stage in Committee but before Report.

The Commission would have to have a reasonable expectation that the move to compulsory provision of identifiers would, first, not compromise the accuracy or comprehensiveness of the register by the point of full individual registration in 2017; and, secondly, that the electoral register was both as comprehensive and as accurate as was reasonably practicable, and that the effectiveness of the registration system was improving across Great Britain, as supported by performance standards data and other measures.

If the commission concluded that the tests were met, it could recommend that the shift to full individual registration should proceed, subject only to a vote by Parliament on whether to accept its recommendation. If the commission recommended against, or Parliament did not endorse a positive recommendation, the shift to compulsory provision of identifiers would not proceed. I am sure that the House will agree that this represents an historic change, and one which is vital to the health of our democracy. Such a change should be not be undertaken lightly; I hope that I have demonstrated that the Government are committed to ensuring that the move to individual registration will take place at the right pace and subject to a number of safeguards and tests along the way.

Of course, the proof of the commitment will be in the detail of the amendments which we bring forward and, notwithstanding the time it will take to ensure that these necessarily difficult and complex amendments will be technically effective, I hope to be in a position to share and discuss them, and any other government amendments which we judge necessary, with noble Lords before the substantive debates. As in the other place, the Government’s key priority is that this legislation should reflect a broad consensus on the way forward. We are committed to taking this Bill through this House on the basis of agreement and I look forward to working with noble Lords to that end. I beg to move.

My Lords, in speaking to the Bill I place on record my interest as deputy chairman—and, as such, an officer—of the Conservative Party. My starting point is that the party political process in this country is something that we have nothing to be ashamed about. It is a system that has secured the orderly transition of power, determined by the people of this country. Political parties are the glue that holds the political system together. They are the means by which legislators communicate with the electors, and the means by which the electorate is given a choice of competing visions of Britain’s future and alternative teams of political leaders.

Moreover, political parties are made up of hundreds and thousands of dedicated volunteers, who canvass in all weathers, and leaflet and fundraise in all circumstances in, and very much for, their local communities. In many constituencies the political parties are the largest voluntary organisations outside of churches in membership and, certainly, in terms of work in the community. This is a tradition of which we can rightly be proud. It is also a vital part of the social capital of this country, which we wish to retain and develop.

On donors to political parties, we should regard as laudable the fact that organisations and individuals are free to make properly disclosed donations to political parties with which they share aims and aspirations; or in order legitimately to minimise the risk of another party attaining power. People donate to charities and religious organisations and we call it philanthropy, derived from Greek and meaning “love of people”. Yet somehow, when people donate to party political organisations, which are part of the fabric of our society, they are termed “lovers of power”. This cannot be true and is unfair. People who make properly disclosed donations to a party are very much strengthening, not weakening, the fabric of our democracy. We ought to defend them.

Our political system is one to be proud of. All those involved in making the machinery work are rightly deserving of praise. Nevertheless, many of these people are being let down. There is a serious problem and it impacts on the legitimacy of our political process. The Bill is, therefore, of the utmost necessity and we welcome it. We welcome it to this place, on this day and in this form slightly more than we welcomed it in the other place when it was introduced in October. There have certainly been many concessions that we welcome, and which the Minister has outlined to us this afternoon.

We need to remember that this political process has been under way for some time. The Bill is welcome. It is of the utmost necessity and we only want to move it further and faster. It is necessary because of a series of high profile cases, such as the “loans for honours” inquiry, in which, for the first time in history, a serving Prime Minister was interviewed three times by the police. For the record, in this case no prosecution resulted from that. I do not want to be too partisan in making this point because the Liberal Democrats have also had problems, in accepting a donation for £2.4 million from a convicted fraudster, Michael Brown. Again, for the record, the Electoral Commission found that the party had been reasonable in regarding it as a seemingly extremely generous donation, though one that has still not been repaid.

For these purposes, a White Paper was produced and the Lord Chancellor, Jack Straw, used a key phrase in the foreword:

“When political parties are brought into disrepute, the reputation of the entire political process is tarnished. It is therefore important that action is taken to strengthen and sustain the standing of political parties within the political process in the eyes of the British public”.

That is why the Bill is both urgent and necessary. We should not limit the examination of weaknesses in the electoral system to the issue of party political funding alone. Whatever the ambiguities about the rules governing cases of donations, there is no ambiguity about one thing. In the last seven years there have been 42—

My Lords, is the noble Lord not being unduly optimistic about the contribution made by members of all parties? I think it has declined, and we all ought to be worried about that. Does he agree?

My Lords, I share the concern—it is shared on all sides of the House—that participation in all voluntary organisations in communities is declining. Our communities are the weaker for it. We would certainly want to see all measures in this legislation enhance the prospect of people taking part in party political activity up and down the country. I will come to that in a little more detail later on.

Wherever the ambiguities may be about the funding of political parties and party political donations, there is certainly no ambiguity about the fact that, over the past seven years, there have been 42 convictions for electoral fraud in the United Kingdom and only one of the 43 authorities in England and Wales has had no case to investigate. The Council of Europe Parliamentary Assembly's monitoring committee commented that there are,

“vulnerabilities in the system which should urgently be addressed".

The Joseph Rowntree Reform Trust stated in its report of April 2008 that:

“There is widespread, and justifiable, concern about both the comprehensiveness and the accuracy of the UK’s electoral registers—the poor state of the registers potentially compromises the integrity of the ballot”.

We take that extremely seriously. This proves that it is not so much the risk of serious fraud at the ballot box that we are talking about. It is happening, and change is urgently required to tackle this aspect of the legitimacy of the process as soon as possible. Furthermore, this opportunity for fraud was significantly increased by the extension of postal voting, as was again found by the Joseph Rowntree Reform Trust report, which said:

“Public confidence in the electoral process in the UK was the lowest in Western Europe in 1997, and has almost certainly declined further as a result of the extension of postal voting”.

As it stands, the Bill is therefore a missed opportunity. It was going to be a calamitous missed opportunity to tackle this important issue but, on Report, just before Third Reading in the other place, the Government finally conceded that they would bring forward proposals for individual voter registration, as the experts have long been calling for. However, it was rushed through at that stage. Many Members of the other place would have preferred that this concession was given in Committee so that it could have been scrutinised by them. So we will be looking to the Minister to provide some assurances and much more detail than we have so far received about how this will operate in practice. What we have been offered so far by the Government is an incomplete system that will not be introduced in a mandatory way until 2015. It will not exclude people already on the electoral role, and it will therefore be 2017—possibly two general elections’ time—before we can again have confidence in the veracity of the register. As the Minister has told us today, personal identifiers will be introduced, but only on a voluntary basis. Can that deliver the confidence that we seek?

All of this is happening while this system has been successfully introduced as a pilot in Northern Ireland. The Northern Ireland Office published Electoral Registration in Northern Ireland, which said that voter registration had been central to enhancing the accuracy of confidence in the electoral register. That is the case made. We do not resent them for having it, but why can the people of Northern Ireland have it and why can it not be spread much quicker into the rest of the United Kingdom?

Finally, there are places where the Bill should be toughened and uncompromising. However, there are also areas, relating to local associations and committees having responsibility to appoint an effective compliance officer in order to identify the source of donations over £500 on pain of criminal offence, which seem to us to go too strongly in the other direction, to the extent that they could discourage legitimate volunteers from taking on those places, or legitimate donors from making donations to the party. It is important to recognise that at a local level, the association, committee chairman or organisers are not qualified lawyers, they do not have access to the best city regulators and they do not have teams of accountants working for them. They are often working by themselves, late into the night and on a voluntary basis, and trying to follow the rules. It is very difficult for them, particularly when the rules change with such frequency.

Therefore we propose two suggestions: first, that there ought to be a defence of innocent mistake; and secondly, that the threshold required for registration—rather than being reduced from £500 down to £200, as was hinted at early on in this debate—should actually be raised to £1,000, to take in many more donations and potential donations, and to remove lots more bureaucracy from this. I understand that the Minister finds this slightly puzzling, but of course this particular element is all about trying to answer the problem which arose from the David Abrahams donations scandal, when it was alleged that donations of £600,000 had been made to the Labour Party through a series of proxies. We understand that that is unacceptable, and that we need to restore confidence to the system. However, we feel currently that moving that threshold to a higher level would help with that, whilst doing nothing to diminish the prospect of catching the serious abuses, which is what we are looking for.

I have spoken about some of the measures which we hope to see this Bill address as it goes through Committee. We feel that this Bill has been framed in such a way as to provide a missed opportunity for a long-term, sustainable settlement with regard to party donations from trade unions, companies and individuals. However, the Government’s many concessions in another place mean that this Bill is now in a format that for the most part we welcome.

My Lords, I should first indicate a non-pecuniary and past interest as a member of the cross-party informal advisory group to the Electoral Commission. I should also apologise at the outset on behalf of my noble friend Lady Hamwee, who will table some important amendments at a later stage on elections to the London Assembly, but who is unfortunately not able to be with us today.

I have begun to realise that this House takes great notice of experience. I should put it on record that I am the veteran of 12 parliamentary and county elections, and I have perhaps also to recall that I won half of those, which is a better record than some of my colleagues on these Benches. Experience is important, and I note with interest that there are in the House a number of noble Lords who obviously will be able to contribute very substantially from that experience to our discussions on the Bill. The noble Lord, Lord Bates, has had perhaps less experience in that respect and that may explain why he started his speech with tones of comparative complacency about the state of British politics, which I do not share.

It is rare that we are given the opportunity to improve not just one piece of legislation, but the public perception of our whole political system. We are going to have to use this Bill to take up that opportunity, even if the Government at present have failed to do so. After all, Minsters have trumpeted this as a great opportunity—a great vehicle— to take big money out of British politics and to increase the transparency of donations and spending from what remains. The Bill does not do that. It does not return political influence from the cheque book to the ballot box and it still places a cloak of secrecy around many large donations. In short, the Bill has gone through an elephantine period of gestation, but we have ended up with a mouse. It is a failure, and we in this House have a particular responsibility to turn it around and make it into a success.

The public surely are demanding cleaner politics. The incidence of cash for peerages, loans for Lords, bungs for amendments: all these episodes have tarnished the reputation of Parliament, this House as well as the other House. However, these are merely symptoms of a much more insidious disease—the reliance of the party system on big political donations. It is a rotten system. Contrary to popular perception, it places Britain in an even worse position than the United States. American election campaigns are expensive—astonishingly expensive—but they are also reliant on a broader base of funding. Donations are limited to $2,400 per election from individuals to any given candidate. Even the higher limits of $30,400 for donations to national party committees are much lower than the amounts now given to British political parties. Surely we should be aiming for our legislation to be at least as stringent as that in the United States.

There are three ways in which we on these Benches think that politics can and should be purged of narrow special interests brought about by big donations and the sharp focus on a small number of marginal constituencies. The first—no Liberal Democrat could come to a debate of this sort without referring to it—is electoral system reform. We must have reform to ensure that every vote, everywhere, counts. The second is certainty about the timing of general elections, to make it absolutely clear when spending limits will begin. The third is an end to what is currently referred to so regularly as the party-funding arms race. We cannot use this Bill to do the first two but we can make real progress on the third. I trust that this House will take the lead in that respect.

Surely we must adopt an all-embracing cap on the individual donations to political parties. If we do not, we will be in danger of slipping back to the worst, corrupt excesses of the 19th century when the wealthy could buy seats and political influence. Surely we must also give every constituency an equal spending limit regardless of its marginality, by dividing the national spending limit by the number of seats. If we really are to end the arms race in marginal seats, we have a duty to amend this legislation in such a way that it covers not only local spending to promote a candidate but national spending which has been used to promote his or her party in any given constituency.

If billboards saying, “Britain—Forward not back”, or, alternatively, “Mum’s eyes. Dad’s nose. Gordon Brown’s debt”, are plastered all over a specific constituency, it should be attributed to the party’s election expenses in that constituency, not just to the national limit. That principle was accepted at the end of the 19th century and surely it must apply now. I am quite willing to accept that if my right honourable friend Nick Clegg writes to a group of electors in a specific constituency, that expenditure must also be the responsibility of the local agent and recorded against the local limit.

