I have to tell the Committee that if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Schedule 2 : Civil sanctions: Schedule to be inserted into the 2000 Act

Amendment 47

In the absence of my noble friend Lord Bates, I shall be moving the Conservative amendments today. I trust that we shall make good progress so that I can adjourn later to the Chamber to give our views on the Cohabitation Bill. I do not know whether the Minister will be dealing with that; I think that one of his colleagues will be.

I shall speak also to Amendments 49, 53 and 57. Again, these are probing amendments. They seek to require that the commission may negotiate the acceptance by the person, the registered party, the registered third party or the permitted participant concerned of a discretionary requirement. The amendment will allow this negotiation even if the commission is not satisfied beyond reasonable doubt of an offence or contravention and/or the person concerned does not accept that such an offence has been committed. This works together with our desire to strengthen the Electoral Commission and enhances its powers and the proportionate use of the new range of flexible sanctions.

It also usefully reflects the provision put forward in Schedule 2, paragraph 15, where the person concerned has the power to accept undertakings to take action so that the offence or contravention does not recur and the position is, as far as possible, restored to what it would have been if the offence or contravention had not taken place, or is action of a “prescribed description”. The difference is that our amendment means that the commission rather than the person concerned can take the initiative.

I understand from briefing that has been produced by the Electoral Commission that it feels that these amendments, among others to Schedule 2, would provide the commission with considerable flexibility to impose the most suitable sanction in each case. It deserves a response from the Government and I would be grateful to hear what they have to say. I beg to move.

I have to tell the Committee that if Amendment 47 is agreed I cannot call Amendment 48 because of pre-emption.

The amendments seek to amend the paragraphs of this part of the schedule that define the circumstances in which the commission may impose a discretionary requirement on a person, a registered party, a recognised third party or a permitted participant. Each amendment replaces the relevant paragraph with a new paragraph, which retains much of what is currently in the Bill.

However, there are some important differences that we are unable to accept. First, these amendments remove the word “prescribed” from these sections when referring to offences. We dealt with this in Committee yesterday. We do not believe that this approach is desirable as the full details of which offences may be punished with a civil sanction should be set out in secondary legislation, subject to affirmative resolution and thus to full scrutiny of both Houses.

Additionally, the amendments significantly depart from the current drafting of the Bill by adding a new heading (b), which states that a discretionary requirement may be imposed “with the express agreement” of the person or organisation involved. In effect, the amendments propose that a person could come forward and give their agreement to the commission to impose a discretionary requirement. We are not sure that the provision of such a step is logical in procedural terms. A civil penalty, by its nature, should accompany a breach as defined by the commission, and it is for the commission, not for the person concerned, to decide whether a breach or contravention has taken place. If a person should be allowed to volunteer themselves for a sanction in this way, the commission would presumably need to investigate the claim in order to determine the level of the penalty, but it might in fact decide that an offence had not occurred. It appears that these amendments could create potential for unnecessary administrative burdens on the commission where there was no need.

If the commission were presented with evidence of a breach, it could decide to act on that evidence. As a regulator, it should not be seeking “express agreement” from those regulated in order to perform its duties. Moreover, if the purpose is to provide an option to encourage co-operation and compliance, that is of course admirable. However, we argue that it is unnecessary as the Bill already provides for such co-operation in the form of enforcement undertakings, to which the noble Lord, Lord Henley, referred. An enforcement undertaking is where a person enters into agreement with the commission and gives an undertaking to take a particular course of action. The amendments seem in some sense to seek to alter discretionary requirements to make them more akin to enforcement undertakings. We do not think that that is either necessary or desirable.

So far as concerns the commission’s view on this, as we understand it, it agrees that removing the word “prescribed” would give flexibility, but it expects that Parliament would want to give a view, which is the Government’s position.

I am grateful for the short debate on this and for the amendment moved by the noble Lord. However, it is not an amendment that we can accept.

I am grateful for that explanation from the noble Lord. If I heard him correctly at the beginning—perhaps he would nod to confirm it—in due course regulations will come before the House dealing with how the commission should operate in this matter and these will be affirmative. The noble Lord referred to some affirmative regulations and we will be seeing those some time after the passage of the Bill. Is that correct? For the sake of the record, I state that the noble Lord nodded and made noises that sounded as though he affirmed my statement. That being the case, we will have a further chance to look at these matters in due course, and I am grateful to the noble Lord for making it clear that the regulations will be affirmative. With that in mind, I beg leave to withdraw the amendment.

I shall not be moving the two other amendments in this group—Amendments 60B and 62—as I think that we discussed them to some extent yesterday. I apologise again to the Committee for the fact that I was unable to be present when my noble friend dealt with them. However, perhaps noble Lords will bear with me if I briefly touch on Amendment 60A, which I do not think need take up too much of the Committee’s time.

As the noble Lord will see, the amendment inserts “promptly” after the word “shall”, so that the commission imposes a discretionary requirement on someone promptly. I hope that that is as simple and self-explanatory as possible. It stems from a desire to ensure that the commission demonstrates good practice if it hopes for similar good practice in return from those with whom it deals. Having said merely that, I would be grateful to hear what the Minister has to say. I beg to move.

We understand the desire that the commission should act in a timely manner. We all wish to see the commission act professionally when enforcing the regulatory regime. However, we do not believe that the amendment will have this effect, nor do we think that the wording is necessary.

It is already clear that the commission will be required, in accordance with general public law principles, to apply these sanctions in a “reasonable manner”. Were it to act in a way that is not proportionate and timely, it could form the basis for grounds of appeal against the resulting sanction. This constraint is more powerful and effective than amending the provision in the way suggested by the amendment.

The commission is well aware of the need, with these new sanctions, not only to act cautiously but also to proceed in a timely fashion. However, we are wary that any attempt to be more prescriptive over the commission’s procedures, however well intentioned, may produce unintended and unwanted consequences. For instance, could inserting this kind of language in the Bill create the possibility of the commission feeling that it must make a hasty decision on prosecution rather than a correct decision?

In drafting this schedule on civil sanctions, we have sought to follow as closely as possible the framework established for other regulators by the Regulatory Enforcement and Sanctions Act. As my right honourable friend the Minister of State has maintained throughout this process, and as I said yesterday, we do not think it appropriate to depart from this model unless it is absolutely necessary. After all, why should the regulator that enforces the law for those of us involved in politics be subject to a set of provisions different from those for regulators in other fields? I again thank the noble Lord for raising the point, but we do not feel that we can accept his amendment.

I am grateful to the Minister. I understand clearly that if one puts “promptly” in one piece of legislation, it changes one’s possible interpretation of other legislation, because the use of “promptly” in the former would imply that there was no need for promptness where the word was not used.

Nevertheless, it was a point worth briefly making, because I think that all of us think that it would be good practice for the commission to act—the Minister put it better than me—in a timely manner. However, “promptly” is perhaps is overprescriptive. I am grateful to the Minister for his explanation and shall therefore beg leave to withdraw the amendment.

I shall speak also to Amendment 71. The amendments are designed to stimulate a brief discussion on early discount payments by removing the possibility of them. I understand that the matter was raised on Report in another place and that the Minister there resisted because he wanted to maintain the greatest amount of flexibility, saying that the provision was modelled on the Regulatory Enforcement and Sanctions Act 2008. We are troubled by the potential for this Bill to encourage overzealous use of the penalties. If the commission has quite so much flexibility to alter its use of penalties, it may be tempted to hand out more than are due.

Early payments would precede the final notice of penalty, so the notices that we are discussing are intended to notify a proposal to implement a penalty rather than the final penalty itself. We fear that while a discount may encourage early payment, it could also diminish the authority of the commission and trivialise the very important message that it sends out. I beg to move.

I understand why the Electoral Commission opposes this amendment. It suggests that it may ultimately cost more to the public purse if it has to pursue through legal avenues recovery of what is owed to it, as opposed to the payment of late penalties. However, if you had sufficiently large late penalties, you would get more money in, so it depends on what your legal costs would be as against the amounts from the late penalties. I think that it is better to have a system of late penalties—and I say that as someone responsible for running a party—because it is clearer and simpler. You know where you are; if you do not pay on time, you effectively pay more. I would not like to encourage the commission to think that it had time to get into legal arguments to pursue the payments; you should know that if you do not pay on time, you pay more.

This amendment and Amendment 71 grouped with it both relate to provisions in the Bill for the commission to offer early payment discounts and late payment penalties. Amendment 61 removes reference to early payment discounts or late payment penalties for compliance with discretionary requirements. Amendment 71 would remove paragraph 18 (1)(a), which allows the Secretary of State to make a supplementary order to allow the commission to offer,

“provision for early payment discounts”,

for any of the monetary penalties contained in the Bill.

These incentives are replicated from the Regulatory Enforcement and Sanctions Act 2008, which give those on whom a sanction is imposed an incentive to accept it, and deal with it in a timely fashion. This may encourage compliance, reduce the workload that late payment would create for the commission, and is a proportionate mechanism to help encourage compliance with these penalties. While the Bill may provide for these procedural discounts and penalties, the commission is not compelled by the Bill to offer them in all instances. It is a matter for the commission’s judgment, to apply its expertise and experience to decide where and when they would be appropriate. We believe that the availability of these options provides a tool that they may decide to use to ensure this. Indeed, as the noble Lord, Lord Rennard, suggested, the commission has said that it does not support Amendment 61 because,

“such penalties are likely to encourage prompt settlement and reduce the need to use public funds to pursue payment”.

I do not believe that the availability of these provisions degrades these sanctions in any way. It is important to see the financial penalties contained in the Bill as just part of an overall package. The commission will also have access to other discretionary requirements of a non-financial nature—for instance by requiring a person to take particular actions to ensure compliance, or by entering into an enforcement undertaking with the person concerned, or, in extreme cases, by using a stop notice. Again, we are following closely the provision of the Regulatory Enforcement and Sanctions Act 2008, which includes provisions for early payment discounts and late payment penalties. We have sought to provide the commission with a proportionate and flexible system which is available for a range of other regulators. It is precisely to ensure that the commission is able to act in a proportionate way according to the facts of the circumstances of individual cases that we have followed this model and we think that there are no compelling arguments, on balance, to move away from it in this case.

Again, the noble Lord’s argument seems to be that we must follow the precedent of an earlier Act—in this case the Regulatory Enforcement and Sanctions Act—and have both the early payment discount and late payment penalties. Obviously, there are arguments for both. I noticed that the noble Lord, Lord Rennard, from the Liberal Democrat Benches, was saying that they agreed with us that late payment penalties was the route to go down and there was no need for early payment discounts as well.

I listened carefully to what the Minister said and I will read it with some care. It might also be worth having discussions with the noble Lord, Lord Rennard, before we look at this again on Report. At this stage, the best thing to do is to withdraw the amendment but say that we may want to return to it at a later stage.

We now come to the end of this batch of opposition amendments. In moving Amendment 72, I shall also speak to Amendment 73. I hope that I can be fairly brief because they are more probing than anything else.

Amendment 72 would insert “reasonable” so that the report becomes the reasonable opinion of the Electoral Commission. On Amendment 73, we felt that rather than,

“might adversely affect any current investigation”,

we should make the provision somewhat stronger and say that it,

“would adversely affect any current investigation”.

It is obviously very important that the commission should have some form of flexibility and, in terms of reporting, that is very useful. However, this could go too far because as it stands there is no requirement that the commission's opinion as to the lawfulness or any adverse effects of publishing certain information be reasonable. We feel that an opinion to this end should be reasonable. Amendment 73 would strengthen the wording in the Bill to make it absolutely clear that the commission should not include anything that would adversely affect investigations. I would be grateful for the noble Lord's comments on those amendments. I beg to move.

The amendments would slightly alter the language used to describe the circumstances in which the commission may leave information out of a report. I am sorry to disappoint the noble Lord in telling him that I will resist the amendments on the grounds that they are unnecessary and would hamper in one case the commission’s operational effectiveness.

Amendment 72 would add the word “reasonable” to the provision relating to the application of the commission’s opinions. At the risk of repeating myself, the commission must already act in a reasonable way. Failure to do so risks judicial review. It is implicit in the drafting that any opinion that can be taken into account must be one that is reasonably held.

It would not be open to the commission, as a body subject to the usual principles of public law, to form a manifestly unreasonable opinion and then act on that, so I do not think that we need to add this here. It might set a slightly unhelpful precedent and imply that other regulators in a similar position would be able to hold and act on “unreasonable” opinions.

Amendment 73 causes us greater concern, because this could have an adverse effect on the commission’s operational effectiveness in some cases. The Bill states that the commission may leave out details from its report on sanctions if including them,

“might adversely affect any current investigation or proceedings”.

Perhaps the word “might” is not specific enough for the noble Lord, but we use it with good reason.

We use it because it allows the commission to apply its general judgment and knowledge of specific cases to make decisions about what “might” subsequently impact on an investigation. At the time that a judgment is required to be made about what to include in a report it may be very difficult or impossible to say whether something definitely would have an adverse effect on the potential outcome of an investigation or proceedings, particularly if the investigation or proceedings are at an early stage. In its latest briefing on the Bill, the Electoral Commission, in opposing Amendment 73, notes that it may not always be possible to be certain whether or not such information could affect a current case.

Positively requiring the commission to identify whether information “would” have an adverse effect could be highly damaging. It is only right that the commission be given a reasonable degree of latitude in making potentially fine value judgments in these sorts of circumstance. Our proposal to retain “might” will achieve the correct result without fundamentally reducing the level of transparency that the reporting requirement is, of course, intended to provide.

The noble Lord took a stronger line on the second amendment, rather than on the first. I was perfectly happy to drop the first amendment, given that adding “reasonable” before “opinion” is possibly unnecessary; one’s opinion may be assumed to be reasonable. The use of that word is also inelegant. However, I feel slightly more strongly about adding “would” instead of “might”. Despite what the commission said, that would refocus it when deciding whether publication of information would damage its investigation. In accommodating the mere subjective opinion requirement, which we have identified, this section would allow for a very cautious report indeed, which might not be fully informative and might not truly reflect the reality of the commission’s work. However, I shall look very carefully at what the noble Lord said. I am pretty sure that I will not come back on Amendment 72, but we may want to have another look at Amendment 73 in due course. We will have to see. For the moment, I beg leave to withdraw the amendment.

I should remind the Grand Committee, as I mentioned at Second Reading, that although I do not have any pecuniary interest, I was a member of the informal advisory group of parliamentarians convened by the previous chair of the Electoral Commission. I am not quite clear as to whether I still exist in that role, because that group has not met since the appointment of the new chair.

We turn to a very important issue that has preoccupied a great many people: whether or not there should be at the highest level in the Electoral Commission people with direct political experience. Clause 5 in an important way modifies the previous Political Parties, Elections and Referendums Act 2000. I should say at the outset that I was agnostic to this proposal, partly because of my experience in the informal group of parliamentarians. I have come around to it and, therefore, I have the merit of conversion, having looked at the arguments very carefully, which are more balanced than perhaps some are prepared to admit.

I have a little problem with the amendment. It is not that I disagree with it, because in a sense I do—I agree with the fundamental feeling behind it—but I am not certain whether putting only this provision in the Bill is right. Would it not be better to pick up the points raised by the noble Lord, Lord Tyler, on the wider issues around the role of the commissioners? Perhaps some guidance can be given to the Speaker’s Committee, which is ultimately responsible, on what we expect of those commissioners, rather than having selective points included in the Bill. I agree that we must take notice of diversity and that we must have people with experience.

I want to pick up a point made by the noble Lord, Lord Tyler, that he repeated two or three times. When he talked about people with experience, he talked about politicians. There are many other people who are not politicians and who have an enormous amount of experience, and who therefore may be better people to do this job. We must ensure that we do not see the situation only in those terms.

I support the Government’s proposal on the four places. As the noble Lord, Lord Rennard, and others know, we spent a lot of time on this issue in the 2000 Bill and failed to persuade the Government, even though everyone around the House thought that it was a good idea to have some political involvement. The suggestion then was that we should have a second committee, meeting as and when, but not having an enormous amount of influence on what was happening.

Perhaps I may give an example and also declare an interest that I failed to declare yesterday. I am chair of the HS Chapman Society, a body that looks at election organisation and of which the Electoral Commission is a part. The society frequently received reports from the commission about its work, and I felt very sorry for a young man who appeared when the commission produced a series of educational documents for review. He was telling us how wonderful it all was, that all the documents were going out and that one had a week to reply. There was also all the nonsense that was going on at that time. I asked him, “And who actually decides the response to those documents? Who actually goes through the responses and says what is right or wrong?”. He said, “Oh, well, as officers, we sit and do this”. I asked, “And do you have any involvement in the political parties?”. “Oh, no, never”, he said. That could not have been a better example for having some political involvement. I have to say that I felt sorry for him because I felt that I had been a bit cruel to him.

Nevertheless, I believe that the Government are absolutely right to make these provisions: it is also absolutely right that there has to be experience of the democratic process. I make the point about politicians because a wider spectrum of experience is needed. The process would help the political parties to feel more comfortable with the Electoral Commission.

I have one little query on how the appointments are made. The review of the Electoral Commission by the CSPL makes the point that although individuals may be encouraged to apply by political parties, each post should be publicly advertised and candidates must satisfy all other criteria that apply to commissioner posts. It says that they must also be subject to a selection process based upon merit following the Commission for Public Appointments’ code of practice. I hope that that will be the process by which appointments are made. It is interpreted that this will somehow be a direct appointment from the leader of the party. I really have some reservation about that. It is not that I do not think for one moment that people cannot be independent—I am sure that many people around this Chamber have been appointments of their own political parties, but have ultimately stood in an independent capacity in those appointments. I do not feel that they would end up being the voice of the leader; I feel that democratically we ought to look seriously at how those appointments are made.

I repeat that I support the Government’s proposals, but I feel that what is in the Bill is not quite right.

I am delighted to follow the noble Baroness, Lady Gould. We are extremely fortunate that she is serving in this Grand Committee. On a wider front, we are extremely fortunate that she is the chairman of the HS Chapman Society, an organisation with which I am familiar not least also in Australia. It is an organisation of considerable value to the general body politic.

I have to declare an unusual interest. My wife is the administrator of the fellowship of retired Conservative agents, whose membership is thrice the number of agents the Conservative Party could afford to field at the last general election. But it means that from time to time I am brought up sharp on election law.

I want to make two comments. One relates to paragraph (a) and the other to paragraph (b) of the amendment. First, I was the first headhunter in the United Kingdom nearly 50 years ago. I planted an acorn and there is now a very substantial forest throughout the recruiting world. One of the areas in which you had to exercise considerable discipline was in ensuring that the client was quite clear what they wanted before we set out to look for the person. Periodically, we had to disagree with their specifications and had to persuade them to change. But it was absolutely essential to do that at the beginning of the process, which is why I find paragraph (a) a wholly worthwhile contribution to the debate. I have no reservations about it being in the Bill.

However, I do have misgivings about paragraph (b). It seems to me that under American anti-trust law, you would have to be managing a cartel to know how your nominee would fit into the creative diversity of appointments by the other members of the team. If the noble Lord, Lord Tyler, is contemplating that such meetings will occur to facilitate discussions on how parties could help the diversity by the choice of their person, that should be referred to in the Bill. It is difficult to imagine how you would do it otherwise. Frankly, without some degree of mutual conference, choosing your candidate against the terms of paragraph (b) would be like sticking the tail on the donkey at a village fete.

I want to ask a very simple question. With the permission of the Committee, I shall do so now so as to avoid doing so in the clause-stand-part debate. What would the role of the party-appointed commissioners be when decisions on penalties are being considered? Even though a commissioner had made every effort to be utterly independent in judgment, if they have such a role, surely the Committee should be considering it at this stage.

That is an important point. There may have to be occasions when the commission does not participate. That is why I return to the point that we need proper guidance. We need something properly written down about the role of those commissioners and the terms of their appointments to make sure that all these points, which could be fundamental, are actually covered.

My noble friend, who has great experience in these matters, referred to guidance. Do we not need a little more than that? Guidance can be ignored.

I concede that.

We broadly support Clause 5 as it is, and in doing so, support subsection (3), which we are largely discussing today, dealing with the three nominated commissioners put forward by the leaders of the three largest nominating parties—like the three parties represented in this Room. This has been a useful debate and I am looking forward to the Minister's response, particularly to the question put by the noble Lord, Lord Tyler, on the dismissal of subsection (3) commissioners. I presumed that it would be the same process as the other commissioners, but no doubt the Minister will let us know that they have the appropriate independence once they have been appointed. This debate has enabled us to discuss the sort of people who the leaders of those parties should put forward. However, in the end, as subsection (3) makes clear, the party leaders will decide who they will appoint.

Like my noble friend Lord Brooke, I have problems with the second part of the amendment which seeks diversity. It might be an admirable thing to do, but as my noble friend pointed out, it is difficult to go for diversity when you have the sole right of appointment of one commissioner, someone else has sole right of appointment of another and the third is appointed by a third person—unless the three leaders get together to discuss their appointments to see that they are being diverse. I would have thought that there would be sufficient diversity in the fact that the three appointees will be of the three different political parties, which would make them sufficiently diverse for the noble Lord. That is what we expect from appointees from the leaders of the three parties. We broadly support Clause 5 as drafted, so I do not think that I can offer any support at this stage for the amendment.

I offer a few words before the Minister responds. Like my noble friend Lady Gould, I agree with so much of the principle that lay behind what was said by the noble Lord, Lord Tyler. In particular, I agreed with what he said about party representatives and the others. The Bill makes it clear that the party representatives are intended to be a minority of the total commission. Clearly, they must all work together. They would not work together very well if the party nominees regarded themselves as representatives of parties, let alone representatives of the party leader. I agree with the points made by the noble Lord, Lord Tyler, on that.

However, like my noble friend Lady Gould, I am doubtful about the amendments. I realise that the noble Lord had to table amendments to enable discussion about the Bill, but with the best will in the world, and no doubt he has looked at the drafting carefully, the wording of his amendments to Clause 5 is not apt at all. Perhaps that is being a little harsh. Paragraph (a) would

“ensure that the nominated person has relevant experience in the conduct of elections”,

and so forth. But that is much too narrow. It would no doubt be delightful and excellent to have someone of the huge experience of the noble Lord, Lord Rennard, and if that could be equated in the other parties, that would be fine, but that is only one version of what is meant by,

“relevant experience in the conduct of elections and the organisation of political parties”.

That is really much too narrow.

Others have commented on diversity. I very much agreed with the cartel points that seemed to resonate through my mind when the noble Lord, Lord Brooke of Sutton Mandeville, spoke. But diverse does not necessarily mean what has been intended. I am familiar with the fact that in recent changes made by the Government in judicial appointments, emphasis has been made on diversity to ensure that more people enter the judiciary who are not white and that there are more women than we have had in the past, particularly at the higher levels. That, I suppose, is what the noble Lord, Lord Tyler, means—but on the face of it, it could mean “diverse representation” from those experienced in the conduct of elections for the European Parliament in devolved parliaments and local government. It could mean diversity across a whole range of fields; diverse does not necessarily have the meaning that the noble Lord seeks to give it, so I think that paragraph (b) is too vague.

For a whole number of reasons, but principally for the one enunciated by my noble friend Lady Gould of Potternewton, it would not be appropriate to try to do this in the Bill, even though a much better outcome could be reached than the original wording chosen by noble Lords opposite.

I raise one point that has not been touched on. I have considerable sympathy with the substance of paragraph (a), although it may be important to stress the desirability that someone has that background, rather than prescribe it. I also have sympathy with the point made in paragraph (b), although I recognise the problems that have been identified when you are appointing only one person. The problem I would draw attention to is the relationship between the two; it might be a bit depressing to do so, but paragraph (b) supposes that paragraph (a) encompasses a fairly diverse body of people already. You would have to do a study of those who have actually got the experience of the electoral system in this country—electoral administrators. It may be that we find that, with regard to the diversity to which the noble Lord, Lord Tyler, refers, we do not have a very diverse group from which to draw, which might limit it. There would be dangers in putting it in the Bill, even though it is in very general terms of having regard to. In practical terms, there may be a problem with the relationship between the two paragraphs, and therefore a danger in putting those two proposals together in the Bill.

I thank noble Lords for this interesting debate, particularly the story of the conversion of the noble Lord, Lord Tyler, from being an agnostic to a supporter of the basic principle. I thank the noble Lord, Lord Henley, for reminding in his careful way us that behind this Bill is consensus. On this clause, I believe that that consensus is strong. I note that those who participate in the debate all support the basic principle of nominated commissioners.

Clause 5 makes provision which enables the appointment to the commission of four commissioners with recent political experience. These commissioners are referred to as nominated commissioners. Clause 5 requires that three of the four nominated commissioners must have been put forward for appointment by the leaders of the three largest political parties in Parliament, with the remaining nominated commissioner put forward by the leader of one smaller party. This amendment seeks to insert criteria which the registered party leaders must satisfy themselves would be met in putting forward their nominee for the post of nominated commissioner. These criteria are that:

“registered party leaders must ensure … that the nominated person has relevant experience in the conduct of elections and the organisation of political parties; and … have regard to the desirability for the overall composition of the Commission to benefit from diverse representation”.

My noble friend said that commissioners are expected to act in “a non-partisan way”. He did not manage to deal with my question about the extent to which commissioners might be involved in decisions on penalties. If he does not have an answer now, can he let the Committee know?

I said, although I may have mumbled it, that the commission staff make decisions on penalties, seeking the approval of commissioners as appropriate. That is a very important point and it would be appropriate that I consult further and we will either bring it into the debate on Report or I will write to Members of the Committee.

This has been a very useful debate and, at the very least, it will help to inform all those who may take decisions about the new category of commissioners. I should like briefly to respond to some of the points that have been made. First and foremost, like the noble Lord, Lord Henley, I should make it absolutely clear that I and my noble friends very much support the appointment of the new commissioners. That is not our concern. The concerns that we are seeking to express in this amendment, which have been reflected by all sides, are precisely how those commissioners may operate. I shall come back particularly to the point made by the noble Lord, Lord Campbell-Savours.