Some Members of your Lordships’ House have great experience in this and have been involved in constituency campaigning for many years. They will be only too well aware of the expenses limit on the specific candidate and his or her agent in that constituency and how important it is to observe those ceilings. However, if we do not make a real change to the Bill as it stands, we will be ripping up all the constraints and safeguards that have been in place ever since the 1883 Act. That would be a terrible retrograde step. We must also look again at the recording and reporting thresholds specified in the Bill.

There is a real danger that the Bill will allow a series of impermissible donations to be made from beyond these shores. The Electoral Commission itself draws attention to a real question mark by saying that the Bill as it stands,

“may encourage impermissible donors to seek to increase their influence on UK political parties, for instance by making regular donations just below £500”.

It would therefore seem to be possible for someone from Belize, for example, to contribute £499 every day of the year without it being necessary to report it. That is absurd. Clause 13, by increasing this limit, is in fact a dangerously retrograde step.

What is most extraordinary is that the Conservative Members in another place sought to increase the reporting limit still further. That is the point at which donations not only have to be verified as permissible but their source declared on the public record. The Conservative Members sought to increase the limit for reporting donations to £3,000. That, surely, would be a backward step. What is more, I am confused by the position of the Conservative Party. I looked at Hansard for December 2007 when Conservative MPs were so exercised by the need to introduce an overall cap on donations that they called a special Opposition Day to debate their call for,

“a comprehensive package of reforms to restore public trust and to support a vibrant local democracy and voluntary activism, which must include an across-the-board cap”.

Yet those same MPs considered the Bill on Report at the end of last year and were unable to support my honourable friend David Howarth’s amendment to introduce such a cap, arguing that it was “for another day”. Why was it so essential to restore public confidence in 2007, but it is too early to do so in 2009?

I and my colleagues in both Houses believe that the Hayden Phillips proposals on party funding were well considered and we endorse them. We were bitterly disappointed when in the autumn of 2007 the other parties pulled the plug on the discussions, apparently in pursuit of their own special interests. However, we have a responsibility now to build on those proposals, not only to deal with the current crisis of confidence in our political system, but to make sure that we deal with it in a way that stands the test of time.

The Phillips proposals to which the Minister referred dealt with, first, caps on donations and loans to national political parties; secondly, the introduction of sensible safeguards for individual union members’ political contributions; thirdly, spending ceilings for the whole Westminster electoral cycle; and fourthly, the suggestion of a broadly based scheme to encourage local campaigning with limited public funding. The Phillips package offers an essential starting point for discussing this Bill.

Sadly, however, the Bill as it stands will certainly not achieve the changes on which all parties were originally agreed. We cannot use this Bill, obviously, to introduce the sanity of a fixed-term Parliament, much though that might be desirable, but we should at least amend the Bill to make sure that there is a level playing field on campaign finance for all elections, not just for the special circumstances of the present time. It is manifestly wrong at any time to legislate only for the existing situation in the full knowledge that this Parliament is likely to last 60-plus months. Very few Parliaments in recent years have gone beyond 48 months; in fact only two elections in the past 12 have gone full term. Imagine the free for all in those other 10 if there were no restrictions at all under this Bill.

I was first elected in February 1974 and the next election was in October 1974. What would happen in those circumstances? We would not have got anywhere near the 55-month trigger point; it would have kicked in 48 months too late. The measures in the Bill will apply only when a tired old Government are desperately hanging on and not daring to face the electorate. That is surely absurd; that is making the rule for the exception rather than the generality. We must investigate ways in which the investment in campaigning for all general elections can be effectively monitored and limited. Ministers must rethink the contortions that they have put themselves in over the issue of a proper fixed-term Parliament.

Some Members of your Lordships’ House may recall that as long ago as 1992 Labour recognised this problem in its election manifesto. It summed up the problem in this way:

“Although an early election will sometimes be necessary, we will introduce as a general rule a fixed parliamentary term”.

I see the noble Baroness, Lady Gould, echoing those words; for all that I know, she may have written them. What has happened to that promise in the intervening period?

Other issues will have to be dealt with. I give notice to the Minister that we will seek to remove Clause 17. This was based on a clause produced by a Conservative Back-Bencher, which managed to produce an extraordinary situation in the other place whereby there was a Division without the new clause being moved. I draw the Minister’s attention to the House of Commons Official Report, 2 March 2009, col. 678.

My Lords, I hope that the noble Lord is not blaming the Government: this was a matter for the Chair in the other place. The noble Lord knows that as well as I do, so I hope that he is not going to leave any kind of false impression.

My Lords, I am grateful to the Minister. I will draw attention also to the fact that his right honourable friend the Secretary of State and the Minister in charge of the Bill both voted against the inclusion. I give notice that we regard that as an improper addition to the Bill.

My Lords, it is our intention that there should be a free vote on that provision in this House, as there was in the other place.

My Lords, it is extraordinary. It is not for us to criticise the way in which the other place does business, but there were other new clauses that had wide support across the parties on all Benches. One was signed by 216 MPs, yet was excluded from debate and denied a vote.

As the Minister knows, I and my noble friends, and my right honourable and honourable friends at the other end of the building, consistently supported the Electoral Commission in its strong recommendation that individual registration is urgently preferable to the current reliance on the head of household. We believe that the integrity of the register is crucial to the reputation of our whole electoral system. We do not believe that registering more people is in itself legitimate if it has to rely on fraudulent additions. I understand that the commission recommended the change in 2003. What has happened since then? The long process to which the noble Lord, Lord Bates, has just referred could have been well under way by now if the Government had listened to their own advisers. As we are threatened with an extraordinarily long transition period to 2017, beyond two elections, surely it is time to get on with it.

In brief, it is extremely important that the Electoral Commission is now given the resources and powers to keep the difficult balance between ensuring the integrity of the political system and avoiding excessive burdens on volunteers. It is far from clear that the Government have recognised the nature of this dilemma. Meanwhile, we in this House should be under no illusion that the Bill offers us a rare opportunity, and therefore we should be absolutely clear that it is important to do it justice in order to make sure that we restore public confidence in our political system. As it stands, the Bill does not meet the clear concerns of the public, and we have a manifest duty to strengthen it.

My Lords, I declare an interest, which the Minister alluded to: I was chairman of the Committee on Standards in Public Life. The noble Lords, Lord Goodhart and Lord MacGregor, were also members. The other representative of a political party was the late lamented Lord Shore—Peter Shore. They were the trio who represented the three parties. We produced the committee’s fifth report, which, as the Minister said, was substantially accepted by the Government, went through and led to the Act of 2000.

I will pick up on certain themes and talk about them briefly. The first is individual registration, which was mentioned by the previous two speakers. As the noble Lord, Lord Tyler, said, in 2003 the Electoral Commission advocated individual registration and said that it was essential. The commission put it on high ground; it said that it was a fundamental democratic right to register your own vote. We could argue about that, but that was the commission’s position and it has been an important element in thinking about politics ever since. It is unfortunate that we in this House cannot, in this Second Reading debate, discuss the clauses that give effect to this idea. The Government said on Report in another place that they were bringing forward the clauses, as the Minister confirmed today. However, the process is very slow and the clauses are very late. I hope that we will not be in the position that I remember when a different Bill came from another place and one-third of it had not been debated there at all. Here we have an important part of the Bill that deserves consideration at Second Reading, but we have no specific clauses on which to focus. Having made that complaint and lament, I move on.

In the literature on this subject, there has been much citation of the Northern Ireland experience, which it seems has been a success. There are two things to note. First, when the system first came in, there was an immediate fall of some 11 per cent in the number of registrations. Secondly, there was a requirement to register annually, which echoes the bit of paper that comes round with the rating list every autumn, giving the householder an opportunity to say who in the house is a voter. However, that was found to be unworkable because people became fed up with having to register annually. They asked, “Why have I got to do this every year?”, and so that was dropped. Therefore, one of the benefits of the household system—the regularity—was lost.

The other point of interest is the general perception of the public. A survey—the BMRB research report—has recently been carried out for the current Committee on Standards in Public Life. I refer, without having it in front of me, to point 6.2 on page 63 of that report. Although quite a big majority of the people who answered the questionnaire—something like 70 or 80 per cent—said that they would favour a system of individual registration, they also said that it was likely that the number of registered voters would decline. That poses a real question, which has to be investigated.

I believe that the effect of introducing the system here and how it would work are matters for evidence. We are not Northern Ireland; we have a different community and a different make-up. Would individual registration work in an acceptable way in all sections of the community in this country? That is a serious question, which needs to be thought about. Would all men and women register their names? Would that be in accordance with custom and ethics and so on? We cannot just take it for granted that the experience in Northern Ireland would apply throughout England.

The other important question on which we require evidence is: what would it cost to set up this system? We have heard talk of bureaucracy. Will it involve a fair amount of bureaucracy and place burdens on local authorities? There was some mention of that at the meeting with the Electoral Commission that I attended the other day in this House; it was considered to need further thought. Therefore, I am saying that this is a serious matter and we need to have a proper debate about it. I suppose that it is impossible to reopen the Second Reading debate, but the clauses need to be considered very seriously in this House.

My next point concerns what I call the insecurity of the postal system. I refer to the 11th report of the Committee on Standards in Public Life, which has nothing to do with me—it was produced years after I left. The report came out at the beginning of 2007 and is called Review of the Electoral Commission. Chapter 5 has the heading, “Integrity of the Electoral Process”. The committee was worried about the effect of the postal voting that had taken place. I shall read out one or two brief excerpts from page 79 of the report:

“The introduction of postal voting on demand without the need to present a reason for the application, has demonstrated the vulnerability of any trust-based electoral process”.

The report goes on:

“While it is clearly imperative for as many eligible individuals as possible to participate in the democratic process, we can no longer base our electoral system on trust alone if we wish to protect the integrity”,

of that system. Paragraph 5.8 states that,

“evidence received by the Committee suggests that since the introduction of postal voting on demand there has been a growing perception that the electoral system is more susceptible to organised electoral fraud”.

A worrying feature that has accompanied postal voting is a change in public perception. In some areas of the country, fewer than 50 per cent of people thought that the system was safe. The report gives examples in table 5.1 on page 81 of some of the offences that have taken place between 2001 and 2006. There is no time to go into them all, but I shall cite some of them. In Hackney, there were hundreds of forged postal and proxy votes. In Havant in 2000, there were 22 forged postal votes. In local elections in 2004, there was a large postal fraud in Oldham and 43 postal votes were tampered with in Stoke-on-Trent. As I said, the report gives various examples.

People who write on this theme are concerned about fraud. I have the executive summary of a report that was commissioned by the Joseph Rowntree Reform Trust and came out last year, which also refers to this worry. It states that,

“cases tried since 2000 underline that the extension of postal voting clearly enhanced the vulnerability of UK elections to large-scale fraud. The likelihood of such fraud occurring could—and should—have been predicted on the basis of evidence of growing proxy vote fraud during the 1990s”.

It goes on to refer to the Birmingham case and to other evidence of rigging and quotes the 2008 Council of Europe report, which has already been mentioned this afternoon. That report states:

“It does not take an experienced election observer, or election fraudster, to see that the combination of the household registration system without personal identifiers and the postal vote on demand arrangements make the election system in Great Britain very vulnerable to electoral fraud”.

That was the pretty pungent criticism of three visitors from the Council of Europe who examined our system and thought that we had opened the way to fraud. It is a pity that no thought has been given to that in the Bill. It is one of its omissions.

On a different point, the Bill provides that there should be four nominated commissioners. The scheme as regards one, two and three is easy to see—each of the three major parties will nominate a commissioner. There is then room for another, as statutory provision says that there should be four commissioners. However, proposed new Section 3A is pretty woolly and hazy on who the fourth individual will be. It looks as if there might be a contest between various small parties that have managed to get two Members of Parliament elected. They might have a tussle on who gets the fourth place.