We support the clause, but we want to make this change which is significant to the role of the commission. We want to make sure that the change is implemented carefully. I turn to one or two of the points that have been made. I am grateful to the noble Baroness, Lady Gould, who has long experience, and to have support from her is a consolation to an amateur like me. Similarly, I received support from a different perspective from the noble Lord, Lord Norton. I do not regard those who are working for the political system in any capacity, be it for a party or outwith, as being somehow a lesser breed. I do not regard the elected or unelected politicians—the people who get kicked out—as being somehow more experienced; far from it. If I in any way gave the impression that I thought that the people we might seek to have nominated should be party politicians in the traditional sense, I did not intend to. That is not the case at all. Indeed, our new paragraph (a) is intended to reflect the need for people working, perhaps at a grass-roots level, who have never sought election and are not politicians.

I take up the point that the noble Baroness made about open competition. From what the Minister has said, we must be clear that these nominees will not be subjected to the normal process of open competition, because of course the party leaders will in the end be the nominators. At the very least, they will be able to blackball any potential person who could be nominated to this role if they do not think that that is the sort of person who will reflect the objectives, purposes and partisan interests of that party and that party leader. I was glad to have the support of the noble Lord, Lord Borrie, on that.

We must be absolutely open about this. I am sure that the Minister in his response was clear: this is not comparable to the open selection interview criteria that are in place for the other non-party commissioners. The nominated commissioners are a different breed and we have to be clear about that. That is why our amendment and this discussion are relevant and appropriate.

I was also grateful for the support of the noble Lord, Lord Brooke, for at least half of our amendment. However, I take some exception to his reference to “cartel”, which has pejorative overtones. I believe that it is quite good, occasionally, for parties and party leaders to work together. I know that it is traditional at the other end of the building that we should multiply the disagreements; but even there, yesterday, there was agreement between two parties and the Government were defeated on a Liberal Democrat Motion. We should not fool ourselves that it is a bad thing for politicians occasionally to agree. That happens at this end of the building, too. I do not think that it would be a bad thing for party leaders occasionally to sit down and think about the corporate responsibilities of the Electoral Commission and to try to make sure that there is a good balance of representation, not just in terms of party, but in terms of experience. Therefore, I resist the idea that if our new paragraph (b), seeking to get a broader diversity, were to be passed, that somehow would lead to a cartel. All kinds of areas of diversity have to be addressed, as has been made clear in the debate, but I do not think this is pinning a tail on a donkey, to again quote the noble Lord, Lord Brooke. Many other things happen in this building which look much more like that.

The noble Lord, Lord Campbell-Savours, raised an important issue to which I should have referred at the outset. The Electoral Commission is not like the Committee on Standards in Public Life, where there are, of course, party-political nominees. There will be occasions when the body acts not only as an investigator, or at least as a supervising investigator, but as a decision-making body on penalties. In such cases, it will not be only the party representative of party A who will be interested in whether or not local party A is penalised in a particular way; but representatives of party B, party C or even party D will have a direct interest in that decision and that penalty.

If there is a major investigation of a whole party, what do we expect the representatives of parties B, C and D to do? The representative of party A may well say, “I am going to set this out because my party is in the dock and is being accused of a major dereliction of duty, an offence under electoral law”, but what about the other three parties? The noble Lord, Lord Campbell-Savours, has raised an important issue about the commission not being like other organisations in which there are party representatives.

My noble friend used the key word “approval”. It may well be that a recommendation comes through, and it is that process of approval about which I am concerned.

On the question of withdrawal, in the expenses discussion that will now take place in the Committee on Standards in Public Life, the political representatives are withdrawing from those proceedings. That might be an indication of the way we should proceed in this case as well.

I am grateful to the noble Lord. We do not have that guidance from the Minister. He may feel that it is necessary to give it guidance between now and Report on whether the model is that all four have to withdraw in such circumstances, or the circumstances in which some other arrangement can be made. I share the anxiety of the noble Lord, Lord Campbell-Savours.

The Minister’s response was very helpful and I am grateful. He rightly emphasised, and perhaps I should have done so earlier, the role of the Speaker’s Committee. I hope this debate will inform and assist that committee in considering these issues in future. However, there is room for greater clarity between now and Report. The terms of office issue, which falls under Schedule 1 to the PPERA, need to be looked at again. For example, if an incoming party leader decides that his or her representative inherited from a previous leader is going to be an extremely awkward customer, who has gone native in the Electoral Commission and is now taking a totally dispassionate, non-partisan view when the reverse is what the party leader requires, the easiest way to deal with that is to say to Joe Bloggs or Joan Bloggs, “Look, I have got a good idea. Why don’t you go into the House of Lords?”. That would remove him or her immediately from the commission and then the party leader can put in the favoured trustee to behave in a more partisan fashion. There is an issue here and we should think about it quite clearly. If the electoral commission is going to operate on exactly the same basis as other commissions, it could be a potential minefield and we need to address the issue.

I do not wish to detain the Grand Committee longer. Important points have been made throughout our debates today which have fully justified our anxiety to take a good look at this issue. It is an important change in both practice and perception for the commission and I hope that Ministers will at least give further thought to the best way to handle it before Report. We, too, will do that—we will look very carefully at what has been said on all sides of the Committee—but, in the mean time, I beg leave to withdraw the amendment.

I want to intervene briefly. The Minister could regard this as a probing question rather than a probing amendment. I notice that the number of commissioners can be nine or 10. Since that increases the number of appointed commissioners from the present situation, it would be helpful to know the Government’s reason for giving themselves that option for the final figure.

There are several things that we will need to put in a letter, particularly the delicate points that have been raised. We will answer the noble Lord in the same letter.

In moving this amendment, I shall also speak to Amendments 77 and 78. I have a short, non-controversial list of amendments to speak to.

The Political Parties, Elections and Referendums Act 2000 imposes a 10-year restriction on previous political activity for all Electoral Commission staff. Clause 7 of the Political Parties and Elections Bill seeks to reduce the restriction period from 10 years to five years for the commission's chief executive, and to one year for all other staff.

These government amendments are intended to address the concerns raised by the commission and my noble friend Lady Gould that the five-year restriction should be capable of being extended to other senior posts in the commission, or those dealing with politically sensitive responsibilities.

Having heard representations on the subject, we fully acknowledge that there may be a small number of posts in the commission, other than the chief executive, which merit a requirement for a longer restriction on recent political activity than one year. It is right that we strike an appropriate balance between ensuring that the commission is able to employ those who have the necessary skills to enable it to be more effective, without creating any perception of politicising the commission.

The amendment provides flexibility so that the chief executive of the commission can determine the appropriate restricted period for its staff. Some senior posts may merit a longer restriction period, while others will not. Likewise, certain posts, which may not necessarily be classed as senior posts, may indeed involve politically sensitive responsibilities. The chief executive of the commission will be best placed to decide which posts merit a longer restricted period, and what that period should be. That said, we are keen to ensure that the power provided for here does not provide the chief executive with unfettered discretion when it comes to choosing what post should be designated or how long a restriction for a particular post should be.

In light of this, government Amendments 75 and 77 provide the commission's chief executive with the power to designate certain other commission posts as being subject to a restriction period of up to five years. The chief executive may designate a post if he reasonably believes that it is necessary to do so in order to maintain public confidence in the effectiveness of the commission in carrying out its functions. In deciding the length of the restriction period, the chief executive will be required to take into account the level of seniority of the post, and how likely it is that any holder of the post will be required by the post to deal with politically sensitive matters.

These criteria show that we are mindful that the chief executive should use this power responsibly. To that end, we propose a further check on the discretion provided for here, so this amendment also requires the chief executive to consult the Speaker's Committee on the posts that he intends to designate. A duty to consult will mean that any view put forward by the committee in relation to a proposed designation will have to be taken into account, and taken seriously, by the chief executive. We believe that the Speaker’s Committee is an appropriate body to give an independent and objective view on proposed designations, in line with the oversight rule relating to the commission. We considered whether it was appropriate to give the Speaker’s Committee the right of veto over a particular designation. Ultimately, we took the view that the chief executive is best placed to come to a final decision on what is best for the successful internal working of the commission.

The chief executive will be required to give notice to the Speaker's Committee of his intention to designate a particular post, and the relevant period of restriction for that post. The notice has effect from the day it is received by the Speaker's Committee and expires after three years, unless the chief executive issues a cancellation notice or a notice that alters the details contained in the original in the interim. Any notice of cancellation or alteration along these lines is also subject to the duty to consult the Speaker’s Committee before the chief executive can issue the notice in question.

This mechanism strikes a sensible and proportionate balance; empowering the chief executive, as the individual responsible for staffing decisions, to make decisions, while allowing him to take account of the views of the Speaker’s Committee as he sees fit. Amendment 75 states that, in cases where the chief executive has designated a post as subject to a longer restriction period, this will supersede the one-year restriction.

I turn to Amendment 78. Noble Lords will be aware that the Political Parties, Elections and Referendums Act 2000 imposes a 10-year restriction on previous political activity for all Electoral Commission staff. Clause 7 reduces the restriction period from 10 years to five for the chief executive, and to one year for all other staff—I hope as amended by my previous amendment.

The Boundary Committee for England is part of the Electoral Commission. However, the Local Democracy, Economic Development and Construction Bill provides for a separate and independent boundary committee in line with the recommendations of the Committee on Standards in Public Life. The Bill retains a 10-year restriction from previous political activity for boundary committee members and staff once the independent body is set up. This mirrors the existing 10-year restriction for all commission staff.

Government Amendment 78 seeks to exclude all Electoral Commission staff dealing with electoral boundary work from the reduced restrictions in Clause 7, because it is envisaged that most members of staff will transfer to the independent boundary committee, which we expect will be set up in April 2010. The commission estimates that 20 members of staff will transfer to the independent boundary committee. Commission staff perform certain functions relating to boundary work that have been transferred by secondary legislation from the Local Government Commission for England. These functions include the implementation of recommendations for a change in the law made by the boundary committee.

Finally, a small number of staff who currently assist with this work, albeit not on a full-time basis, will not transfer over as part of this process. The changes made by this amendment relate also to these categories of commission staff during the intervening period before the boundary committee is set up.

The reduction in the restricted period, as proposed in Clause 7, would be temporary. Removing staff who work on boundary matters from the effect of Clause 7 of the PPE Bill will ensure that the level of political restriction on the appointment of staff remains consistent in the intervening period between the commencement of Clause 7 and the creation of the new boundary committee. The commission requested this amendment, and we agree that taking these steps will help to ensure a smooth transition of staff dealing with electoral boundary work before the boundary committee is set up. I beg to move.

I have Amendment 76 in this grouping. I begin by apologising to the Committee for not having been here for the beginning of today’s proceedings. I am therefore patricianly conscious that I should not try to plough a furrow that has already been ploughed in previous amendments and particularly under Amendment 74 from the noble Lord, Lord Tyler. Some of my foxes have been shot by the Minister in his opening remarks, but I have one or two small foxes still running across the fields, which I should like to pursue if I may.

My amendment is a probing amendment designed to raise the minimum period from one to three years in which staff of the commission may have been involved previously in political activity. The point was made by the Government and by many noble Lords from all sides of the House yesterday and today about the necessity of maintaining public confidence in the performance of the commission. It will be doubly damaging if, at a time of public cynicism, we set out to reform and improve the working of the commission and for reasons unforeseen at this stage fail to do so because it will be a quantitative uplift in public cynicism as a result. We discussed under an earlier amendment the mixture of politicians and people who are politically active as commissioners in an administrative body, and I raised concerns about that during my debate at Second Reading. Obviously, we have seen calls for restraint and a non-partisan view of those who are so selected from political parties.

I want to check one thing in relation to the Government’s Amendment 77—and I think I heard the Minister clearly—in subsection (8) of the new section on the requirement to consult. The Minister seemed to make it clear in his remarks that the ultimate power in this lies with the chairman of the commission, who can discuss the matter with the Speaker’s Committee but in the end, if he decides that the post is politically sensitive, it is his call and there is no gainsaying it.

Did the noble Lord mean to say the chairman of the commission or the chief executive?

I think I mean the chairman, but maybe the chief executive has the final call. Do either of them have the final call? Perhaps the Minister could tell me that.

The final decision lies with the chief executive under the clause.

I am grateful for that—he has the final call. My issue relates to subsection (3) of the new section. It is not about seniority of posts but the political sensitivity of posts. A great range of posts within the commission will be politically sensitive at one point or another and it is hard to know when people will undertake work of a politically sensitive nature. I am thinking not of senior but of younger people, who can be rash—shall we say, rash or precipitate—in their judgment of how they might take advantage of the information that they gain in performance of their duties within the commission. It might be someone who foolishly believed that he or she could advance his or her political career by gathering information of one sort or another. It may not even be a political career that he or she wants to advance; it might be a career in the media, for which the information would be very helpful indeed. Is there not some value in having a slightly longer minimum period of quarantine? I know not whether three years—36 months—is the right period, but a 12-month quarantine period is quite short. I have no wish to inhibit people developing their careers, within and without the commission, but there is an argument for having a slightly longer period of quarantine for people who want to work in the commission and at the same time have political affiliations.