Is this really worth doing? On the Committee on Standards in Public Life, we had, as I said, a member of each of the three major parties. They acted in an entirely neutral way and not as representatives of their parties in the slightest, but each of the three brought their experience of politics. We always knew that, when somebody started talking nonsense, somebody else would say, for example, “It doesn’t work like that in the House of Commons”. We had the balance of that from three people and I raise the question of whether we need a fourth.

My next point refers to the increase in the figures: £200 going up to £500, £1,000 up to £1,500 and £5,000 up to £7,500. That is not really what the Electoral Commission wanted. It certainly does not like the look of £500, although maybe it was open to an increase in the £200.

My Lords, it is time for a mea culpa, because I was wrong and I want to apologise to the House, so I should do so at this stage. The Electoral Commission did not recommend the increase as I thought it had. The decision to raise the amount was taken by the Government—I can justify it at a later stage if I have to. The Electoral Commission did not suggest it and I was wrong to say that it did.

My Lords, I thank the Minister for putting that right. I was not quite sure whether it would accept some increase, but my position is that I do not think that any of these figures should be increased. There is no justification for it. We talk about this leading to bureaucracy, but I do not see why it causes more bureaucracy to enter a small figure than to enter a large figure, and I do not think that it gives the public the right feeling in days when those with money are regarded with some suspicion.

I shall put down my position on a point that has been touched on today: public funding. In the Committee on Standards in Public Life’s fifth report, we went into public funding. At that stage, the Labour Party put in a written submission opposing it. One of its arguments was that public funding was not something that we ought to be looking at in times of financial stringency. Talk about financial stringency! Turn over a few pages of the scrapbook and get to 2009, and that is exactly what Mr Jack Straw said the other day in another place. He said that the public would not look with a kindly eye on public funding for Members of Parliament. That is completely correct, I think. If the issue comes up, we will probably have a debate about it when an amendment is moved.

The final thing that I want to mention is a hobby-horse of mine. The Bill refers to civil sanctions to be given to the Electoral Commission. In substance, they are not civil at all, but completely criminal. They are fines imposed for committing an offence. They are a fixed monetary penalty, a variable monetary penalty and a non-compliance penalty, as set out on page 37. The standard of proof is the criminal standard—it must be beyond reasonable doubt—and what is being alleged is the commission of an offence. They are really criminal in nature. That is all that I have to say.

My Lords, in welcoming the Bill, I must declare an interest as chair of the HS Chapman Society, an organisation that brings together from all parties high-level experts on election procedures, regulations and practices to examine and make proposals to maintain the integrity of all aspects of our electoral process. I welcome the Bill because it puts right many of the weaknesses and omissions of the 2000 Act. I have suggested the need for an Electoral Commission since 1991, after listening to the views of the Association of Electoral Administrators, which believed that many aspects of the electoral process at that time were insufficiently rigorous and in many cases little more than ad hoc. The establishment of the Electoral Commission was a milestone, but its remit in the 2000 Act was too wide and lacked sufficient regulatory control.

Last year, the HS Chapman Society held a seminar to consider the recommendations on the future role of the Electoral Commission proposed in the Eleventh Report of the Committee on Standards in Public Life and to hear the response of the Electoral Commission. That report stated:

“An effective Electoral Commission is a necessary and vital part of the modern institutional architecture. Its core duties should be as a regulator to ensure integrity and public confidence in the electoral process and in the framework that governs the political party funding and campaign expenditure”.

I believe that the regulatory proposals in Clause 1, based as they are on those principles, will enable the Electoral Commission to be a proactive regulator of party funding with stronger control over electoral administration. However, this has to be accompanied by full implementation of the sanctions outlined in the Bill, which I believe will be adequate when we get the proposed amendments that will recast the current criminal offences into ones based on compliance models and fines.

The 2000 Act placed too great a burden on political parties and particularly on voluntary treasurers. The sanctions proposed will ease that burden by enabling the Electoral Commission to respond to breaches in a more proportionate and flexible way. Offences will be those committed without reasonable excuse, while those who have honestly made a mistake in reporting incomplete donation returns will be treated fairly. The training by the Electoral Commission of treasurers on compliance with the law should also ease that position.

The original writing of the Bill went too far in allowing the Electoral Commission to have powers to search donors’ premises. The provisions finally arrived at will protect both the donor and the commission by making it the decision of a judge, based on a reasoned request from the commission, that any relevant document should be released, and only on further refusal would the police be able to carry out a search. This gives the donor every reasonable opportunity to comply.

I come now to what was previously a controversial subject when we discussed the 2000 Act: allowing some commissioners to have direct political experience, as in Clauses 4 and 5. As noble Lords will recall, in the debate on the 2000 Act all sides of your Lordships’ House felt that it was wrong for there to be no direct political experience on the commission. As the Lord Chancellor said in the other place when introducing the Bill:

“With hindsight … that was an error”.—[Official Report, Commons, 20/10/08; col. 46.]

It will be of immense value to the commission to have four commissioners directly nominated by, but not representative of, the political parties in the Commons. It is important that the Speaker’s Committee, which will confirm the appointments, ensures that there is absolute transparency in the making of those appointments, not least in how the fourth commissioner from the qualifying small parties will be determined.

The reduction of the restriction on involvement in political activity from 10 years to five years for all commissioners will provide a layer of experience that has been missing. The same principle applies in respect of the staff by reducing the current prohibition on employment from 10 years to one year, except for the post of chief executive, which is reduced to five years. In no way am I suggesting that the staff cannot be impartial, but I understand the desire of the commission for some flexibility so that, if necessary, it can apply to the Speaker’s Committee for the five-year ban to be applied also to a small number of other posts, particularly to someone who might be acting on behalf of the chief executive.

I fully appreciate how difficult it has been to arrive at the necessary consensus on candidate spending limits but, without doubt, it was an unintended consequence of the 2000 Act that, in seeking to establish a clear definition of when someone has become a candidate, it seriously weakened controls on candidate spending. This has caused a dramatic increase in targeted spending by candidates. As outlined by my noble friend, Clause 14 removes the original triggering proposals from the Bill and replaces them with new controls on candidate spending at those Westminster parliamentary elections held more than 55 months after a Parliament first met. That is four and a half years, and I have some questions about that period. The proposal has the benefit of clearly defining when time controls will be in place.

I have been advocating since I was a party official that we ought to have fixed-term Parliaments, but this is not the Bill to deal with that position. However, I have some concern about the situation for shorter-term Parliaments. Having looked at the detailed explanation of the candidate spending amendment, I urge that the Electoral Commission, in its guidance to parties, spells it out in simple terms, with clear examples for each of the different outcomes depending on when an election is held. I found it more than a little complicated and felt that I ought to sit down with a pencil and paper and work it out. I am sure that voluntary party members will feel the same. It is important that it is spelt out clearly.

The new average limit of £30,000 per seat seems sensible. When I first became an agent we thought £2,500 was an enormous amount to spend. I therefore find £30,000 difficult to imagine, but I am sure it is right.

As my noble friend said, the increased reporting thresholds for donations should alleviate the compliance burden on political parties, which we also have to take into account. Importantly, the Bill clarifies the position on unincorporated associations and will increase the transparency surrounding large political donations. This will close the loophole which has allowed a breach of the principles of the 2000 Act and which currently allows wealthy donors to make anonymous donations to political parties above the amount which has to be reported. Actions like those also cause concern among the public, while we have to look seriously at the issue of foreign donations; I look forward to seeing whether that comes up in Committee. Having read Clause 10, about the compliance officers, I have one query for my noble friend. Could he clarify a little better exactly who can and should be a compliance officer, and what their particular role would be?

I turn to an important part of the Bill, which others in your Lordships’ House have raised although it is not quite in the Bill yet. It is the question of individual registration. For far too long, there has been a democratic deficit arising from the 3 million eligible people who, because they are not registered, are not able to vote in this country. Ninety-one per cent registration is not acceptable. On polling day we are, all too often, confronted by people who want to vote, then discover that they have not registered and so cannot. It is such a simple thing; “No registration, no vote” should really be the sign that goes on all of our posters.

The Electoral Commission, as has been said, has long argued the case for individual registration to replace household registration, as has my own organisation, the HS Chapman Society. It is good news, then, that the Government are to produce an amendment for this House to discuss bringing in a scheme for individual registration. We will have to consider carefully the points within that amendment and look at it in some detail, but I support the Government in this; it is better to have it later than never. I am really glad that the Government have now come around to that thinking, but I appreciate why they had reservations that individual registration might result in a drop in the registration level, as in Northern Ireland. The process has to be rigorous enough to make sure that does not happen, which is why the timescale of allowing that work to go on until 2015 is absolutely right.

The integrity of the register is paramount and must be comprehensive and accurate, which means that electoral registration officers have to make special and increased efforts but have to be provided with the right tools and resources to make it happen. The Minister, Michael Wills, indicated that he would be coming forward with proposals to provide the extra resources needed. Experience has shown that money, unless ring-fenced for its intended purpose, is likely to be lost in other local government expenditure. The money has to be spent for the purpose for which it was allocated, but account must be taken there of the additional dimension of asking for personal information identifiers—such as date of birth or national insurance number—as well as a signature. The public will almost certainly want reassurance when providing that information. Equally, provision has to be made for reaching people living in multi-occupancy accommodation, those with literacy problems and other hard-to-reach groups. The decision to allow two-tier local government, as well as one-tier, to receive relevant data from other sources will greatly assist, but must clearly be done in compliance with the Data Protection Act 1998.

I appreciate that the Electoral Commission’s monitoring of current standards and expenditure on registration by local authorities will give an assessment of performance variability throughout the country; those details will, I believe, be available shortly. That information should be the basis for starting the planning process towards individual registration. As my noble friend said, equally important will be the judgment of the Electoral Commission in determining whether sufficient time has been given to allow full implementation of the scheme or whether a further period, perhaps two years, is required.

The introduction of individual registration is a major breakthrough and should provide greater protection against electoral fraud while enhancing the legitimacy of the electoral process and the integrity of the ballot. Whether it is in the provision and expenditure of funds or the validity of our election, our electoral procedures—as the noble Lord, Lord Bates, said—need the proposals in this Bill. I will fully support its progress through your Lordships’ House.

My Lords, I support the points that the noble Baroness has just made about the burden on local parties, particularly the treasurers, that was implied in the 2000 Act and was originally going to be increased in the current Act. I welcome the Government’s pull-back with the restriction of investigatory powers, which will be an important aspect in encouraging local people to serve as officers of their local parties. All too often, as many of us know, it is not a question of who is going to carry out these roles but how we will get anybody to do it at all. We want to find ways of encouraging them. In Committee, we will need to explore whether the changes the Government made achieve what it says on the tin.

Since this is a Second Reading debate, I shall step back from the detail and look at two issues which I describe as the elephants in the room. The first is the maintenance of public confidence in how our elections are run; the second is the maintenance of public confidence in the way in which our political parties are financed. If we get those two building blocks right, most other issues fall into place. Several noble Lords have remarked on the evidence of declining electoral confidence on both counts and the consequent dangers to the fabric of our democracy. That will be even more important at a time of considerable economic stress such as we are apparently going to have. People are at work; they are impoverished; it is more than ever important that they feel that their democracy represents their views and aspirations as a means of avoiding other and much less attractive ways of expressing them. Some people have said that this is primarily an issue for the other place, but I do not think it is any more, if it ever was. The waves of cynicism and disbelief are beginning to lap against the foundations of your Lordships' House as well.

On how elections are run, the Government’s response to the decline in electoral turnout was to make it easier to vote, hence the introduction of pretty wholesale postal voting. But any dispassionate observer would have said that that was an experiment doomed to failure. Those of us who have fought general elections will recall travelling up and down streets on election night, asking people to vote. The person says that when they have finished washing the car or mowing the lawn or when their television programme comes to an end, they will go and vote. You say, “For goodness’ sake, go and vote—for me, preferably—but above all, go and vote”. Even so, you have a pretty clear idea that they are not going to.