First, I should say how much I appreciate the fact that the Government have picked up the point that I made in Second Reading about the level of this flexibility for the chief executive. It is absolutely right that that should happen; I also think that it is right that they have to have that consultation with the Speaker’s Committee, which, at the end of the day, will no doubt be the body that takes the decision. I have no doubt that the chief executive will listen with care to whatever the Speaker’s Committee says. I wanted to make that point.

Having listened to the noble Lord, Lord Hodgson, I want to make another point. I accept that if someone is in a politically sensitive post, obviously it might be important that there is a longer term. However, the clause states that in deciding what that period should be, the chief executive shall take account not only of the level of seniority of the post, but

“how likely it is that any holder of the post will be required to deal with politically sensitive matters”.

In fact, the clause covers the points that the noble Lord, Lord Hodgson, made. Perhaps I may say again how grateful I am and, I am sure, how grateful the chief executive of the commission is that he will now have the flexibility to—

My point was not that someone would be in a politically sensitive role all the time, but that people dip in and out of politically sensitive activities. Junior members of staff will have a variety of tasks, perhaps. What I am concerned about is that if someone obtains access to information on a serendipitous basis, that person would not be the subject of the quarantine order, because the chief executive would see it in that way. I was concerned that it may be that some higher basic threshold would be a good idea.

I take that point and I understand that it is always possible for someone to use information that they should not use, or whatever, and they do not necessarily have to be someone to whom the one-year period applies. It could be that someone has been there three years and still has that influence. I go back to the point that I do not think there is an absolute relevance in that and hope that the chief executive would have the discretion and sense to ensure that anyone who has to deal with political issues has the experience to carry out that role.

I completely agree with the noble Lord, Lord Hodgson of Astley Abbots.

Perhaps I may make one or two brief comments. We are sympathetic to these government amendments, but I ask the Minister to deal with one or two points. First, can he repeat what seems obvious to me: that this affects only the staff of the commission and in no way could these amendments at some future stage be used to affect the commissioners in relation to new subsection (3)? It would obviously be ridiculous if they began to be appointed by their party leaders. They could not be treated as if they were staff and found themselves excluded because of their political backgrounds. The noble Lord will obviously have no problem in repeating that.

Secondly, I agree that it is useful that the chief executive has the power to vary the period as he wishes and that he should consult the Speaker’s Committee. In the end, the final decision will be that of the chief executive. I should be grateful if the noble Lord repeated that. I take it, from my reading of the Bill, that the Speaker’s Committee has no veto on the chief executive. No doubt, he or she would take appropriate advice if the Speaker’s Committee had very strong views about what he was proposing.

Thirdly, it would be quite useful if the Minister gave some example of the times when he thought that the chief executive might wish to make use of this power to vary the period. I have some idea of my own, but I should be grateful if the Government gave their views as to when they thought it likely that the chief executive might exercise these powers.

I wish to make a brief contribution. We, too, see the logic of clarifying these issues and we very much endorse what the noble Baroness, Lady Gould, said about the role of the chief executive. It is now easier to follow and clear. It is also important that the chief executive knows what the role is and to whom he or she is accountable on this issue. There was quite a lot of discussion about this at an earlier stage, and I think that this is now probably a sensible consensus and compromise.

However, it is important that those responsible in the commission for any form of enforcement are seen as a particular category. It may be that a longer period will be necessary for them, not just from a practical point of view but, as we have said in debate on other amendments today, from a perception point of view as well.

I listened very carefully to the noble Lord, Lord Hodgson of Astley Abbotts. I understand his point about quarantine but I fear that, as the noble Baroness said, the length of time is less important than the mindset. You could stipulate that people should not have been involved in active politics for 15 years but the important point is their mindset when they come to the job. Similarly, I am sad to say that if a young person has ambitions to become an investigative journalist, it will not matter how many years of restriction are imposed because that may not have any bearing. That person may not have had any political experience but may be extremely ambitious to join the team of the Sunday Times, to quote just one example. Whatever the case, I do not think that we should be deluded into thinking that time is the critical point. However, the noble Lord made a very important point about loyalty and commitment in the commission. If we do nothing else in this Committee and at later stages, we have to reinforce that point, if only because, with the appointment of the nominated party commissioners, we may look as though we are diluting the issue.

I keep thinking of the Damian Green affair, where a civil servant had come straight from a political party, gone into a department and then acted improperly. I worry that the restriction period is too short and I think that the Government should consider an additional period in relation to employees.

Again, I understand the noble Lord’s point, but whether that individual had been immune from direct party-political influence and activity for one year, three years or 10 years is immaterial. I shall try not to make any generalised comments but it would seem that anyone who takes on a responsible position within any administration, as in that case, or in an important regulatory body such as this and who goes in with a partisan view or with partisan ambitions—a point made very well by the noble Lord, Lord Hodgson—is inappropriate for the task. It is a considerably difficult question, and it concerns recruitment and training as well as a check on previous experience. I give way.

I am extremely grateful. The noble Lord raised the question of enforcement. I understand the point about senior enforcement officers but the enforcement case will be heard at quite a junior level. The information and documents will be put together and the case will be assembled not at a senior level but by a series of junior members of the commission. As I understand the drift of what the Minister is saying, some senior people will be picked out and will probably be given a longer quarantine period. I may be wrong but I do not read in the Minister’s comments or body language that we are talking about adding to the quarantine period for those who deal with highly sensitive matters at quite a junior level.

That is a formidable point and it reflects the one that I made about enforcement. The commission has many other responsibilities but, when it comes to the specific task of enforcement, I think that the chief executive will be well advised to think very carefully about the so-called period of quarantine. However, the marker that I wanted to put down is that we need to be quite sure that we give guidance to those who set out the criteria. I think that we will all have to give that matter more thought before Report, and I hope that the Minister will do so too. However, whether the guidance should be in the form of the time limitations in the Bill, I have more doubt. The noble Lord, Lord Hodgson, made the valid point that we do not want to see at any level of the commission people given important responsibilities that will have a direct relationship on how a party, or an individual within a party, is or is not the subject of any enforcement. It is an extremely important point that we should all think about between now and Report. It may be that Ministers will find a way of approaching this issue other than through the Bill.

I have little to add to what I have said but it is important to thank the noble Baroness, Lady Gould, once again, for her input. She answered the point of the noble Lord, Lord Hodgson, very well and has completely stolen what I was going to say. But I shall say it again anyway. The issue of political sensitivity is covered by the proposed new sub-paragraph (3)(b) in Amendment 77. I take the point made by the noble Lord, Lord Tyler, that the issue is about the kind of people who will be recruited. When someone who has been politically active becomes a public servant, that individual has to have a change of mind because he is now a public servant. The restrictions, the varying times and so on are meant to help in that, but it is also about the way people think.

As to the direct route request, yes this applies only to the staff of the commission; yes it is correct that the final decision will be made by the chief executive; and no, I am afraid I do not have any examples at hand. The enforcement point is interesting and we will certainly think on it as a result of today’s debate.

Perhaps I may put a scenario to my noble friend. This is a real world question. Imagine a young socialist in a political party who does his 12 months and then joins the Electoral Commission. He is then involved in an inquiry into malpractice in another political party—maybe the Liberal Democrats or the Conservative Party—and has to make a recommendation about penalties or is involved in the making of that recommendation. Surely that is utterly wrong and must be avoided at all costs. So we either have to extend the limits, as proposed in the amendment of the noble Lord, Lord Hodgson, or we have to introduce other criteria on the way in which the commission deals with these matters internally. We have to do that in the Bill, otherwise we will have problems in future.

Any member of the commission staff doing any task must act impartially. The power in this clause is to give the chief executive a reasonable and proportionate way of ensuring the impartiality that we all seek. The chief executive in his consultations will sensitively pick the appropriate post and create a structure that will provide public confidence. Over and above that, the essence on which our public life depends is that public officials act impartially in their role of working to their job descriptions and to the standards expected of them.

Perhaps I may press the Minister a little further. There are concerns around this issue and the noble Lord, Lord Campbell-Savours, has given a number of interesting scenarios. How many people does the Minister think will be inhibited from joining the commission because of a 12-month ban who would otherwise join at 24 months? If we double the period, how many people would that rule out? The balance of risk and reward lies with a longer period. The number of people—including those who would make really good commission employees—who would be inhibited because of a 24-month ban as opposed to a 12-month ban would be infinitesimal. In response to the noble Lord’s point about wanting to go to the commission within 12 months of leaving a political party, I wonder why someone is going—whatever the party.

I have a problem with the last comment. I know many people who are interested in that aspect of electoral work and would want to join the commission. Therefore I do not think that the noble Lord’s point is right. I also have a problem with timing. However, I accept the point made by my noble friend that we should consider laying down some criteria. You can be out of a political party for one year, five years or 10 years and still want to be involved; it does not mean that you are no longer involved. You are not active, but you may still have an instinct that draws you to a political party. I accept, after listening to the discussion, that we must think about how we address the points that have been raised.

I have nothing to add at this point.

The Electoral Commission is required by Section 6 of the 2000 Act to keep under review and from time to time submit reports to the Secretary of State on matters relating to elections, referendums, the redistribution of seats at parliamentary elections, the registration of political parties, the regulation of income and expenditure, political advertising in broadcast and other electronic media and the law relating to these matters. I mention in passing, following yesterday’s debate, that the commission is not required to report on institutions of government or institutions of the European Union. The commission may also be required by the Secretary of State, under subsection (2), to review and submit reports on matters specified by the Secretary of State. The reports produced under the terms of this section are published in such a manner as the commission determines.

The areas covered are clearly important and relate to the commission’s areas of expertise. However, Section 6 is silent about what happens to the reports once they have been published. There is no requirement for the Secretary of State to have regard to them, or even to respond to them. My amendment would ensure that, when the commission makes a report to the Secretary of State under the provisions of Section 6, the Secretary of State responds in writing within six months of the day of publication of the report.

The requirement to reply within six months is not onerous. Ministers seek to reply to Select Committee reports within two months of publication. In this House it used to be six months for committees other than the European Union Committee; but the Government recently agreed that it should be two months for all committee reports. The Government seek to respond to Law Commission reports within six months. I have opted for the more generous six-month period. If it is to be a statutory provision, that seems appropriate.

The second part of the amendment seeks to address the obvious objection to imposing a statutory time limit, namely that it may not always be possible to provide a substantive response in six months if the report is highly technical. My proposed new subsection (2) provides that if the Secretary of State is unable to respond within six months, he shall inform the Electoral Commission of that fact, and the reasons for it, not later than the day on which the response is due.

The provisions of the clause are not unduly onerous; indeed, they are open to the objection that they are not tight enough. However, they have the merit of imposing on the Secretary of State a duty to respond to reports from the Electoral Commission. Such a requirement is eminently sensible. It would bring Electoral Commission reports into line with Law Commission reports, and ensure not only that they are taken seriously by the Secretary of State, but are seen to be taken seriously—an important element of transparency. If the commission believes that a matter is of such weight as to justify a report to the Secretary of State, or if the Secretary of State believes that a matter is of sufficient importance to require a report from the commission, there should be a requirement on the Secretary of State to provide a written response. The new clause imposes no requirement in terms of content; that must be a matter for the Minister, as is the case with responses to Select Committee and Law Commission reports. All that is required under this clause is that the Secretary of State must reply in writing; I believe that it imposes a useful—indeed, a necessary—discipline. I beg to move.

I support the amendment. It is absolutely right that if, in fact, the Electoral Commission has been asked to do a piece of work, that response must come. I am not sure whether six months is not a bit too long, but I shall go with the amendment. It is important that responses are received while the issue is still timely. If you leave it a year, you could have completely forgotten what the issue is about. To lay this down means that there has to be a response. The commission says that usually it does get responses, but there have been occasions when it has not. That is unacceptable. It is unfortunate, perhaps, if something needs to go into the Bill to say that that has to happen, but if that is necessary then so be it. The commission also makes the point that reports should be published under Sections 5 and 6 of PPERA. We should ensure that it covers all those points.

We, too, very much support this amendment, along similar lines to the noble Baroness. I am not sure whether it is not that the present reporting regime has been inadequate as regards what the commission has or has not been doing, or whether it is the response that the Secretary of State has or has not made in a timely fashion that is at the centre or core of the amendment proposed by the noble Lord, Lord Norton of Louth. Either way, this is obviously an extremely helpful self-discipline, which otherwise is not really dealt with under Section 6 of the 2000 Act. The reviews set out under that section are very important; these are not trivial issues and, as the noble Baroness has said, leaving them too long unreported or unresponded to by the responsible Secretary of State would seem to leave a nagging doubt on whether action is being taken on important issues.

We warmly support the amendments and hope that the Minister will be prepared to take them on board either now or at Report in some other format, if that becomes essential. Either way, a bit of tightening up and tidying up is very timely.

I shall be brief but perhaps marginally more controversial. I completely support the amendment, although perhaps not for the reasons that the noble Lord, Lord Norton of Louth, might appreciate. Sometimes the commission produces reports that are politically very inconvenient; they just do not suit the debate of the times. One particular report that I recall is the one it produced on individual registration, to which I am utterly hostile. It might in a few years’ time produce a report on electoral registration that shows that government policy is not being realised, which might suit the Government of that time, who might wish simply to ignore it and not respond positively to any recommendations that it might make that would lead to an increase in electoral registration. In wanting to avoid the potential political inconvenience, I strongly support the amendment.