Postal voting will not change that aspect of behaviour; rather the reverse, in my view, because the easier it becomes to vote the less people value it. There may be some argument for saying that voting should require at least some effort on the part of our fellow citizens in order to participate in our democracy. It happens, after all, only once every four or five years, and of course one should provide safeguards for the old, the infirm and the ill. However, as my noble friend on the Front Bench pointed out, it was worse than this because the cases of electoral fraud undermined confidence in the whole process, and participation decreased rather than increased.

I was extremely disappointed that there was nothing about this in the original Bill, but I welcome the Government’s Damascene conversion on 2 March. God loves a sinner who repenteth. We have a very interesting set of proposals to consider. Of course we shall need to look at them in detail. If I heard him aright, the noble Lord, Lord Neill, set a few torpedoes running about the nature of them, which may well yet take those provisions amidships. I congratulate the Government on the Bill; certainly there is a cheer for having got that first part of the task in hand.

So much for the first elephant. The second is party funding, on which, I am afraid, the Bill is entirely silent. To use a caricature, if you go to the saloon bar of the Dog and Duck and talk about party funding, after a certain amount of unprintable stuff about politicians generally, you will be told that my party is funded by, and responds to, rich people and the Labour Party is funded by, and responds to, the trade unions. I think that the Labour Party has a good many rich people in it as well, but never mind about that. I am not saying that that is a true reflection of the situation, but it is how people think, react and behave. To restore confidence, we need to show that this is not the case. The Bill would have been an ideal opportunity for us to do so, but it would require courage and resolution on the part of both major parties to accept the inevitable consequence: a cap on individual donations. For my party, it would be an opportunity to demonstrate beyond peradventure that rich men cannot influence it; for the Labour Party, it would be an opportunity to introduce transparency to its financial arrangements with the trades unions. There are, of course, risks and dangers, but surely, given the degree of cynicism about our political process, it is a risk that we should all be prepared to run.

Finally on this point, if we really want to be bold and encourage the parties to reach out to a mass membership along the lines referred to by the noble Lord, Lord Clinton-Davis, in his intervention on the Minister’s speech, perhaps some form of matched funding from the taxpayer, whereby, up to a modest level per head, individual donations could be matched, should be considered. This would have the twin benefits of encouraging parties to produce more members and providing them with additional funding. But I am afraid there are no ideas from, nor cheers for, the Government on this topic, because they have ducked it.

I turn briefly to the provisions. Clause 4 proposes the introduction of electoral commissioners from the political parties. I can see the superficial attractiveness—the noble Baroness, Lady Gould, referred to it—of getting people with political experience involved in the commission, but I say to the Government, “Be careful what you wish for”. If one talks to Members of the other place about the way in which their internal disciplinary procedures run, they will say, in a moment of honesty, that they too often become party political matters, and that the process of discipline has therefore become less effective and less commanding of public confidence than might otherwise be the case. There is a danger in introducing party-political electoral commissioners. I understand that they will be extinct volcanoes—that is, people who have had a distinguished career but who are no longer involved in the day-to-day thrust of politics—but members of the Electoral Commission need to be, like Caesar’s wife, above suspicion.

I draw the Minister’s attention to Section 4 of the Political Parties, Elections and Referendums Act 2000, entitled “Parliamentary Parties Panel”, on which, I think, the noble Lord, Lord Tyler, served if I heard him correctly in his opening remarks. Subsection (2) states:

“The function of the panel shall be to submit representations or information to the Commission about such matters affecting political parties as the panel think fit”.

I accept that it is quite narrowly drawn, with financial matters primarily in mind, but it could be built on. We could have the advantage of party political input without running the risk of the Electoral Commission becoming involved in party politics. The Minister should consider whether we cannot get the best of both worlds by slightly reforming something that already exists in the 2000 Act.

Clause 10 relates to the compliance officer. I cannot see clearly what this man or woman will achieve other than duplicate existing functions. Most of the duties laid down seem primarily to be the responsibility of the election agent, and there are considerable dangers of divided responsibility, with neither party being prepared to take primary care. I refer the Minister to Clausewitz’s old saying: “Better a bad general than a divided command”. We have a divided command here.

We should look carefully at Clause 17. I agree with the point made by the noble Lord, Lord Tyler, and I was delighted to hear that the Minister intends to allow a free vote on this issue. Transparency is a key regulatory objective and one of the principles of good regulation. This change was popped into the Bill without any debate a couple of weeks ago. Electors are entitled to know where their candidate lives; for some, local roots are an important aspect of the appeal of a candidate. To those who argue about security, I say that I am not aware of attacks on candidates. There have been some dreadful cases of attacks on Members of Parliament, particularly the one in Cheltenham, but that was about a surgery. I assume, therefore, that a candidate’s address will not remain a confidential matter; otherwise, the contact between the Member of Parliament and his constituents would be greatly reduced.

My Lords, I declare a personal interest as someone who has received protection against terrorism in my day. Is my noble friend contemplating that those who are under such a threat should be required to put their address in the electoral register, or is he prepared to allow them to be protected?

My Lords, if we have a particular security threat, which is a rather specialist case, then the case might be made. However, as a matter of course, if every single parliamentary candidate can avoid giving any detailed information about where he lives, we are shutting off the electorate from the candidate in a way that is undesirable as a matter of course. Clearly, we hope that the issues that particularly affected my noble friend—Northern Ireland and so on—are a thing of the past. The proposal to introduce this without debate or consideration of the various aspects of which this is an important part is something that we should examine again in Committee.

My final point is that the Electoral Commission will have an extraordinarily heavy burden to play in this new world. The noble Baroness, Lady Gould, quoted from the report on the Committee on Standards in Public Life. After her quote, the report went on to say:

“Through a combination of deficiencies in its current mandate, that is too weak in some areas and too broad in others, combined with a lack of courage, competence and leadership in its regulatory and advisory approach, the Commission has not successfully performed these core duties”.

We cannot legislate for courage, competence and leadership; that will be achieved in the hearts of the men and women who serve on the commission, who will need to be well endowed with those characteristics. But we can and should provide the appropriate framework. While welcoming the rather glacial progress that this Bill represents, I am not convinced that the Government have done enough to provide the right architecture to enable the Electoral Commission to execute its heavy responsibilities.

My Lords, I very much welcome the spirit in which the Minister opened this debate, indicating, understandably, that the Government are seeking consensus as a way in which to bring about political reform of the election system. That is an ideal for which we should all strive, although it is not always possible. In those circumstances, Governments are placed in a difficult position, but they have to provide leadership and be transparent about what the best arguments are, so that the public may buy in to the case.

In this House, we should endeavour to see whether we cannot broaden the consensus from that agreed in another place. The process of this Bill has indicated some widening of the Government’s horizons, at least in the discussions in that place, most notably in respect of individual registration, and the welcome development from the original Bill to provide for it, albeit at a rather slow pace. I listened with great attention to what the noble Baroness, Lady Gould, has to say about the timing of this, as she has great experience. No doubt in Committee we will be able to look at this issue in greater detail.

The political reform of this country is a necessary condition for delivering a more successful Britain and a Britain at peace with itself. It is not a secondary consideration at this time of financial crisis. There is currently much evidence of disquiet in this country about our political system. I believe that imports a danger. When the public is under pressure for economic and external reasons and it is not content with the system that we have, it is more likely to listen with greater attention to the voices of populist extremists. That extremely important point was made by the noble Lord, Lord Bates, in opening for the Opposition.

We must therefore ask ourselves whether the Bill has gone far enough to meet the concerns of the public. It is unquestionable that it has gone further and in many respects it is an improvement on the 2000 Act, but I am surprised that the Government have not felt it possible to grasp the nettle of expenditure in elections. They recognised that this was a grave concern and that the fear that votes could be bought has not evaporated since the Government asked Sir Hayden Phillips to consider these matters. It is reasonable, and therefore it should be possible, for the parties to assemble and consider how they would address these issues even now.

I know that an election is in the offing for the Westminster Parliament, but even now we should attempt to remove this anxiety. We should look again openly and particularly at the principles that underlie the report of the Constitutional Affairs Committee and that of Sir Hayden Phillips. Those principles were well enunciated and they are not addressed in the Bill. One principle that Sir Hayden enunciated was that the status quo in which there are no caps on donations is unsustainable and therefore donations to parties should be limited. That is an extremely important principle and it needs to be particularly addressed in our debates.

Another principle was that expenditure on general election campaigns was progressively growing and should be reduced. I do not see anything in this Bill that goes in that direction. That worries me, particularly because we do not have the sort of controls over expenditure in this country that the United States has and which my noble friend Lord Tyler, in his detailed and helpful speech, enunciated. We cannot congratulate ourselves on getting this right if we do not address that general point.

A further related point is that if we were to affect the incomes of political parties, there is a potentiality for inequitable consequences and the loss of stability. I need not remind the House that Sir Hayden Phillips advocated some increase in public funding of political parties. It is important to espouse the view that political parties are an absolutely key part of the working of our democracy. They are responsible for the sophisticated development of policies by parties not in government and the success with which they propound those developed policies will enable the public to have a sense of its involvement in the political process. More than anything, it will have the potential of encouraging people not to take a backseat, not to listen to the cheap points which are being scored by the populists and even to participate directly in seeking to formulate these attitudes. Hayden Phillips drew attention to the fact that, in this country, membership of political parties has dropped from one in 11, 50 years ago, to one person in 88 today. To me, that is retrograde and unfortunate. If parties cease to play a part, what is to take their place? Is it to be individuals? I cannot imagine anything more dangerous.

I hope that in addressing these considerations in Committee, we will consider these wider considerations in putting forward our individual proposals, which I do not propose to touch on today, and I hope that we will not simply consider how they affect one or other political party. All political parties are required to be funded properly—not excessively funded—with sufficient income to enable the serious work of political thinking and political education to be advanced.

My Lords, I declare an interest as a member of the Labour Party for more than 30 years and as the chair of the Labour Party in 2000 when the Political Parties, Elections and Referendums Act came into being. I can still remember the challenges that we faced: on the one hand, quite rightly, we were trying to implement our manifesto commitment to clean up political party funding and, on the other hand, we were struggling with the practical operation of what became a complex and, to my mind, unwieldy piece of legislation. From my perspective, this Bill is a welcome opportunity to iron out some of the unnecessary local burdens, while tightening up on the big funding issues, which continue to threaten the integrity of our political parties and, therefore, the reputation of our democratic system.

I am sure that there will be some robust discussions during the passage of the Bill through the Lords, as is absolutely right, but, as has been said, there have been considerable efforts in the other place to try to reach a cross-party consensus on issues that should transcend individual interests in favour of the more compelling objective of renewing faith in our political party system. I hope that we are able to keep that goal in our sights as the debate progresses.

In that context, I would like to make the following points. My main concern about the 2000 Act was that it placed daunting new accounting burdens and draconian sanctions on the rather scarce and precious local volunteers on whom we all rely to keep our local democracy alive. Those individuals, often elderly, provide an essential presence in local communities and act as the recruiting sergeants of the next generation of political activists. As a number of noble Lords have said, we expect too much of them and often exploit their good will. At the time, I was concerned—it was borne out by some evidence—that the new responsibilities of the Act would prove to be the final straw and they would step down from office. To be honest, it felt like the people drafting the legislation had never run a jumble sale or passed a hat around to get enough money to pay for the hire of the room.

That is why I am pleased that the provisions in the Bill have begun to address that issue by introducing a more proportionate regime for local accounting. It is helpful that the basic level of recordable donation has been increased to a more justifiable figure. More important, the concept of a local compliance officer who could be appointed to make the returns to the Electoral Commission on behalf of other local officers could provide some welcome relief to our overburdened volunteers.

I am also pleased that the thresholds for other recordable and reportable donations have been increased to more sensible levels. More fundamentally, I very much welcome the shift in the nature of sanctions that can be applied to breaches of the law at a local level. If our activists were put off by the bureaucracy of the previous recording procedures, they were terrified of the penalties for default that threatened them with criminal proceedings. Again, it seemed as though there was no real understanding of the slightly chaotic and unstructured nature of local activism. It is absolutely right that, where honest mistakes are made, there should be flexibility in the application of sanctions.

Secondly, I very much welcome the move to extend the size of the commission to enable four commissioners with political experience to be appointed. Clearly it is important that the political appointees are not in the majority, but in its early days the commission felt that it was struggling to understand the real world of political parties on the ground. It was making policies for an idealised concept of super-organised local activists who did not exist and it was less effective for that. There is a role for knowledge and experience in a regulator and I am sure that the new appointments will enhance the status of, and respect for, the commission.

Thirdly, it has to be right that, in the longer term, we move to individual electoral registration. The concept of a head of household taking charge is increasingly an anachronism, which takes no account of the changing nature of households and relationships and subtly downgrades the status of those passively being registered. It is also, as we are painfully aware, more open to fraud. There is a real opportunity now to use an electoral registration campaign to reach out to the next generation of voters and persuade them that their right to vote has significance and value. It should mark their transition into the adult world and bring with it other advantages and benefits.

That is easy to say and more difficult to deliver. It would be a disaster if the result of this initiative was fewer people being registered and fewer individuals voting. That is why we need to proceed carefully. The full and enthusiastic support for the initiative from local electoral registration officers is crucial and they need to be guaranteed the extra resources to roll out this programme. It is also vital that the verification proposals have broad popular support and do not become an excuse for a registration boycott. This is a difficult challenge. We are right to proceed with it, as it is long overdue, but it is also right that we should learn the lessons as we proceed and not put the whole registration process at risk.

Fourthly, I have a couple of comments about the trade union political funds, which some people have suggested should be included in the Bill. Already, the political activities of trade unions are massively regulated by both trade union and electoral law. Already, donations, affiliation fees and donations in kind have to be clearly recorded and made public. Trade unions also have the draconian duty to reballot their members on continuing these activities every 10 years. These funds are then used to affiliate individual members to the party in the form of a membership fee. This is very different from the large-scale individual donations that the Bill attempts to regulate, and the two should not be confused.

Finally, I turn to what are now described as unincorporated associations but which most people would describe as front organisations. Of course, political organisations, like all other parts of our lives, have become more complicated. It is also true that an organisation set up for one purpose can easily become a convenient vehicle for an entirely different purpose. The key to unlocking these complex relationships has to be transparency. This was the spirit and intention of the 2000 Act. It is vital that we take the opportunity in the Bill to close any remaining anomalies that have drawn a cloak of secrecy over millions of pounds in hidden donations. That is why I welcome the measures in the Bill, which will require unincorporated associations that make donations to political parties in excess of £25,000 a year to report the names of individual donors to their funds. It is right that the public should know who funds our parties; people should be reassured that opportunities for foreign nationals to fund our parties via this route are now being blocked.

I am aware that I have touched on only a few aspects of the Bill. I look forward to opportunities to debate the issues as the Bill progresses through this House. There is always a temptation when dealing with issues in which many of us take a close interest to become rather partisan. I hope and believe that we will manage to avoid that trap and to craft a Bill that has at its heart renewed transparency and renewed public faith in our political system.

My Lords, I speak as a former treasurer to the Conservative Party, from 2004 to 2007. I will largely restrict my comments to matters of finance and party funding. Many aspects of the Bill address those issues and issues of disclosure. However, I fear that the Bill does not go far enough. I was co-author, with Andrew Tyrie, of a paper for the leader of the Conservative Party. I also served in the discussion stages with Sir Hayden Phillips. Two things that we tried to demand were a cap on donations and matched funding, to which my noble friend referred earlier.

We live in a world that demands transparency and where the media have become obsessed with political party donors and with what they perceive—I use that word deliberately—as their motives. The Bill, by not imposing a maximum amount per donation, does not address those issues. It cannot be right that there is overdependence on a union or a number of individuals for the annual running costs of a party. It cannot be good for politics and it cannot be good for the parties themselves. Through the passage of the Bill, we must be earnest about changing that.

Neither does the Bill prevent a cash-grab race from taking place, as it does not restrict what political parties may spend in any one year. It cannot be right that, depending on a party’s political fortunes and popularity in the polls, one party should be able unreasonably to exceed another in its ability to raise—and therefore to spend—money. A cap on annual running costs would be welcome.

However, the most acute problem is the raising of money for a general election, which effectively doubles the money that a party is required to raise in one year. Large donations are therefore required and the issues of influence and reporting raise their ugly heads again. If we are to get to a consensus on this, we need to resolve how we support parties in their election fundraising initiatives.

Neither does the Bill promote democracy, because it does not produce a plan for financially supporting new political parties, allowing them to campaign—and thereby permitting the nation to debate broader democratic issues—without being dependent on a rich donor. Nor does the Bill financially incentivise political parties to encourage greater turnouts at the ballot box and greater involvement in political debate. A grant scheme or incentive plan is surely an imperative. Yet again, that opportunity has been missed.

Finally, the Bill does not address the undue influence of trade unions or the amount that they are allowed to give the Labour Party. In the last year we have seen the unions bail out the party from its deeply parlous financial state. What is the price of that bail-out? It is totally unreasonable. The Bill does not permit trade union members to opt out of their union contributions being directed to the Labour Party. This must change.

It may seem odd that I welcome the increase in the threshold for a declaration, but the threshold has not changed since 2000 and therefore has not kept pace with inflation or comparable gift-making to other voluntary organisations. This change helps the significant administrative burden on our local associations, which, after all, are made up largely of volunteers, as was said earlier.

I turn now to policing. During my time as treasurer, the Electoral Commission was the most frustrating and inadequate organisation to deal with. It neither policed nor interpreted the legal implications of the 2000 Act adequately. Despite the Conservative Party having a compliance officer, a finance director and a finance board, who tried to maintain regular contact with the commission, it failed in its guidance and liaison with them. Of course, the moment that trouble started, it ran for cover proclaiming its vast innocence. I think that noble Lords opposite will agree with this.

As we all know, the Electoral Commission also failed to monitor the postal voting system and to rigorously police the election process. It is therefore imperative that the people who run it not only understand the Bill but also its relationship with the parties, to help them with interpretation and to work closely to ensure that parties fulfil their obligations. I welcome the fact that there will be four commissioners, but it is important that they understand the workings of political parties. We should not ban former political party executives from being commissioners; we should encourage them, because those people fundamentally understand the workings of political parties. The commissioners should also understand parties’ financing, because we must deal with what is an acute problem.

I am afraid that the Bill has been fudge. Despite its great rhetoric, and despite the procrastination, it has failed to address the practical issues of fundraising and how to engage with a wider audience in politics.

My Lords, I start by declaring an interest as a donor whose constituency donations exceed the reporting threshold and whose national donations exceed the recording threshold. I speak on the Bill mainly because I was a member of the Committee on Standards in Public Life at the time of its report on the funding of political parties, which laid down the framework for the later legislation. I pay tribute here to the noble Lord, Lord Neill of Bladen, for his effective chairing of that committee.

I was also on the Front Bench for my party during the passage of the Political Parties, Elections and Referendums Act 2000 through this House, and for that of the Electoral Administration Act 2006. In view of the history of that legislation and the gaps that have appeared, I strongly support this Bill.

Two matters are of particular importance: first, the increasing transparency, particularly by requiring unincorporated associations to disclose the source of donations made through them; and, secondly, a provision not yet in the Bill but promised by the Government, as the noble Lord, Lord Bach, has done, to bring about individual registration by electors throughout Great Britain. Electoral fraud is indeed an increasing problem and has undoubtedly affected some results, particularly in local government elections. Individual registration with identifiers would make fraud much more difficult to achieve. It needs to be brought forward more quickly than is now proposed by the Government, although I obviously recognise that it would take some time to achieve.

There are several other useful provisions in the Bill. I welcome, among others, the greater power to obtain relevant information, and the powers to impose civil penalties; on this, I am afraid that I disagree with the noble Lord, Lord Neill. The threat of criminal penalties has deterred many party members from accepting offices in their local parties that would place them in danger of acquiring a criminal record. Criminal penalties should be reserved for deliberate and conscious breaches of the law, and not for breaches caused by ignorance or incompetence, which are better dealt with by civil penalties.

I also welcome the extension of the size of the Electoral Commission by adding four members nominated by political parties. My experience over six years on the Committee for Standards in Public Life persuaded me that having members with front-line knowledge of the workings of the political system was useful to the committee, and it would also be useful to the Electoral Commission. However, we also need to clarify the method of selection of the fourth political member. By an odd coincidence, I have recently been on a mission to Sri Lanka for the International Bar Association, where we discovered that failure to spell out what was, in that case, the method of electing the sixth party nominee to their constitutional commission had stymied the whole operation. We must therefore give some greater indication in the Bill of how the fourth member will be selected.

I support some proposals in the Bill in principle but not in detail. In these, I agree to a considerable extent with the Electoral Commission. The Bill proposes in Clause 13 to increase the permissibility and recording thresholds from £200 to £500. While I accept that some increase may be desirable, that seems to me to be altogether too high. I suggest that the increase should be from £200 to £300. That would tally with the 50 per cent increase in the reporting thresholds provided for by Clause 13.

Clause 14 limits free candidacy expenses for general elections occurring more than 55 months after the previous general election. This is good in principle but, as my noble friend Lord Tyler pointed out, four of the last general elections have taken place only four years after the previous general election. Four years seems to have become the standard length of life of a Parliament if the governing party expects that it is likely to be re-elected. This suggests that a limitation on constituency spending should preferably operate throughout the life of a Parliament and, in any event, should at least come into force at a much earlier date than that proposed by the Bill; I suggest that that should be not later than 42 months after the previous general election, so that it would be there after three and a half years. Then there is the question of the withholding of the home addresses of candidates. I am not persuaded that we need it at all, except in cases of a real security threat, as the noble Lord, Lord Brooke, pointed out.

Finally, there are provisions that should be in the Bill but are not. Of these, much the most important, which has had support from a number of other speakers, is the cap on donations. This was not recommended by the Committee on Standards in Public Life’s fifth report, but developments since then have made it clear that it is necessary. Indeed, it is essential that parties are to be given a reasonably level playing field. The present system enables a party with wealthy supporters to run more expensive campaigns and to be more active outside the campaign periods. More important even than that, some contributions in recent years have been so huge that party policy can be altered by the promise of more money or by the threat of withdrawing financial support in the future.

Wealth can quite legitimately be used to buy fine houses, great works of art or yachts and Rolls-Royces. However, it is contrary to the spirit of democracy to allow wealth to buy political influence, so we need to add a cap on donations to the provisions on the existing cap on spending. That should apply with or without a consensus.

Another provision that should be in the Bill, or perhaps in the forthcoming Finance Bill, is tax relief for small donations. This was proposed in the Committee on Standards of Public Life’s report, but was not adopted. We have in this country for years recognised that donations to charities are a matter of public interest and should have tax relief through gift aid. However, modest donations to political parties are also very much in the public interest and should be encouraged. This has already been recognised in principle, although not many people appreciate this, by exempting bequests to political parties that have two or more members in the House of Commons from inheritance tax liability. The same principle should apply to donations by the living. The simplest method would be to use the gift aid system with some changes. In particular, there would be a cap on the size of the annual donation that could qualify for relief—I would suggest no higher than £1,000—and higher-rate taxpayers could not set off their donations against their higher-rate tax liability as they can in the case of gifts to charities.

This is an important Bill. It has many good features. There are some which could and should be improved, and a few which ought to be here and are not. I wish the Bill well.

My Lords, the real issue of this Bill, as I see it, is how we can galvanise our democratic electoral system so that greater numbers of our people feel that their participation in elections really matters.