The amendment would require the Secretary of State to provide a written response to reports issued by the Electoral Commission under Section 6 of PPERA within six months of publication. If the Secretary of State is unable to respond within that time frame, the amendment requires the Secretary of State to provide the commission with reasons no later than the six-month deadline.

The noble Lord was good enough to remind us what Section 6 said. It enables the Electoral Commission to submit reports to the Secretary of State on various matters, including elections, referendums, the redistribution of seats at parliamentary elections, the registration of political parties and the regulation of their income and expenditure; and the law relating to these matters. As he also told the Committee, the Electoral Commission publishes a significant number of reports. Some reports make recommendations to government, while some make recommendations for others, such as electoral administrators. A proportion of these reports does not make any recommendations at all, so it may not be necessary for government to respond to them.

We note that the Electoral Commission supports this amendment. I have been quick enough to say when it does not support an amendment, so it is only fair to say when it does—although I am hardly surprised and understand absolutely its reasons for doing so, given where it sits. However, I hope that noble Lords will take the point that pressures on government time are significant and it is important that issues are prioritised. It could create a real burden on government resources if we were compelled to respond to all reports within six months of their issue, irrespective of their subject matter. Moreover, depending on the nature of the issues covered by a particular report, requiring a response in every case within six months could prejudice government’s ability to consider the issues fully or engage with other stakeholders. I am sure that we can all agree that a fully considered response to a report that requires a response will be of more benefit than a response that is prompt but is less detailed in its analysis.

However, I am obliged to oppose the amendment on a more basic and fundamental ground—

Under subsection (2) of the proposed new clause, I presume that the Government could reply and say that they needed more time. I do not think that it would take up immense resources within the department to send out a letter of that nature.

But what an added piece of bureaucracy to have to respond within six months. It is small but significant, I would suggest.

Oh!

I am very surprised that the Committee is seriously proposing that we should add to, rather than take away from, bureaucracy.

In the briefing which the commission has given us for this amendment, there is an indication that there have been occasions when the Government have not replied at all. If you do not have a deadline, how will the Government be prompted into action?

There are some commission reports to which it is not necessary for the Government to respond.

But surely in such circumstances all the Secretary of State has to do is to say, “This report does not relate to the responsibilities of Government; it relates to the responsibilities of the electoral registration officers”—or whatever. “No comment”. That is a response which would fall neatly within the terms of the noble Lord’s amendment. If that is adding to bureaucracy, I pity the Minister and his department.

Perhaps I could go on to what I considered my strongest point, which is that such a shift risks seriously moving the initiative in setting policy away from government and towards an independent regulator. That would be damaging to both government and to the commission. I shall rely on what the Committee on Standards in Public Life said in its 2007 report, which we talked about yesterday. It said that the Government should lead the development of policy on electoral matters. The committee recommended that:

“The Electoral Commission should no longer have a role in undertaking policy development in relation to electoral legislation. This function should be the responsibility of the appropriate Secretary of State for Constitutional Affairs”—

as it then was. The commission is a source of expertise and it is right that it shares it and offers its view to government. But to allow the publication of commission reports to dictate the focus of government policy making by requiring a policy decision to be taken one way or another in response to their recommendations is handing the initiative to the commission in a way that is wrong under our system, in which the elected Government of the day, whoever that might be, set the agenda.

I argue that the Government should be allowed the flexibility to respond to commission reports as they see fit within what they consider to be an appropriate timescale, taking account of the subject of the report and other priorities. There may be circumstances when the Government feel able, and consider it appropriate, to respond relatively quickly. In other cases, they may require a longer period to consider the recommendations of the report fully before making any decisions, either because of the nature of the report or due to other political issues. Therefore, we believe that a time limit of six months is inflexible.

I am tempted to ask the Minister whether he recognises that he is speaking out loud. I am very grateful to all Members of the Committee who have spoken in support of the amendment. The Minister will have noticed that he is somewhat isolated on the issue—he is in a minority of two, with support from his fellow Minister—and that, so far as I can determine, his arguments did not seem to persuade the rest of the Committee.

I cannot help but have heard the strong arguments around the Committee on this issue. Although I have argued a case which I consider has some merit, I think that in these circumstances it is incumbent on the Government to think again about the noble Lord’s amendment. I give no promise or guarantee at all that we will come back to the noble Lord with a positive answer but I tell him and the Committee that we will think again about this issue.

I am grateful for the Minister’s response. He has listened to the Committee. I think it is worth reiterating the point that I made, which has been supported elsewhere. The requirement to respond has no bearing on the content of the Minister’s response. It is up to the Minister to determine how to respond, and therefore he is not being required to give a substantive response on policy. The six-month requirement is covered by the second part of the proposed new clause, which allows the Minister to say, “I require more time”, if that is necessary, but at least then the commission will be clear on that. Therefore, there is flexibility on the part of the Minister; the amendment merely requires his response.

The other point to stress is transparency. To some extent, the Minister spoke as though the commission reports were not published, but they are. It is for the Minister to respond but what that response is is entirely at the Minister’s discretion. The amendment does not tie the Minister’s hands except in ensuring that there is a response, which from the commission’s point of view, given the seriousness of the issues with which it deals and the amount of work that it does, is important. On some issues, the department can say, “This is not a matter for us”, but I think that it is an important discipline and therefore I am very grateful for what the Minister has just said. In the mean time, I beg leave to withdraw the amendment.

This may be a convenient point for the Committee to adjourn for 10 minutes.

If Amendment 80 is agreed, I cannot call Amendment 81 because of pre-emption.

Amendment 80

In moving Amendment 80, I shall speak also to Amendments 85, 91, 93 and 95, which propose altering Clause 8 so that a declaration as to the source of the donation is required only for donations above £7,500, whatever the nature of the body receiving it. Currently, a declaration would be required for all donations above the reporting thresholds—£1,500 and £7,500 depending on the recipient.

We support this proposal as a means to reduce the burden of compliance with the 2000 Act. This is effectively an alternative to the Opposition’s proposal to increase the local reporting threshold, which is currently set at £1,500 in the Bill. While that would undoubtedly reduce the burden of compliance, it would have an impact on transparency and, as such, we have decided that an increase in the threshold in Clause 8 is preferable. If it were ever moved, we would be bound to resist opposition Amendment 111. I note that the Electoral Commission opposes that amendment for similar reasons.

Balancing the importance of transparency and encouraging compliance with the reporting requirements of the 2000 Act with the twin, and also important, objective of minimising the regulatory burden of compliance is a delicate act. First and foremost, it is the Government’s belief that transparency and effective regulation are vital to public confidence in the probity of our democratic and electoral systems: an objective to which all in this Committee would subscribe. But that is not to say that we are not sympathetic to the concerns expressed here and in another place about the challenge of compliance with the reporting requirements set out in the 2000 Act. My right honourable friend the Secretary of State said that compliance is key to supporting the effectiveness of, and public confidence in, the regime: it is not intended as a challenge in its own right.

We therefore agreed that, to balance the additional requirements in the Bill which are intended to increase the transparency and regulation of political party finance, we would in parallel support a measure to reduce the burden of compliance. Doing so by further increasing the thresholds for reporting donations was one option we considered, but concerns have been expressed that that would reduce the public transparency of political funding, and such a step might be detrimental to public confidence. That is why we have instead supported this proposal, which increases the level above which a declaration is required, stating whether or not a donation is the donor’s own. Instead of the declaration requirement mirroring the differential reporting threshold set out elsewhere in the 2000 Act, declarations will be required only for donations for the purpose of Clause 8 in respect of donations above £7,500.

It should not be inferred from this change that the declaration is not of value, nor that the smaller donations need not comply with the same rigorous transparency requirements. The declaration requirement will help to shine a light on the true source of the most significant political donations by focusing the minds of those claiming to make the donation and those who are in receipt. Importantly, this will ensure that donors understand the legal requirements relating to permissible donors. Additionally, it will reduce the scope for donors to claim ignorance of the law, put in place by the 2000 Act, which seeks to ensure disclosure of the identity of the individual or body that is regarded by the Act as being the “true” donor.

Rather, the amendment before us today recognises the concern that the burden of reporting can be high, and seeks to address this concern in a way that is least damaging to transparency and thus to public confidence. I hope that this approach will gain the support of the Committee. I beg to move Amendment 80.

I am grateful to the Minister for speaking to the government amendments and for touching on our Amendment 85, which the Government have also supported. Having heard his explanation, we accept the government amendments, which shows the value of seeking consensus and cross-party support for the various parts of the Bill. Having said that we accept the government amendments, I make it clear that I will not move my Amendments 81, 86, 92, 94, 96 and 111. However, I will take the opportunity to move Amendment 85, in my name and that of my noble friend Lord Bates, because I am buoyed up by the presence of the Minister’s name on the amendment. I shall therefore move that amendment and trust that I will have the Government’s support.

There was a moment of considerable concern in my mind because I was anxious that we should not proceed to look at Amendment 86, which would be a retrograde step. However, I am quite happy with Amendment 85.

The government amendments are helpful and will result in a relaxation of the process, not in the sense of making life easy but by avoiding unnecessary burden. That should be an important subtext of all our purposes in considering the Bill in Committee. I am delighted to hear that the noble Lord, Lord Henley, has decided not to move the amendments to which he referred because it would have been an unfortunate step to take. There was quite a lot of discussion at an earlier stage about the thresholds for this purpose. I think we have got it about right. Clearly it will have to be reviewed over the years because life moves on. Even now, when we have nil inflation, we assume that it will eventually return. As we understand it, the mechanism is there for that. If it is not, it can be dealt with by secondary legislation. In the mean time, we welcome the amendments and hope that we will make some progress together, as a Committee, in this direction.

I am grateful to both noble Lords for supporting this part of the Bill and the government amendments. We, in our turn, will support Amendment 85. Indeed, my name is attached to the noble Lord’s amendment. As to the point made by the noble Lord, Lord Tyler, about keeping the threshold under review, in due course we will come to government Amendment 112, which I hope does that in a satisfactory way.

I am afraid that I shall spend a little more time on this amendment. I have tried to be brief on other matters to which I have referred in Committee, but this is a very controversial area and the debate we are now having will be followed closely in the House of Commons, whence these amendments originally came.

This is an extremely important amendment which seeks to deal, in part, with a Linton loophole—that is, a loophole that has been identified by Martin Linton during his considerable work on these matters over the past 20 years. These two amendments were originally tabled in the House of Commons and were supported by 216 Members. They were probably among the highest signature-endorsed amendments ever produced in the Commons. Yet, for all sorts of reasons that I hesitate to go into in detail during proceedings in this Committee, the matter was not debated in the Commons. Amendments 84 and 85, to which there were 216 signatories, were tabled by Mr Prentice and constituted the fourth group of amendments scheduled for debate out of a total of six on day two of proceedings on the Bill. The House had from 3.40 pm to deal with all six groups, and had to complete its consideration by 7 pm. That left three hours and 20 minutes to deal with these highly controversial areas of the Bill. The first three areas included limits on donations, caps on donations and unincorporated associations. Consideration of this group began at 5.20 pm and was interrupted at 7 pm under the programme Motion governing Report stage—that was the amendment before this amendment could be called, with the result was that there was no debate in the House of Commons.

Mr Prentice asked me whether I would move the amendments in this House, and I agreed. His argument is simple. He says: “We in the Commons were denied the opportunity to discuss these matters, and we now rely on you in the House of Lords to give us in the Commons the opportunity to deal with these matters”. He goes on to say that if the pay-roll vote had been free to add their signatures to this amendment, a majority of the Commons would have supported the amendment. He is convinced that in a Division in the Commons, these amendments will go through. I bring these amendments to your Lordships’ House because the Commons was, under the programme procedure, denied the opportunity to debate and vote on these matters, and we should give them that opportunity; and because of the merits of the amendments.

The question is simple. Why should a person who does not pay tax in the United Kingdom, or is not liable to tax on their earnings in the United Kingdom, be denied the right to influence the election of the Government by making a substantial political donation? The answer is because, as individual citizens, we collectively pay our taxes in the belief that, having paid them, we have the right to influence how they are used. The payment of, and liability for, tax gives us and not others the right to decide. It is our money, not theirs. It is for us to decide which Government should be in place to spend the money raised from us as citizens through taxation. Those who are not liable to taxation are not entitled, through the use of their money, to influence the Government that is in place to decide how our taxes are spent. Why should a person who is not liable for tax in the United Kingdom influence the use of taxpayers’ money paid by those who are liable for tax?

I will exaggerate to make my point. If a Hungarian billionaire philanthropist, entrepreneur, oligarch, public benefactor—whatever you want to call him or her—acquires British residency, buys a home in London, spends most of his or her time abroad, refuses to make himself or herself liable for tax in the United Kingdom and then offers a political party a £10 million donation, should a UK political party be permitted to accept it? The public would be appalled, the political party would be discredited and Parliament’s credibility would be further undermined.

As I understand it, that can happen under the law as it stands. The argument therefore turns on where we draw the line. What does the Prentice amendment do? It would make it unlawful for any person who is not a UK resident for tax purposes and is not a non-domicile UK resident to make a substantial donation to a political party. The higher limit of donations would be defined in law.

I and my noble friend Lord Rennard have added our names to Amendments 82 and 84 for a number of reasons. I shall, as briefly as possible, add to what the noble Lord, Lord Campbell-Savours, has already said and try to emphasise one or two additional points.

First, I entirely endorse what he says about the extent of support within the House of Commons and the totally inadequate lack of attention to this issue because of the way in which the legislation was so-called “programmed”. Old-fashioned politicians like me used to think of it as guillotining. The only point on which I differ from the noble Lord is that I think it was 218 Members who signed the amendment; a very substantial number.

To pick up on one extremely important point that the noble Lord made towards the end of his speech, all parties would benefit from this situation being sorted out. What happened in the past has gone; we have all had unfortunate experiences in this field; the sooner this issue is cleaned up and it becomes absolutely apparent to the public that it has been addressed, the better. It is not going to be retrospective, but the lessons of the past should be informing us for the future.

We, too, believe that it is a matter of principle that those whose commitment to the United Kingdom stops short of making a substantial contribution to its economy through their tax should not be put in a privileged position. It is surely the greatest irony that you can save a bit of money by being a tax exile, and then you can use it to invest in the United Kingdom political parties to try to reduce the tax burden, perhaps, on non-doms. It is extremely important that we find ways to deal with this issue. To me, tax is the rent we pay to live in a civilised society. It is part of being a citizen of the United Kingdom or any other democracy.

The noble Lord, Lord Campbell-Savours, referred to the Rowntree report. I do not intend to follow him in detail, but I drew that report to the attention of the House in a Question some months ago. We are still awaiting a considered response from the Government to that extremely important report, which raised very substantial issues about the way in which the political system is seen and the extent to which individuals in our society feel disenchanted and disengaged from the political system, because of the power of money—not least in terms of the power of foreign money.

The noble Lord referred to the views of the Electoral Commission and I take seriously the fact that it recognises the purpose of what we are seeking to achieve, but has some concerns about its application. It is clearly a problem that it is impossible for any regulatory body to take a retrospective view of. Were they a tax exile last year or are they a tax exile this year? However, ways can be found around that. If there is a practical way, as the noble Lord said, for the Appointments Commission to look at this issue in relation to nominations to this House, and if that is seen to be a perfectly legal, unchallengeable way to assess the tax status of an individual, why for goodness’ sake can that not be used in the same way?

There are two subsidiary issues to which the noble Lord has not referred. As he pointed out, small donations might well fall outside this particular restriction, for reasons that we all understand. However, as I understand it from the briefing that was repeated to me from the Electoral Commission, which I received before Second Reading, if each individual donation is £1 less than the threshold, and the donation is made at that level every week of the year and goes, in aggregate, way over the top of the threshold, it would not be caught in terms of reporting and checking the origin of those donations. That cannot be right. I had hoped that having raised this at Second Reading the Minister and his team would have found a way of closing what is, at least apparently, a loophole. If it is an apparent loophole for the Electoral Commission, it must surely be one that we should take very seriously, because it would be crazy if the aggregate donation over the full 365 days of the year turned out to be dramatically more than Parliament and government intend in terms of the threshold. I hope that the noble Lord can respond to that in particular. As I have said, I raised that at Second Reading; I did not receive an answer then and I was hopeful that we would have received a substantial amendment to deal with it now.

On the other question to which I should like to draw attention, the noble Lord, Lord Campbell-Savours, mentioned the companies that might be in the control of an otherwise impermissible donor. The answer to that is of course in Amendment 89, to which he may care to add his name, in the name of my noble friend Lord Rennard and myself, and in Amendment 90. Both amendments deal with this issue. We will come to them in due course, but it is not impossible to deal with that perfectly justified point. We do not want a way whereby particular donors are excluded as individuals, but they find a route round that simply by having a company which enables them to make donations in a way that would be illegitimate in terms of the amendment and, I hope, the eventual legislation that we pass.

We have a great deal of sympathy with the points that have been raised, not just by the noble Lord, Lord Campbell-Savours, but by a huge number of others outwith politics. These are not just political animals saying that this system is being cheated, it is of a real concern to the interested public, and that was very apparent from the Rowntree report. We hope that the Minister, even if he cannot do so today, will recognise the strength of feeling among Members of both Houses—and rightly so, because the present situation is not sustainable, and the public know it is not sustainable. The public believe that it is yet one more reason why we have what is now being referred to as a reputational crisis in Parliament.

The noble Lord, Lord Campbell-Savours, will not be surprised to learn that he does not have my support on his amendments. I shall be relatively brief in dealing with the arguments that he put at considerable length, but there are three important points to make.

First, and I think that the Minister would agree with me, these are matters where we should proceed by consensus. The parts of this Bill that are working best are those where consensus has come into it, as the Minister acknowledged earlier. Secondly, we already have strict rules which deal with controlling who can and cannot donate to political parties. If there is a concern about large donors having a disproportionate influence on the political process, which is in effect what the noble Lord is worried about, that is a matter that in my party’s belief should be addressed by a comprehensive cap on donations. That, as the noble Lord is well aware, would have to affect not only firms and individuals but also the trade unions. If the noble Lord was prepared to go down that route, he might find that some consensus was possible, but I suspect that he and the Government would not like to see their political masters, the trade unions, denied making the contribution that they wish to make to their party.

How would we manage to regulate a multiplicity of £50,000 donations coming in from some obscure part of the world?

That is not a matter for me to address at this stage. I noted what the noble Lord, Lord Tyler, said about a whole series of individual donations coming in in different weeks. If we could reach an agreement on a comprehensive cap, I have no doubt that some such means could be found to do it. If the noble Lord wishes to have a comprehensive cap, it must be not just on individuals but on individuals, firms and trade unions—the noble Lord has to accept that.

Thirdly, I go back to the point on which he quoted the Justice Secretary. Confidentiality is very important in relation to individuals’ relations with Her Majesty's Revenue and Customs. I understand that HM Revenue and Customs currently has no power to release data of this kind to other bodies, because of confidentiality.

I am listening with great interest to the noble Lord, but does he accept that that principle has been blown to smithereens by the Appointments Commission for this House, which is presumably given access to that precise information?

It might have been blown to smithereens on that one point but it still exists here. It is a valid point that has to be borne in mind.

I go back to my first and second points, which are the more important. We need a consensus and, if the noble Lord’s real concern is the disproportionate influence coming from individual donors, the route that he should look at is a cap on donations, which must affect all bodies and not just individuals.

As a fundraiser for the UK Independence Party, I find these amendments inconvenient. However, I also find them largely persuasive. At Second Reading, I asked the question raised by the noble Lord, Lord Tyler, about the possibility of a large number of cumulative donations of £7,499 coming in by standing order. That is not a problem that the Committee has resolved, and it is clearly unacceptable.

Perhaps I may ask the noble Lords, Lord Campbell-Savours and Lord Tyler, one or two questions. Under these amendments, what would be the position of a UK-resident taxpayer donating through an unincorporated UK association? Have they thought of that? I refer to a genuine UK-resident taxpayer, from whom a donation is currently permissible. Under the amendment, would that situation continue to apply?

Secondly, I did not want to come here as the usual Euro-bore that I am in your Lordships’ House, but I ask the noble Lord, Lord Campbell-Savours, whether he has thought about European law with regard to the amendment. I may be wrong but, as I understand it, under European law, European Union companies and individuals are able to donate in this country in a way that companies and individuals from outside the European Union are not. I apologise if I am setting off a false hare but it is an area that the noble Lord should think about, especially as we go forward. I do not mind betting that if it is not law at the moment, it will be fairly soon. Those are my two questions.

On the subject of trade unions, which I do not suppose will be popular with—

Perhaps I may intervene. As Ministers would say, “It is not in my brief to reply on issues of European law”, so I cannot answer the noble Lord’s question, although I will ask those who brief me to consider the matter and give him an answer. The question of unincorporated organisations is dealt with in the Bill. I understand that they are subject to new restrictions.

In that case, I was not sufficiently familiar with the Bill. I hope not to irritate my erstwhile Conservative friends too much, but a trade union is a collective of British-resident taxpayers and therefore I cannot see why it would not fall within the ambit of the amendment. Nevertheless, I hope that the noble Lord, Lord Henley, and the Front Benches generally can reach agreement on this matter. I look forward to the answer on my European point and support these amendments in general.

I recognise the powerful, if emotional, appeal made by the noble Lord, Lord Campbell-Savours. Some aspects of what he is thinking about are more complicated than they first appear. I am not sure that membership of your Lordships’ House is a good comparator with the ability to vote. He prayed in aid the new Appointments Commission procedures. It seems to me that, when appointing one of 750 members of a legislature, you will have a higher, or different, standard than for someone who will be one of 50 million voters, because the influence is much greater.

There are two practical points for the noble Lord to bear in mind. The first is that we recognise that a large proportion of our population—often the most talented part—may serve overseas for a period of time. I lived in the United States for five years, and so do many other people. In your period of overseas service, you may cease to be resident for tax purposes in the United Kingdom. Those people who intend to return to the United Kingdom should not in those circumstances be precluded from participating in our elections. That is recognised by the fact that you can continue to vote if you live overseas for 15 years—it used to be 20 years—by remaining on the register here. The noble Lord should address that issue.

The second point is the question of residency and domicile for tax purposes. The noble Lord, Lord Bach, and I were in this Room on Tuesday afternoon discussing perpetuities and accumulations. Residence and domicile for tax purposes is almost as complicated as perpetuities and accumulations. The simple issue of being resident for tax purposes is not a permanent state; you may drop in and out of being resident for tax purposes along the way. Therefore, I am not sure that his case will work in a practical way.

I do not wish to sound as though I am trying to deride every proposal. I hope that when we get to Amendment 108, which talks about a cap on donations and provides a blanket answer to the particular problem that he proposes, the noble Lord will be prepared to speak in favour of it as being at least a halfway house to what he is seeking to achieve here.

Before the Minister rises, I have been reminded of one more question for the noble Lord, Lord Campbell-Savours. Does he see his proposed requirement for a donor to be wholly and fully resident for UK tax purposes as a better test of being allowed to donate to a political party than the present test of whether the donor happens to be on the electoral roll? Alternatively, would he require both conditions or has he not yet thought about it?

My proposal provides for a stronger threshold than simply being on the electoral roll.

I do not think that the noble Lord, Lord Campbell-Savours, would regard it as a betrayal of a confidence if I said that he and I had a short conversation during the 10-minute interval while we were waiting in the queue to get some food. I complimented him on the fact that he was participating in this Committee and was here the whole time, and I thought that the Committee gained enormously from his doing so. He reminded me that he periodically moved amendments which, to borrow the language of the noble Lord, Lord Pearson of Rannoch, I might find inconvenient. I said it was perfectly true that I had had quite a lot of those, not only in business such as this but also in business relating to the City of Westminster.

I want to make two generic points about the opening speech of the noble Lord, Lord Campbell-Savours. The first, I remark in passing, relates to parliamentary procedure. I totally understand the unhappiness about the inability of the Commons to debate and vote on the issue that we are discussing now. However, when I was a Whip in the Government between 1979 and 1983, on no less than three occasions we sat for between 100 and 135 hours and did not guillotine the Bill; in other words, we did what the House of Lords does—we looked at absolutely the whole Bill. I recognise that in the ensuing 20 years Governments have found that pattern of behaviour inconvenient, and of course the right to guillotine was always available to us, had we chosen to use it. However, it is slightly disingenuous of the noble Lord, Lord Campbell-Savours, to complain about the outcome in the House of Commons when it is the Government that he supported in the House of Commons who introduced programming that I personally consider to be a flagrant interference with the right of the elected House. I think that the noble Lord wants to interrupt me.

If I had still been in the elected House, I would have voted against it and spoken against it with passion.

I have no difficulty at all in recognising that fact. It is obviously worth referring to in the context of how this amendment has arrived here but I do not think that it can be blamed on the Official Opposition. Fortunately, scrutiny in the House of Lords is automatically available. It is one of the glories of the House of Lords that that is so. I do not in the least begrudge the noble Lord, Lord Campbell-Savours, bringing forward this amendment, and I think it is a very good thing on behalf of the nation that we should have the opportunity to scrutinise it.

The second thing of a generic nature to which I wanted to allude was his observation about the advice that had, I gather, been offered to Labour MPs, although I know not whencesoever it came and the noble Lord, Lord Campbell-Savours, was not able to tell us. The commission briefing on the subject, while pointing out some of the difficulties, makes it quite clear that the issue that we are debating is a matter for Parliament and not for itself. The commission states that it is not for it to make a judgment on the issue.

In the context of the advice, I shall briefly recount a conversation that I once had with a Permanent Secretary of a department in which I was serving as a Minister. We had been contemporary undergraduates, so we knew each other very well in a private capacity. He said that politicians of both parties—I think the Labour Party is a little more prone to this than the Conservative Party, but there is no question that my party is prone to it as well—are extremely resistant to what they regard as negative advice given to them when they come into office, when civil servants tell them why what they want to do is impracticable. He said that they are making a mistake because members of the Civil Service are themselves part of the Government, and they take pride in the manner in which business is conducted because they are paid from the public purse.