We are facing a grave crisis—a crisis that affects all our political parties. We do not have an easy way out of this, but we have to face the situation together. Unfortunately, I do not think this Bill—or any Bill—can really do this. I am not suggesting for one moment that we should not consider what is being proposed. There are certain advantages in this Bill, but it is not a complete answer—or any answer—to the underlying problems that we face. The noble Lord, Lord Bates, was in my view unduly optimistic about the contribution that Members are able to make in the political process. That is an issue which confronts all parties but, as I have said, I do not think that any Bill can answer that problem.

I became involved in politics a long time ago—before the 1945 election. Some Members—very few in this House—will appreciate the significance of that. I became involved at a time when people really cared: the turnout in 1945, 1950 and 1951, and even in 1955, was enthusiastic and energetic in a way that few of us would say has happened since. I have been a member of the Labour Party for a very long time; the decline in voting is an issue that confronts all parties, if you care about the democratic system, as I do. I remember in that time—64 years ago—that people flooded into the election canvassing rooms. They really cared not only about casting their vote, but that other people should cast their vote, too. How can we resuscitate that situation? Is it possible? I repeat, it affects us all.

We are not facing up to the real problems. The real problem is that people want to feel that they can really effect change, something that many people think is impossible to achieve at this time. Despite what I have said, this Bill by and large represents an advance. It is also capable of becoming even more benign, within the limitations that were spelled out by my noble friend Lord Bach. I hope that in his wind-up, he will give the House further and better particulars of what discussions have taken place with the Electoral Commission and others about the proposals in the Bill, and about some of its shortcomings. The essential goals that we should seek to attain, as the Electoral Commission urges, are how we can modernise and strengthen the electoral registration system to make it more meaningful as far as ordinary people are concerned, and how we can introduce individual electoral registration. I would hope that we can see some worthwhile changes in this Bill.

The Electoral Commission is clearly concerned about the effect of the Bill’s proposals about reporting donations and loans. Despite improvements contained in the Bill, the risk remains of a lack of confidence, as expressed by the Electoral Commission,

“in the transparency and integrity of party and election finance”.

Is there validity in this concern? What is the Minister’s response?

The Electoral Commission welcomes the changes devised by the Government to Clause 2 and Schedule 1, establishing that the Government are in listening mode and that this new procedure is a significant improvement on what we have now. I submit that the Electoral Commission is right when it suggests that statutory requests for information and explanations should be dealt with similarly to requests for documents, thereby extending the new court order procedure. As the Electoral Commission argues, such a procedure would enable an investigation to be effective. It strongly recommends—I think that it is absolutely right in this—that a civil court procedure is to be preferred to a criminal prosecution for not complying with a statutory request. What is the Minister’s response to this modest proposal?

I turn to Clauses 4 and 7, concerning electoral commissioners. It was submitted in the House of Commons that the fourth nominated commissioner should provide a voice that would otherwise be unheard, for parties with fewer or no seats in the House of Commons. What is the Minister’s view about this? It is essential that that issue should be faced.

So far as donations are concerned, Clause 13 increases the permissibility and recording threshold from £200 to £500. I share the concern of the noble Lord, Lord Maclennan, about this. Why have we come to that conclusion? There is a need to take account of the inflation that has occurred since 2000—that makes sense—but it is absurd to change the amount to £500. What justification is there to change it from £200 to £500? Although I think that there should occasionally be a review of the situation, we should react adversely to this particular proposal.

I turn to candidates in parliamentary elections. The Electoral Commission considered that voters should be able to have sufficient information to identify a candidate’s links with his or her constituency, and the Minister indicated that there will be certain changes. Will there be any changes as far as that is concerned, and what is the general purpose which the Minister prescribes? It is quite insufficient to enable only candidates, some others closely identified with the candidate and representatives of the Electoral Commission to have access to the candidate’s full address. What is suggested is that the returning officer should identify the candidate’s home address. I think that that represents a demonstrable improvement on what has gone before. However, there needs to be further discussions with the Electoral Commission and the discussions should not be confined to that issue. It would be enormously beneficial to do that and I humbly commend the proposal.

I hope that what I have said is not wholly negative and that the Minister will take some account of it. I await his reply with bated breath.

My Lords, I agree with a great deal of what the noble Lord, Lord Clinton-Davis, said, particularly the first four or five minutes of his contribution, when he was talking about the need to enthuse and involve people in the democratic political process. That is a major problem for all of us who are involved in political activity and who care about active democracy. I very much agree with what he said about that. It has also been said by other noble Lords in this debate.

I should start by declaring some interests. I notice that the noble Baroness, Lady Jones, declared that she has been a member of the Labour Party for 30 years. I am not sure that we should declare that level of interest. However, I worked out when I first joined the Liberal party and regret to say that it is almost 50 years ago. When I heard the noble Baroness’s remark, I thought “What it is to be young like her and some other noble Lords”.

I am an elected member of Pendle Borough Council, which is an electoral registration authority. I have also been an election agent for many hundreds of candidates over the years; indeed, I am an election agent for a candidate in a by-election at this very moment. My noble friend Lord Tyler was bragging, I think, that he has stood in 12 elections and won half of them. If I have my arithmetic right, I have stood in 20 and won 80 per cent of them. However, I defer to my noble friend because he got elected to the House of Commons, which I failed to do on several occasions.

I want to talk about two nitty-gritty issues: individual registration and postal voting. On individual registration, I join those who welcomed the announcement made at Report stage in the House of Commons. We look forward with interest to see what the government amendments actually say. I join those who have urged the Minister to ensure that the amendments are here in time for Committee stage, when they can be thoroughly discussed and properly gone over without the constraints of the more formal procedures on Report.

I, too, join my noble friend Lord Goodhart in expressing concern that it will take eight years before the system comes in if all the hurdles are passed. That seems a very long time. Like him, I understand that there are many interesting and intricate hurdles to be passed before it can be brought in, and indeed that it will cost money. But eight years is a long time. Looking round your Lordships' House, I think that some of us may not be here in eight years. The way things go, projects like this slip—they do not speed up once a timetable has been put in place. The Government say eight years but it might be 10 or 12 years—who knows?—unless someone puts a bit of oomph behind it. I believe that electoral registration is necessary in principle. I think that it is necessary to help stamp out some kinds of electoral fraud that do or can take place.

The noble Lord, Lord Neill of Bladen, talked about the different culture in England, Scotland and Wales as opposed to Northern Ireland. He may be right. If people were asked which part of the United Kingdom would most easily take to such changes, I do not think that most would necessarily choose Northern Ireland first. It has undoubtedly been a success in Northern Ireland and there is no reason at all why it cannot be a success here. If the Government are putting forward a timetable for this, let us have some pilots. Let us pilot individual registration in different parts of the United Kingdom, or in England, Scotland and Wales, and see what the difficulties and results are in practice without trying to overcome possibly very real hurdles or making assessments on the basis of what might happen. I have not always been in favour of the concept of piloting in elections in other areas but it really could happen in electoral registration. Pilots could go ahead in some areas in two or three years. Those could identify, thrash out and resolve the difficulties and that experience could then be used.

I do not believe that individual registration will on its own stamp out fraud through postal voting; I shall explain why in a minute. However, I do believe that it is vital to stamp out possibilities for personation at polling stations. Not a great deal of publicity is given to personation at polling stations, but there is evidence that it exists on an unacceptable scale in some parts of the country. I suppose that one case of someone personating another elector would be an unacceptable scale, but I am referring to a scale at which elections can be changed. For example, I have quite a bit of information from my honourable friend John Hemming MP that personation is a problem in Birmingham. I believe that it is a problem in at least one town in Lancashire, though fortunately not in the areas where I am politically active.

In principle, individual registration is right because people ought to be responsible for their own votes. The noble Baroness, Lady Jones, who brings some youth to the Chamber—compared with some of us, at least; and she can read Hansard to see what that is all about—referred to the “head of household”, a description that has not actually been used, at least since the Electoral Administration Act of two or three years ago, to which my noble friend Lord Goodhart referred. The truth of the matter now is that the electoral registration form for a household is filled in and sent back by whoever bothers to do it—whoever picks it up and decides to fill it in. This is utterly and totally unacceptable, particularly in multi-occupancy housing, where the person filling in the form may be someone whom you do not know much about. That is not an acceptable practice. The idea that there is a male head of household is outmoded in even the most conventional households. Individual registration is right in principle and has benefits in practice.

I do not want to say a lot about postal voting. The first time that I tried to tell your Lordships about some of the problems of postal voting was when we were discussing the European Parliamentary and Local Elections (Pilots) Bill back in 2003, and I recounted some of the utterly unacceptable practices in relation to postal voting and what became known as “warehousing” of voting in the infamous case in Birmingham. At that time, many noble Lords around the Chamber did not really believe me. How could this level of electoral fraud and malpractice in British politics be practised and be quite so prevalent in some areas? We now know, partly from the court cases to which the noble Lord, Lord Neill, referred, that this problem is widespread and totally undermines the democratic process in those areas. There is absolutely no point in beating about the bush; most organised postal vote fraud is in areas where there are large south-Asian communities. There is a cultural problem there and there is no point in pretending that that is not the case, because it is. Unless we tackle the problem at its roots in those communities, we will not sort it out.

Postal voting, by its very nature, is not and never can be secure. My answer would be to start by saying that there should be no postal voting, and then by asking who really needs it. My bottom line, or perhaps my top line, would be to return to the system that existed before 2000, but I would restrict its use to people who needed it for medical reasons or reasons of disability because they physically could not get to the polling station to vote. In this modern day and age there are other ways of providing voting facilities for people who are simply away from home.

In the future, it should be possible to arrange to cast your vote anywhere in this country, given the computer and communications systems that exist nowadays. Obviously, that would have to be organised and thought about carefully, but such a system is possible. Systems of advance voting, were used in America before the presidential election, when many of us discovered to our astonishment that in some areas between 25 and 30 per cent of the electorate had already voted before polling day—but they had voted in a polling station.

I was not in favour of pilots for postal voting because I was not in favour of postal voting on demand, but pilots for advance voting systems could be looked at in this country to provide a means by which people can vote, even if they will be away on polling day.

So there are other ways of doing it. We should look at other ways of voting that are secure. The problem with postal voting is that you can never guarantee whether the person who has had the voting paper sent to them has filled it in and sent it back. Even if identifiers are used and verified, and even if there is individual registration, that problem does not fundamentally change. In particular, you cannot guarantee, even if the correct person is filling in the ballot paper, that there is not someone standing next to them making sure that they are voting the right way. Even if that does not happen, you cannot prevent people doing what someone did to me at the last election—they knocked at my door and said, “Can I give you our postal vote?”. I said, “If it’s sealed up I shall take it back, but I really don’t see why you can’t just post it”. They said, “Oh no. We want to show it to you to make sure that you know that we voted for your man”. That is inherently possible in postal voting and it totally and utterly undermines the secrecy of the ballot box.

Like the noble Lord, Lord Neill, and others, I think that this Bill misses an opportunity to turn back the clock from 2000 and place much greater restrictions and security measures on postal voting.

My Lords, I start by declaring an interest in this Bill in that I am trying to raise money for UKIP, the UK Independence Party. I have only two brief points to make. The first is to support the Electoral Commission, as other noble Lords have done, in its recent briefing paper, which is nervous about increased thresholds for donations that do not need to be declared. As the commission has said, the proposal to increase the declarable threshold to £500 may mean that any cumulative series of donations which are individually worth less than £500 will be legal, regardless of where they come from, and will not need to be reported to the commission for publication.

As a fundraiser, I confess that I find this a rather attractive proposition, but it cannot be right if we wish to identify substantial donors to our political parties. I fear that the commission must be right when it suggests that this proposition may result in large donors making regular donations of just below £500, perhaps even by standing order. I should have thought that that must defeat the object of the present Act and of this Bill. I submit that this may be an area to which we may wish to return in Committee. One could of course require the cumulative totals of small gifts to be declared when they reach £7,500.

My other suggestion is that we should perhaps revisit the requirement for a large donor to be on the electoral roll. I have to tread rather delicately here, which noble Lords may think is not my strongest suit, because my party is in dispute with the commission about this area. However, I welcome the words of the noble Baroness, Lady Jones, when she referred to the burdens placed on amateur activists and donors, who may make technical and sometimes innocent mistakes.

In the report of the noble Lord, Lord Neill of Bladen, which gave rise to the present Act, he suggested that a party should have been able to accept a donation from someone who was on the electoral roll, or who was known to be eligible to be on the roll. A Conservative amendment to include the latter category was lost in your Lordships’ House after the Government argued that:

“It would be no easy matter for a registered party to establish whether a donor whose name did not appear on an electoral register was nevertheless entitled to register”.—[Official Report, 21/11/00; col. 695.]

That might be so, or it might not. People may not want to be on the electoral roll for a perfectly respectable reason, such as not wanting to reveal their address for security reasons, but a party might be satisfied that they were bona fide resident taxpayers in this country. If so, I suggest that the party should be able to accept a donation, perhaps while informing the commission in each case. There will not be many such cases.

I appreciate that the present rule gives certainty and clarity, but the Bill does allow in Clause 17 for candidates to withhold their addresses from general scrutiny, and therefore moves in the direction that I suggest, although I appreciate that the clause is somewhat controversial for some of your Lordships. The object of the exercise is to prevent foreign and anonymous donations; if we can achieve that without penalising even a small number of people, perhaps we should try to do so. I look forward to the Government’s views on my two suggestions.

My Lords, the quality of today’s debate has been assisted by the high proportion of us who have felt the need to declare an interest. Perhaps none of us should be here if we did not have an interest in this subject. I declare my interest formally, as chief executive of the Liberal Democrats and a salaried employee of the party.

Nine years ago, a number of us, including the Minister, the noble Lord, Lord Bach, participated in many debates during the passage of the Political Parties, Elections and Referendums Act 2000. All those of us here today who took part in the debates nine years ago would agree that the Bill we are examining aims to put right some of the things that were not right in the Act. I welcome in particular both a reduced burden on local party treasurers—people who need appreciation and respect for their voluntary work—and the strengthening of the investigatory powers of the Electoral Commission. I am sure that both principles are right.

The noble Baroness, Lady Jones of Whitchurch, and the noble Lord, Lord Hodgson of Astley Abbotts, both spoke with feeling and experience on the need to reduce the burden of bureaucracy on voluntary local party treasurers. The noble Lord, Lord Neill of Bladen, on the other hand, asked how raising the donation threshold so significantly would reduce the level of bureaucracy. It seems clear that, by raising the threshold in this way, many local party treasurers will no longer have to make any returns, which will reduce their paperwork and the stress put upon them. It is not donations of up to £500 that we should be worrying about when considering the Bill.

The noble Lord, Lord Clinton-Davis, and my noble friend Lord Goodhart asked why such large increases were needed. I point out that these are the first increases since 2000, nine years ago, and that we may not have further increases for a significant period of time. I have no doubt that the Minister will refer to the fact that the Electoral Commission, while initially expressing reservations about the large increase, decided that it would not oppose higher thresholds. Above all, we must consider that the burden of bureaucracy on volunteers would be wholly disproportionate to the benefit of any transparency over donations at a level below £500.

Sadly, the debate has reflected the fact that the Bill still fails to address fundamental problems affecting the health of our democracy. My noble friend Lord Tyler drew attention to the failure of the Bill to address the problem that our system allows millions of pounds to count for more than millions of votes. He made the democratic case that the ballot box should be more important than the bank balance. Figures supplied by the Electoral Commission show that almost half of the Conservative Party’s income from donations in 2008—some £10 million out of the £22 million raised—came from donations in excess of £100,000. More than two-thirds of the Labour Party’s income from donations—some £16.5 million out of £23 million—came from donations in excess of £100,000; and half the party’s total income—around £12 million—came from trade unions. For the record, around a fifth of the Liberal Democrats’ income from donations in 2008—just over £600,000 out of £3.2million—came from such large donations.

The donation patterns show three things. First, there continues to be an unhealthy arms race in relation to party spending, which the legislation in 2000 failed to halt. Secondly, those making the largest donations can be seen to have a significant, and possibly even corrupting, influence on the parties, if their proportion of the overall donation level is very high. Thirdly, all the parties have concluded, despite public protestations, that cash counts for a lot in politics, and can have a decisive influence in the outcome of elections. All the parties feel that they need money to compete, otherwise they would not seek these large sums. The case for a cap on very large donations, as was proposed and nearly agreed in the discussions with Sir Hayden Phillips, will be made again. I was delighted this afternoon to hear both noble Lords, Lord Hodgson of Astley Abbotts and Lord Marland, supporting this principle.

There have been a number of references in our debate to the proposed changes to the composition of the Electoral Commission. It is fair to say that the commission had reservations about these changes, but has now accepted the principle of having a minority of commission members with hands-on political experience. Some of us with such experience, including the noble Baroness, Lady Gould of Potternewton, argued in 2000 that the Government were wrong and that the political parties panel was an inadequate way of enabling the commission to have the necessary insight into electoral processes. We feel vindicated now. We would reassure others that the political members of the commission will be in a minority, but will be able to assist fellow commissioners on the basis of being poachers-turned-gamekeepers.

I turn to the issue of the trigger and constituency limits. I expect that in future debates we will return to the controversy surrounding the “trigger mechanisms” for starting the period for which candidates and agents must limit their expenditure. My noble friend Lord Tyler explained the absurdity of making an arrangement in legislation that would apply only to a small number of Parliaments; two out of the past 12.

The old trigger mechanism for starting a candidate’s election expenses was inadvertently abolished during the passage of the Political Parties, Elections and Referendums Act 2000. Suggestions have been made to reintroduce such a mechanism for a period of four months prior to polling day. The proposals, initially from the Electoral Commission, were rejected during the passage of the Electoral Administration Act 2006, when everybody agreed that a four-month rule for counting expenses was impractical, because in the absence of fixed-term Parliaments, no one knows when it is four months before polling day. A cap on expenditure, at national and local level and over the course of a Parliament, would make much more sense than a cap over the period from the 55th month of the Parliament through to polling day. A cap on expenditure should apply every year, not just on national spending in the last 12 months of a Parliament, as at present, nor just on local spending in what looks likely to be the last four months of this Parliament.

The noble Baroness, Lady Gould, agreed that there was a problem. Perhaps I have an answer. Spending caps should apply every year and should start to be applied from the day after each general election, when we all know that the campaign begins for the subsequent general election. A major problem with the current proposals is that they still fail to address the unintended consequence of the change nine years ago that permits any amount of what is deemed to be “national expenditure” to be targeted at particular constituencies. This has exacerbated the potential for multimillionaires to buy influence over the electoral process, by allowing them to concentrate expenditure on marginal seats.

The noble Lord, Lord Ashcroft, is not here today to defend the way in which he could boast of giving well in excess of £10 million to the Conservative Party before the last election and his claim that his money influenced the outcome in 25 of the 33 seats that the Conservatives gained in 2005. I should still like to persuade the Government to cap such donations nationally. However, to have any effect on what is sometimes called “the Ashcroft problem”, we must bring back an effective cap on constituency spending by properly defining what is local and what is national expenditure in particular constituencies during an election campaign.

Having failed to bring back the old trigger, the problem now is that many tens of thousands of pounds—perhaps hundreds of thousands of pounds—can be spent legally in particular constituencies in the immediate run-up to polling day if the expenditure is deemed to be part of a party's national rather than local campaign. This sort of expenditure will not be capped by the proposals in the Bill, and the Bill as drafted completely fails to deal with the problem. It means that millionaire funding allows parties to place advertisements targeted on local newspapers in certain constituencies; it allows them to pay for huge billboard advertising sites that appear only in their targeted seats; and it allows them to bombard target voters in those seats with dozens of national mailshots from the party leader. At the same time, an MP or a candidate from a party without such wealthy backing finds that any personal promotion is subject to a very strict and small local limit. That cannot be right; it is not democratic and must be changed before our next election, which could be corrupted in a way that has not been the case in this country since the era of rotten boroughs in the 19th century.

Finally, I turn briefly to the subject of individual voter registration, which has been raised by many other speakers. Among the mistakes that I believe we made in 2000 was allowing postal voting on demand without proper safeguards being in place. We have made some progress since then, particularly in the Electoral Administration Act a couple of years ago, but more must be done if we are to have proper safeguards against fraud.

At the same time, I recognise that we need to ensure that the electoral register is as accurate and complete as possible, and the belated moves towards individual voter registration are very welcome to many of us. However, I think that the Government’s approach to this whole subject has been reminiscent of the old phrase, “Lord, make me holy but not yet”. Postal voting came in in 2000 but the necessary safeguards produced by individual voter registration may not appear until perhaps 17 years after that or even later, when four general elections may have taken place, along with numerous other elections to other bodies. It is simply not good enough to say that we will have to wait until then.

I look forward to the further stages of the Bill and to the opportunity that it presents for a further attempt to halt the arms race on spending, clean up the reputation of politics and ensure that power lies where it belongs—with the voter and not with the funder.

My Lords, I join other noble Lords in thanking the Minister for his clear exposition of what is in the Bill and I look forward to the Committee and Report stages with the noble Lord answering all the questions that will be put to him in due course. I also look forward to him bringing forward the other parts of the Bill that he has promised. As he will be aware, this Bill is already very different from what was originally introduced in the Commons and it will differ further, we hope, following the Committee stage. As the noble Lord, Lord Neill, put it, it is unfortunate to have Second Reading of the Bill when a rather large part of it is not there. However, I shall come later to the subject of individual voter registration.

I start by declaring an interest, albeit a very small one compared with what my noble friends and others have declared, but I think that it is important. For many years, I have been active, like many others, in the local constituency association where I live and I am a former chairman of that association. Like the noble Baroness, Lady Jones of Whitchurch, and my noble friend Lord Hodgson, I think that the state of our parties is a matter of considerable importance and that we should all do all that we can to encourage greater participation in the voluntary side. In particular, I should like to encourage greater participation in the voluntary side of my own party, but I would hope that the other parties might benefit as well.

That should be borne in mind in all our discussions on the Bill because it is important that, as many noble Lords have put it, we do not impose burdens on individual members of associations—we all think particularly of treasurers—that discourage people from becoming actively involved in those associations. I mention treasurers in particular because I remember that when I was chairman of my own local association, we brought in a new constitution, one of the sensible rules being that no officer should remain in office in the association for longer than three years. However, we suspended that almost immediately when we realised that we were not going to be able to find a new treasurer. I think that many people who have been involved in their local associations will have come across that problem. That needs to be borne in mind, particularly when we come to the question of the levels at which to set the various sums that need to be disclosed.

As I said, the Bill is rather different from what was originally introduced and it will change further. I want to discuss a few points before I hand over to the Minister and allow him to answer properly for the Government. The first relates to Clause 13, which concerns the thresholds and limits for donations. These have not been changed since 2000. For that reason, we think it right that they should go up and we will certainly put forward amendments to allow us to discuss whether they have gone up by the right amount or whether they should go up further. That will be an opportunity to debate these matters nine years on from 2000.

It is also important that we should look at the mechanism for increasing those sums in the future. I can see that simply bringing in a power to increase them in line with the RPI each year would, again, make things very difficult for people on the voluntary side of the parties. The thresholds would go up by odd sums and it would be very difficult to remember them. Therefore, a better approach might be to have some mechanism by which the thresholds could be increased once each Parliament by an appropriate amount that could be looked at by all those concerned. The increase could be broadly in line with inflation or, if necessary, the thresholds could be changed by a greater amount. That could be done by order or it could be included in the Bill. I should certainly welcome the noble Lord’s views on that and on the whole question of what the thresholds in Clause 13 should be.

I move on to Clause 14 and the whole question of triggering. I should like to hear from the noble Lord exactly what the point is of having this triggering mechanism at 55 months. As the noble Lord, Lord Rennard, said, it would have applied in only two of the past 12 Parliaments. It seems a rather pointless thing to have included in the Bill, but the Minister will no doubt give his justification for it in due course and I shall welcome hearing what he has to say.