The civil servants have two preoccupations. First, if a Minister does not listen to all the arguments against what he is proposing to do, there can be a moment when he is caught out at the Dispatch Box. That could happen even at the Second Reading of a Bill on which the Minister has intervened on dozens of occasions. He has to look at difficulties contained in the Bill which he has never considered before because he has brushed aside the advice that he has received. That is embarrassing for the civil servants sitting in the Box, who have no way of advising him.

Secondly, it is worse when a Government do not take advice in the early stages and then find themselves having to retreat in midstream from the legislation on which they have embarked and start again. It is infinitely easier to prepare legislation over six to nine months than to suddenly have to produce it in a month, to which there has previously been some allusion even in this Committee.

I do not think that the Government are wrong to point out the difficulties of doing certain things. It is the right thing to do so that everyone taking part in the debate on the legislation knows what the real practical difficulties are. I say that on behalf of people who have been in government in both major parties.

The intention behind Amendments 82 and 84 is to seek to tie the ability of an individual to make a political donation to his or her taxation status. In order to be considered a permissible donor, the 2000 Act requires that an individual must be registered in an electoral register. Amendment 82 would introduce two further conditions or requirements. First, the individual would have to be resident in the United Kingdom for the purposes of the Income Tax Act 2007; and, secondly, that individual would have to not be a non-domiciled United Kingdom resident. Amendment 84, in turn, would require a donor to affirm that these two additional conditions are met under any statement made as to the source of a donation, as will be required under the provisions of Clause 8.

As the Committee has heard, identical amendments were tabled in the other place but were not reached. It goes without saying that the Government recognise the force of support that these amendments enjoy in another place. I can confirm, and do so, that we understand the argument that the ability of an individual to participate in the democratic processes of this country should be linked to their taxation status in a broad sense. But if these amendments were passed, that would not introduce any further controls on donations from other permissible donors—for example, from companies, and I shall come back to companies in a moment, and non-incorporated bodies. It could therefore have the effect of diverting these donations through other, less transparent routes.

The amendments that we are to deal with later in the name of the noble Lord, Lord Tyler, Amendments 89, 90 and 142, seek, as I understand it, to prevent people who are not allowed to vote in local, parliamentary and European elections, and companies controlled by those people and other impermissible donors, from giving political donations. The qualification is not linked to the tax status of individuals or companies; it is the right to vote that the amendments will deal with, rather than the tax that they pay.

The noble Lord, Lord Pearson of Rannoch, asked about companies donating under European law. To donate, a company must be incorporated in the UK or in an EU member state, but must still carry on business in the United Kingdom. That is at Section 54(2)(b) of PPERA. Effectively, the amendment, even if carried, would not achieve the clear objective that it appears intended to achieve.

My noble friend asked the perfectly proper question of why the Government do not add an amendment to that effect. In order to donate to UK political parties, companies have to be registered and carry on business in the UK. The Government acknowledge the concerns that have been expressed about the scope for evasion of the ban on foreign donations contained in these provisions. As we have indicated throughout—and I shall say a little more about this later—the Government are of course willing to discuss how these provisions might be improved and are willing to hear representations on the best way forward. However, we believe that we should move forward on any proposals for better regulation in this area, if we can, on the basis of consensus. We think that in the long term that is much the best solution.

There are wider issues to consider than those that the amendments would address. We are concerned—and it is a fair concern—that if these wider issues are not looked at, we risk creating a constitutional anomaly. The amendments tabled by my noble friend seek to prevent those who do not pay certain types of tax in this country from donating in their individual capacity to a political party or other regulated recipient. However, they do not attempt to prevent those same people from participating in a very active way in our democracy in a number of significant ways, including by voting, sitting in our legislature and standing as a candidate to sit in our legislature. That would be a significant anomaly for which there would be, on the face of it, no obvious explanation. Because of the concern about the potential for creating constitutional anomalies, which we should try not to create if we can help it, we believe that broader consideration is needed of the relationship between, on the one hand, an individual’s right to civic and democratic participation and, on the other hand, their responsibilities and, in particular, their taxation status.

Noble Lords may be aware—and let me tell them if they are not—that we approached the Committee on Standards in Public Life to suggest that it might want to consider the issue. However, we were advised that the work programme of the committee does not allow it to pursue the matter at present. We are continuing to reflect on how best to take forward this very important matter.

We are, however, clear that it would be wrong to tie democratic rights in one area to taxation status, as the amendments propose, while leaving other democratic rights unfettered. Let me deal with some of the significant practical and legal difficulties which mean that the amendments proposed might not work in their current form. I shall mention briefly a few of these.

First, the amendments raise real practical difficulties, which cannot be wished away, about how a recipient party or the Electoral Commission would be able to verify whether or not what a donor told them about their taxation status was accurate. Coming to a sustainable view about whether or not someone is resident or domiciled in the UK for tax purposes raises complex issues that it may be difficult for either a party or the commission—both may be involved—to resolve on their own without expending considerable time and, potentially, money. An individual’s taxation status is essentially retrospective—a tax return is normally submitted at the end of a financial year—and it might, therefore, be difficult at a point of time in the middle of a year to determine what an individual’s tax status is.

One way to deal with this might be to enable information about taxation status to be shared among key stakeholders in the process. Information on whether an individual is resident and/or domiciled in this country for taxation purposes is currently held only by Her Majesty’s Revenue and Customs in certain circumstances. HMRC does not collect data on residence and domicile status unless it is relevant to an individual’s tax calculation, and it does not hold a list of individuals who are non-resident or non-domiciled. It may be that for the proposal to be fully effective, HMRC would need to collect additional information specifically for this purpose in addition to any information it currently holds. The Electoral Commission or others would want to be able to access this information, whether it be routinely or on a more limited basis.

I hardly need to tell the Committee that the confidentiality and data-sharing implications of any proposal to tie residency to donation permissibility would at the very least have to be carefully considered given Her Majesty’s Revenue and Customs’ statutory duty to preserve taxpayer confidentiality. I note that the Electoral Commission has expressed concerns about the workability of the proposal in its briefing note on the Bill ahead of the debate. It is worth quoting what it says about this aspect. The commission states:

“In order to assess whether any donation from an individual is permissible, the recipient would need access to authoritative information about that individual’s tax status. The Commission would also need access to that information to confirm compliance. We think it highly unlikely that this will be achievable in practice or (if so) that the resulting burden on regulated entities and on HM Revenue and Customs would be proportionate”.

I should also note that at present many people are potentially unaware of the concept of domicile or their domicile status because it is not relevant to their tax affairs. For example, domicile is irrelevant if you have no overseas income. Under this amendment people unaware of their domicile status could unwittingly commit an offence by giving to a political party.

My second practical point, if that is the right expression, is that following the changes made in the 2008 Budget, my right honourable friend the Chancellor of the Exchequer gave a commitment that there would be no further substantial changes to the taxation regime for resident non-domiciles in the rest of this Parliament or the next. Any change to the rules on permissibility of donations should be mindful of this commitment.

Finally, we must also consider any legal implications arising from a proposal further to limit the ability to participate in our electoral system, whether through a narrow limitation on the ability to make donations or something wider on participation more generally.

It is possible—I do not say that it is inevitable, but it is possible—that the proposals in this area would touch on some key principles. For example, any limitation on participation may well raise issues relating to Article 10 of the ECHR, the right to freedom of expression, and Article 11, the right to freedom of association. We must bear in mind that this amendment proposes a restriction that would apply to UK citizens who happen not to be resident in the UK for various tax purposes. Any proposal that seeks to limit the right to democratic participation of a UK citizen, whether it is in this field of donation or any other, will require particularly careful scrutiny and may raise legal issues for which there may be little established precedent. So I hope that the Government can be forgiven for acting here with some caution.

Any potential legal issue will almost certainly be complicated by focusing only on donations, rather than by taking a more consistent approach across the board towards the issue of tax status and participation in politics more generally. These matters may be complex and it is clearly sensible to take the proper amount of time to examine them with the care that they deserve. I do not consider that a task of that detail and potential complexity can safely be completed during the timetable allowed for by this Bill.

There are many other points to bear in mind, some of which have been raised during this debate and which the Government will reflect on in taking forward work on this complex issue. I thank my noble friend for raising this issue in the way that he has and for giving us the opportunity to have this debate, which, I suspect, we may in some way or another come back to at a later stage of the Bill.

I am not sure whether the Minister intended to complete his remarks, but could he address the important point raised with me by the Electoral Commission—twice now—that, just short of the threshold for both verifying and reporting, it is possible to make a number of regular donations which would not alone trigger that limitation but would clearly do so in aggregate? That is relevant not only to this discussion but also to the wider one in which we are engaged.

I have an answer for the noble Lord: if donations which are above the recordable threshold of £500 under this Bill are made by one donor, and the total of those donations over a period exceeds the reportable threshold of £7,500 in that same year, they have to be reported to the commission. We could lower the threshold, but if we were to do so it would be a disproportionate administrative burden. The noble Lord, as I look at him from quite a long way off, does not seem entirely satisfied by what I have said and so I offer to write to him with an answer before the next stage of these proceedings.

I had almost finished what I was going to say. It is for the aforementioned reasons that the Government cannot support the amendments. I hope that my noble friend at least realises that we consider this to be a very important matter, to which I know we will return at a later stage.

I am grateful to my noble friend for his comments. I do not want to be rude to noble Lords, but I shall be quite brief in dealing with them. What my noble friend has said will now be pored over in the House of Commons. His contribution to the debate today will be that which Members of Parliament at the other end will want to read in some detail; indeed, it will be widely circulated.

I suspect that Members of Parliament may also want to read what the noble Lord said.

I think that they will be far more interested in what the Minister said as against what I said. It is clear that the noble Lord, Lord Tyler, understands the politics of this at the other end; he has obviously been well briefed by his colleagues. The noble Lord, Lord Hodgson of Astley Abbotts, used the £50,000 argument without explaining how it is possible to police foreign donations if they are capped at £50,000. It is utterly impossible, unless you have policemen all over the world checking up on inter-company and inter-family relationships.

The noble Lord, Lord Pearson of Rannoch, presses me on Europe. I have to tell him that my interest in Europe is not as detailed as his, as we know from his weekly interventions at Question Time. The noble Lord, Lord Brooke, raised an important issue: the whole question of how we legislate. He may be interested to know that this recommendation came from a report, sponsored by the IPPR, written some 16 years ago entitled Money and Votes. Among its recommendations is that donations from overseas sources should be banned with three exceptions: registered overseas votes; allocations from parliamentary groups and the European Parliament; and donations below £1,000. Therefore, there has been a longstanding argument over many years on the need for reform in this area.

I turn to the comments of my noble friend Lord Bach. I noted that his brief closely followed mine—that is, the one that I received from my colleagues, which was circulated in the House of Commons. Clearly, it must have come from the Government, because even the order in which the points were raised was very similar to the order of the points in the document that I read to the Committee.

On my noble friend’s point about the release of information from Her Majesty’s Revenue & Customs, is he aware of the NTC project? It is referred to in the document that he was not too happy with, produced by Rowntree. He may remember the debate about two weeks ago on the Floor of the House in which he commented on his reservations about the Rowntree report. I cannot remember the name of the report but it referred to NTC projects which provide HMRC tax-credit data to local authority housing departments. Therefore, there is obviously a process whereby HMRC is able, certainly in the case of housing benefit, to provide information to departments outside HMRC.

My noble friend said that the Government are continuing to reflect on these matters. In the event that this amendment were agreed in the House of Lords, they would have to reflect very fast. I understand that, if it goes back to the other House, Members will want to vote on it unless the Government come up with some alternatives, so they might want to get a move on and sort out an alternative approach, rather than put the Commons in a position where they might have to vote on the amendments that I have tabled here today.

For the record, the Rowntree report that I was talking about—it is easy to get them confused—is not the one on the administration of elections; it is the one on data-sharing. I am afraid that a few words of criticism did cross my lips on that report.

The reference to the interflow of data between various organisations within government appears in the section dealing with data-matching. Of course, the Government’s case is that through data-matching they will be able to make the system of individual registration more effective. On that basis, I beg leave to withdraw the amendment.

I shall speak also to Amendments 87 and 88. We now move on to what will be new Section 54A, which is inserted via Clause 8 and relates to declarations as to source of donation. Our amendments are designed merely to provide some sort of protection for those who have a duty to make such a declaration. The first one changes the words from,

“best of the individual’s knowledge”,

to “individual’s reasonable knowledge”. The second amendment leaves out in line 41 “or recklessly”, so it has to be quite clear that a person knowingly makes a false direction and there is no question of recklessly. To underline that particular point, after that we insert a new subsection to make it clear that:

“A person does not commit an offence if it can be reasonably proven that the person had no intention of making, or by innocent mistake made, a false declaration under this section”.

When a new criminal offence is being created, as it is here, it is right that if the individual does not have the mens rea and has not properly thought that he was committing a crime, it would be unwise to deem that he or she has done so in that event. I hope that the Minister will accept that it is particularly the last amendment that is the most important, in that it makes it quite clear that from Amendments 87 and 88 a person must know that they are committing an offence before they commit it, rather than being able to be found guilty having made a reasonable mistake. I beg to move.