I turn to the question of penalties—or civil penalties, as I think they were described. The noble Lord, Lord Neill of Bladen, rightly made the point that they might be called civil penalties but they look more like criminal penalties than anything else. That was dealt with by the noble Lord, Lord Goodhart. I underline that these will be very difficult for individual members of an association—again, I think particularly of the treasurer—who might, inadvertently, make mistakes. We are all told that ignorance is no defence in criminal law. However, we are told that these are not criminal but civil penalties, although to me they look like criminal penalties. The point is that it does not make the whole job of compliance very easy for the individual member of an association. Would the Government be prepared to consider whether there might be a defence of inadvertently not knowing what was going on? Again, we will bring forward amendments on that in due course.

I now come to the part of the Bill which is not there and which we are debating without having seen it—that is, the part concerning individual voter registration. We were told—I think in the Minister’s response to a question from his noble friend Lord Campbell-Savours—that an amendment will be tabled before the Committee stage. It would have been more helpful to see something now. I appreciate that the Minister could not amend the Bill before Committee, but even a draft of what was coming might have assisted us in this Second Reading debate. Although we have agreed that the Bill will go into the Moses Room for Grand Committee, I have some questions on that in the light of this new and big subject coming in. I make that point simply for the assistance of the usual channels, who can discuss it and tell us their conclusions; we will no doubt do what they say.

We are told that amendments will be tabled on individual voter registration but that, for some peculiar reason, they cannot be brought into effect for at least eight or nine years from now—2017. That is a suspiciously long time and we wonder why the Government are so keen to ensure that individual voter registration is not operable for at least the next two general elections. We know that there may be an election some time later this year or, at worst, in June of next year and that there will be another in about 2014. I appreciate that it is too early to get anything going for the coming general election, but surely the Government could manage something a little sooner than 2017. After all, this system has been tried and tested in Northern Ireland for some years. We shall be tabling amendments to that effect and I imagine that others will want to question why the Government are being so slow on individual voter registration, which is of considerable importance if we are to stamp out the fairly high degree of postal vote fraud in the past few years.

As is frequently said at the end of the Queen’s Speech, “Other amendments will be put before the House”. Certainly my noble friends and I will make sure that others are brought forward. For example, as suggested by the noble Lords, Lord Neill of Bladen and Lord Rennard, further constraints could be put on postal voting. We will want to give serious consideration to those matters. I wish the Minister well. As I said, we broadly support the Bill as it now looks and we very much support the idea of individual voter registration and what the Minister will introduce, but we will want it a little sooner than he suggested.

My Lords, I think that I should declare an interest—perhaps I should have done so sooner. I am currently chairman of the constituency Labour Party and was for many years treasurer of a constituency Labour Party, but I am glad to say that I gave that up well before 2000.

This has been a lively, interesting and well informed debate. There is fantastic expertise in this House on these subjects and the Government are grateful to noble Lords for their contributions. However, I feel that the Bill is in a rather unusual and unfair position as it has been attacked for not being something that it has never pretended to be. It is not the final answer to what has been described as the democratic deficit in this country. That is not this Bill at all. It has a more modest intention; it represents a significant attempt to make important improvements where we can, by agreement. My noble friend Lord Clinton-Davis said that to him it represents an advance. That is what it is supposed to be. It is not the final answer to all these issues. It is particularly an advance, we hope, towards a system of party funding that is, first, more transparent and, secondly, better regulated.

It is in the interests of all parties for the regulations governing party finance and expenditure to be strengthened and for the public to have faith in the democratic process. We have heard interesting comments on all sides about what noble Lords consider to be the democratic state of the nation. We believe that all this can happen only through a consensual approach. These are not matters that can best be decided by partisan politics. The Government’s commitment to move forward on the basis of broad consensus is reflected in the Bill. That does not mean agreeing about everything but is about not doing something that is so out of tune that it is fundamentally opposed. I repeat that the Government are in listening mode to representations as the Bill proceeds, and I suspect that there will be broad support for many of its aspects.

Noble Lords have raised important matters and I look forward to debating them in Grand Committee. In advance, I shall try to deal with some of them now, but I am setting myself a strict time limit because I know that my noble friend beside me will do it if I do not. I start with the issue of donation caps, which is very attractive to noble Lords on all sides of the Chamber, and I can understand why. It is important to go back to Sir Hayden Phillips on this point. To implement a cap without introducing greater state funding would result in major financial instability for political parties. He is right about that because it would impose significant restrictions on parties’ freedoms to raise their own funds, and an increase in public funding would be needed to offset the effect of a cap on donations. In other words, his view was that without increased state funding, it was not necessarily right to impose a donation cap. As we have made clear, such fundamental reform of the current party funding regime would need to command cross-party consensus and the confidence of the public. Frankly these conditions do not currently exist.

The noble Lord, Lord Rennard, made an interesting point—all his points are very interesting—about spending limits starting each year. We do not believe that it is possible to reach consensus on any more fundamental reforms at present. In its limited way, the Bill represents quite a step forward and has broad cross-party consensus. On raising recordable thresholds, as has been referred to from the start of this Second Reading debate, there are differences of opinion. Some believe that we should not raise the threshold at all; others that we should raise it by a little; one or two may even agree with the Government that moving from £200 to £500 is right; but others think that it should be more than that. Let us see how our debates go. The Government’s view is that we have it right.

The interesting point is what we should do in the future. The noble Lord, Lord Henley, had an interesting idea, which may find some support. It would require the Government to review these thresholds once during the life of each Parliament. We want to consider that proposal and perhaps come back to it at a later stage.

My Lords, would it not be preferable to have a situation where this issue could be looked at in the light of events and proceed by regulation?

My Lords, that may be so. Let us see what comes forward in Committee on this matter.

My Lords, do the Government have anything to say about the Electoral Commission’s fear that raising the threshold from £200 to £500 may increase the temptation for cumulative donations under £500?

My Lords, we of course take note of what the Electoral Commission says and have great respect for its opinion on that matter, but it does not necessarily decide what we want to do in this field. We will come back to these issues in Committee. I have a lot of ground to cover and, for various reasons, I do not want to hold the House up longer than I have to tonight.

I move on to the issue of electoral fraud and shall deal with it as quickly as I can. It was raised by a number of noble Lords. I think we are slightly in danger of falling into a trap. Our political system is not corrupt; it is still the envy of the world. That is not to say that it does not have considerable problems, many of which have been raised today. The Joseph Rowntree Reform Trust report Purity of Elections in the UK: Causes for Concern made clear that,

“there is no hard evidence suggesting a significant increase in electoral malpractice since 2000”,

and the Electoral Commission’s report gave details of prosecutions for electoral malpractice. There were 23 convictions for RPA offences between 2000 and 2006. Convictions do not necessarily occur in the same year as the offence. Published information shows that the number of convictions relating to RPA offences in that period peaked at 11 in 2001, and the number of convictions has since declined. Of course, I am not naive enough to argue that just because there have been no convictions, there have been no cases of fraud. Of course there have been, but we have to put this in perspective.

It is clear that postal voting has proved popular and has helped to boost turnout. In itself, that is a good thing. We have to take very seriously the risk of electoral fraud, and, as one or two noble Lords said, we have put in a range of measures to safeguard the security of postal voting. I could go through them, but I shall not.

Innocent mistakes were raised by the noble Lord, Lord Bates. I do not know whether this is the first time he has spoken from the Front Bench in a Second Reading debate, but I congratulate him on his speech. The noble Lord, Lord Henley, and my noble friend Lady Jones also mentioned them. We are considering a concession. We have undertaken to consider this proposal and will return to it in due course.

I turn to the issue of 55 months. I was surprised by the noble Lord, Lord Henley, on this. I understand that the noble Lord’s colleagues in another place welcomed the proposal that the Government made on 55 months. It is for this Parliament, which may go longer than 55 months. Who knows? It is possible that it may. Let me concede this: these provisions provide for 55 months. I accept that that is a relatively infrequent occurrence. In bringing forward the Bill, we have been clear from the outset that any changes to the regulation of party funding must command a consensus. There is a potential problem of unregulated spending occurring prior to dissolution, and it could still arise in future Parliaments. I regret that we have been unable to find a solution to tackle this that all parties can support. If this House can find a solution, the Government would be extremely grateful. We do not deny that there is a problem, and we are doing something to sort it out for the forthcoming election.

My Lords, is it not bad legislative practice simply to take account of present circumstances, which all noble Lords accept are exceptional, and legislate for them and not take account of general experience, which is that we do not go for five years? Surely, the Minister is not saying that we are going to have to come back to this issue again immediately after the general election and have yet another statute to deal with what is not the normal situation. However, I tell the Minister that we will help him in every way we can to find a better solution.

My Lords, I feel very much better for the noble Lord’s last comment and much relieved.

On the next issue, I pray in aid the noble Lord, Lord Neill of Bladen. His expertise on this is probably greater than that of any other noble Lord. There are matters on which he criticised the Bill. Although he says we should have done this sooner, he praised the Government on the move towards individual registration. He made the important point that this is a serious move towards individual registration and is bound to take some time if it is to be done properly because it affects voters all round this country. It took some time to become successful in Northern Ireland. There was a drop in registration when it was first brought in there. I ask noble Lords not to rush ahead of themselves in asking for some ridiculous timetable for this important step.

I was heard in some parts of the Chamber to say that we would start collecting personal identifiers from August 2010 to August 2015. What I meant to say, and what I think I said, was autumn 2010 and autumn 2015. I make that point if I was wrong.

As far as pilots for individual registration are concerned, the noble Lord, Lord Greaves, would like this to be a pilot case. He may recall better than most of us the provisions for the collection of personal identifiers from electors on a pilot basis that were brought forward in the Electoral Administration Bill 2006. Those provisions were removed and replaced with provisions for the universal collection of postal vote identifiers brought forward by my noble friend Lord Elder in response to a consensus around the House that we should get on with it.

Moving on to the commission itself, there were some issues around the fourth member with some political experience. Nominated commissioners—those with political experience—will not be party representatives just as they were not, I believe, on the noble Lord’s committee. We believe that it is right that there are four nominated commissioners—there was some support around the House for that—allowing the perspective of one smaller party to be heard. This was a recommendation from the CSPL. The noble Lord, Lord Goodhart, also had a view on this. The proposal that there should be some members of the commission with some political experience was supported by all parties during the Commons stages.

My noble friend Lady Gould, who also has huge experience in this field, asked about candidate spending rules. The Electoral Commission said before the Public Bill Committee in the other place that it would aim to publish draft guidance on the Bill’s original proposals in January and then finalise its guidance as soon as possible after the Bill has completed its passage. However, I think it would say that that is an indicative timeframe rather than anything more precise.

I was asked why compliance officers are needed. The background to this is that there have been frequent complaints about the burden of compliance with the 2000 Act, particularly from people with very busy roles. We have heard of some of the difficulties that local parties on all sides have found and those of Members of Parliament. An honourable friend in the other place tabled an amendment seeking to achieve this. Opposition parties did not dissent and thus the proposal was included in the Bill, appeared on Report and has come to this House.

Compliance officers are intended to assist elected office holders with requests of compliance set down by the 2000 Act. However, they do not absolve office holders from responsibility for compliance themselves. I look forward to discussing compliance officers in Committee. Any holder of a relevant elective office—that obviously will be a Member of the other place, a Member of the other Parliaments and Assemblies in the UK, or a member of a local authority in London and elsewhere—will be able to appoint a compliance officer.

My noble friend Lord Clinton-Davis asked what discussions had taken place with the Electoral Commission and others concerning the Bill. We are in regular contact with the Electoral Commission at all levels and we are aware of its views on the Bill, much of which it supports, I am glad to say. It does not support everything in the Bill but we have an honest and open dialogue with it which we hope will continue to be constructive. We believe that the measures in the Bill concerning the Electoral Commission will assist it to do an even better job than it has so far done.

I thank all noble Lords for the part they have played in this Second Reading debate. I anticipate and look forward to the Committee stage.

Bill read a second time and committed to a Grand Committee.