The amendments in this group do not really find favour with me. Amendment 83 would cause confusion when what is needed is clarity on this situation. You should really know whether it is your own money that you might be giving to a political party; the test should be a matter of fact rather than a supposedly reasonable belief that you think that it is your own money. We had sufficient controversy with Mr Abrahams’s donations in the north-east a few years ago. The Bill is tightening up on those problems, and introducing Amendment 83 would not help.

Amendment 87 would weaken the Bill significantly by leaving out “or recklessly”. We need to punish recklessness, not just dishonesty. There has to be a reasonable expectation that you will endeavour to comply and that, if you are reckless in not actually complying, you should be open to punishment for it. On Amendment 88, it may be that there is a slightly better form of words to be found; perhaps “proven beyond reasonable doubt” would be better. But to make a donation and not know that it is your own money seems rather absurd. If you are in any doubt that it is your own money that you are giving to a party, you should really not be giving it away.

Amendments 83, 87 and 88 relate only to Clause 8, the requirement for a declaration as to the source of a donation above a certain threshold. Government amendments alter the level above which such a declaration is required so that it is necessary to provide a declaration for donations above £7,500 only. The intention of these amendments appears to be to ensure that so-called “innocent” mistakes—essentially, the inadvertent submission of a false declaration under the requirement in Clause 8—are not needlessly punished. That is an intention with which I have some sympathy, but I am afraid that the effect of these amendments in this specific context is not something I can support.

While I am determined that the public interest is effectively served by a rigorous and enforceable regulatory regime, I am equally determined that minor or genuine mistakes are not automatically pursued where it is not in the public interest to do so. The Electoral Commission has reassured us that it intends to take a risk-based approach to the use of their investigatory powers and civil sanctions. This implies a proportionate approach where attention is focused on the most egregious breaches of the Act.

The amendments before us would negate the requirement for a declaration under Clause 8. They would mean that a person could only give a false declaration if they did so knowingly; that the test for making a declaration would no longer require an individual to be satisfied “to the best of their knowledge or belief”; and, most significantly, that any honest mistake would not be punishable.

This is a powerful combination of amendments that would render the declaration requirement nugatory. It would be very hard for the commission or Crown Prosecution Service to be satisfied to the criminal standard of proof, as is required by the changes proposed in these amendments. That is contrary to our intention. The clause seeks to remind donors of the requirements applying to them—requirements of which many donors could be ignorant.

Any individual signing a declaration must surely be required to be certain of the truthfulness of that declaration. That is a basic requirement in many spheres of law. Suggesting that it does not matter whether the statement is truthful, or that the individual has no responsibility for seeking to ascertain its truthfulness, detracts significantly from the value of the provision.

The provision is intended to buttress the existing regulatory regime for party finance, in particular by ensuring that donors of significant amounts—now above £7,500—should not be ignorant of the law. Clause 8 does not make it harder to comply with the law, since it does not restrict the permissibility of donors. Rather it ensures that the existing law is complied with.

Accepting the amendments would weaken the declaration requirement for Clause 8 when compared with other declaration requirements in the 2000 Act; and a justification for this difference in treatment is not evident. Moreover, removing the reference to recklessness in this context might incentivise ignorance of the rules. I reject the suggestion that all innocent mistakes ought to be disregarded. If an individual signs a false declaration under this requirement and there is no clear evidence that they knew that the statement was false, there might be evidence to suggest that the statement was reckless. If this cavalier attitude to the statutory requirements is permitted, it will over time erode public confidence in the probity of our party and of the electoral finance regime. For these reasons, I reject the amendment and hope that the noble Lord will withdraw it.

At this stage, I can do nothing other than withdraw it. However, I am not happy with that response. I am perfectly happy about Amendment 83, which is not very important. However, the second amendment in the group, which brings in “recklessness”, and the third that provides cover for those who make an innocent mistake, are important. I certainly want to consider these again—it might be that the wording is wrong—at the next stage. I will withdraw Amendment 83 and not move the others, but I will want to come back to this later.

Before the noble Lord sits down, would he not agree that the word “reckless” implies that you do not care whether something is correct or not? Surely a person in that frame of mind should be regarded as having committed an offence.

I will certainly look at that in due course. The third amendment is the most important. I always worry about the Government in their legislative capacity, particularly when I look at some of the motoring legislation in which they imply that careless driving is almost the same as reckless driving. One should be very wary about what they are up to when they use the word “reckless” here. That is why I will consider the amendments again, and there is a considerable likelihood that I will—carelessly or recklessly—bring them forward at Report. The noble Lord will then have a chance to debate them in the Chamber.

In view of what has been said, I support the second two amendments of the noble Lord, Lord Henley. Recklessness is a much more difficult thing to prove than whether somebody knew something or not. I suggest that recklessness is often in the eye of the beholder.

Secondly, Amendment 88, if carried, would certainly have avoided the problems to which I referred at Second Reading and in Committee yesterday of an innocent mistake ending up in court on appeal and even eventually going to the High Court at vast expense to the taxpayer and the recipient political party. I very much hope that the noble Lord, Lord Henley, will bring those last two back at the next stage.

Perhaps I may respond to the issue of how difficult it is to prove recklessness. That is quite properly so. I emphasised that the burden of proof must be to a criminal standard in this case. That is why we are opposed to the amendments. There is already a considerable burden on proving an offence under this provision to the standard required in the clause.

I take note of what the Minister said, but I am buoyed up by the fact that both the noble Lords, Lord Borrie and Lord Pearson, would prefer to discuss this again in the Chamber. In withdrawing Amendment 83 and offering a commitment that I am unlikely to move Amendments 87 and 88, I give the Minister an assurance that I am likely to bring these amendments or something similar back at a later stage. I beg leave to withdraw the amendment.

We do not need to spend a great deal of time on this matter because to some extent we have covered it in a previous debate. In moving Amendment 89, I shall refer briefly to Amendment 90, which also follows Clause 8, and Amendment 142, which is a consequential amendment in Clause 29.

We have been carefully advised that, contrary to what the Minister said a few moments ago, if we had already approved Amendments 82 and 84 in the name of the noble Lord, Lord Campbell-Savours, an impermissible donor would include someone who had been made impermissible under those amendments. So when the Minister said a few moments ago that it entirely relied on those who were not qualified in terms of their electoral status, that is not our view. If they were not permissible donors under the amendments that we endorsed for tax reasons, they would fall within this definition as well.

Amendment 89 relates to those companies whose control is in the hands of an impermissible donor either for electoral reasons or for tax reasons. That meets the point made by the noble Lord, Lord Campbell-Savours. Were we to take the view that impermissible donors would include those whose tax status made it impossible, it is illogical if those people could get round that by using a company under Amendment 89. Therefore, the amendment would make it impossible for them to use that route.

Similarly, under Amendment 90, we were looking at the specific issue of those who are not qualified to vote under all three types of election. When this matter was discussed in the other place, there was some anxiety that those Members of your Lordships’ House who are disqualified from voting in parliamentary elections should not be permitted to make donations to political parties. That is not our view and we have adjusted what was then before the other place to make it clear that it relates to those who are not qualified in all three types of elections—parliamentary, local and European. As noble Lords will recognise, we would not be preventing them from making a donation to a party under these provisions.

My intervention will be extremely brief. I did not table an amendment to this effect, but does the noble Lord, Lord Tyler, agree that, on the principle of the difference between “and” and “or”, the meaning of subsection (1) would be clearer if it said,

“parliamentary elections and local elections and European elections”?

The omission of the “and” introduces a slight element of ambiguity and requires the reader to read it at least three times before he knows what the noble Lord is trying to say.

Perhaps I may briefly respond. The noble Lord, Lord Brooke, has a great deal more experience than I have, but we were advised that this is the normal way to identify these options. I may be wrong; if so, we can correct this between now and Report.

I must say that officials and ourselves had also read the amendment as implying that it would apply to Members of your Lordships’ House, but shall adjust my notes for brevity and we will look at the words even more carefully if this amendment comes forward on Report.

This group of amendments seeks to effect a significant change in the regulation of donations to political parties. Amendment 89 adds to the permissibility requirements for political donations from companies and would prevent companies which are controlled by impermissible donors from donating to UK political parties. Under the proposed new clause, a company would be deemed as being controlled by an impermissible donor in a range of specified circumstances. For example, it would be deemed as being controlled by impermissible donors where 75 per cent of the voting shares are held by an impermissible donor or a combination of impermissible donors. It would also be deemed as being controlled by impermissible donors where a person who would be an impermissible donor under the 2000 Act acts as a shadow director of the company, or where the majority of the board of directors of the company would be impermissible donors if they were donating in their capacity as individuals.

Amendment 90 defines an impermissible donor as one who is not registered to vote in the UK, either in parliamentary, local or European elections. Amendment 90 extends this proposed exclusion whereby a company controlled by an impermissible donor by virtue of this proposed provision should also be deemed to be an impermissible donor. Amendment 142 would mean that the provisions in the proposed new clauses would come into effect on Royal Assent.

I begin by saying that I am sympathetic to the intention behind these amendments which seem primarily intended to prevent foreign donations from being channelled through companies operating in the UK. We owe a huge debt of gratitude to the noble Lord, Lord Neill, under whose stewardship the Committee on Standards in Public Life provided the blueprint for the Political Parties and Referendums Act, which was a major reform in the area of party funding. It is therefore right that we take a step back and look at what the noble Lord said when considering these amendments. His report stated that,

“political parties should in principle be banned from receiving foreign donations”.

The Government welcomed this recommendation and sought to implement it in the Bill which became the Political Parties, Elections and Referendums Act 2000.

I assure noble Lords that we remain committed to the important principle that political parties should not receive foreign donations; and some of the provisions in the Bill would provide a disincentive for foreign donors channelling donations through legitimate structures to circumvent the rules on transparency—for example, the proposals in Clause 8 which seek to ensure that provisions regarding donations on behalf of others are understood and complied with, and those in Clause 12 which seek to bring more transparency to donations from unincorporated associations.

The provisions preventing foreign companies from donating to UK political parties have existed since 2000 and are a vital component of the regulatory regime. Section 54 of the 2000 Act requires a company to be registered in the UK or in a member state, and carrying on business in the UK. I understand that there are some concerns about whether those provisions go far enough and I do not want to dismiss those concerns out of hand. However, I do not believe that the amendments proposed here are effective.

The scheme envisaged by these amendments would almost certainly require a party or other donee to verify the permissibility status of those who own voting shares, of shadow directors and of board members. For example, although “shadow director” is defined in legislation, it would require considerable expertise in the law relating to companies to be able to say for certain whether someone was or was not such a director. Therefore, it seems clear that verifying these new permissibility requirements would be, at the very least, a difficult and onerous task. It could greatly increase the possibility of parties and others inadvertently accepting donations that they had concluded were valid. I cannot see that the resulting damage to trust in politics which might follow, even in cases where there is no blame to speak of, would be at all desirable.

Ultimately, these amendments may well have the effect of substantially reducing the number of companies from which donations can be accepted if those matters cannot positively be verified, including companies about which there is no real concern but in relation to which the relevant details are simply unavailable. Consequently, the potential effects of the amendments could be far-reaching and disproportionate.

Amendment 90, which prevents those ineligible to vote in UK elections donating to UK political parties, is also something that I have to oppose. The existing provisions in the 2000 Act require individuals donating to a regulated recipient to be on an electoral register. Extending this provision so that it excludes those who are not “qualified to vote” would seem to have no positive effect.

Finally, as noble Lords will know by now, consensus is a watch-word of the Bill. A significant step such as that proposed by the amendments would need to command broad cross-party consensus, and I am not convinced that such a climate exists at present. Therefore, I hope that the noble Lord will withdraw the amendment.

I apologise for arriving late at the Committee. I also apologise for taking noble Lords beyond four o’clock when they all have things to do. I want to say a few things from a practical point of view. I completely agree with the noble Lord, Lord Tyler, about getting public perception right, and I obviously endorse many of the things that Andrew Tyrie said in the other place.

The purpose of the Bill is partly to make party funding easier and more transparent. However, I am afraid that I do not believe that the amendment, as presented, makes it more transparent; it makes it more difficult for the parties to practically operate and police the giving of donations. How is there a means of finding out the dynamic of a shareholder register during the period of a gift? How can you police each individual shareholder of a party as a party treasurer or compliance officer? Who can determine their status? It should not be incumbent on the political party to act as policeman for companies’ shareholder registers.

The two criteria by which we have to transact, as does the noble Lord as party treasurer, are as follows. First, is the company UK-registered? That strikes me as being fair enough. Secondly, is it a company that trades? Once those two criteria have been met, it becomes almost impossible to police the shareholder register. Whereas I am extremely sympathetic, as I am sure are all of us in this Room, with the wish to clear up public perception and find a method whereby we can control these issues, I do not believe, with due deference to the noble Lord, that this works on a practical level.

I am very grateful to the noble Lord, Lord Marland, in particular, because I know that we share a great deal of concern about the reputation of our political system and we are seeking practical ways in which to go forward. At this stage, I can say only that we will look at the matter very carefully. I am very grateful to the Minister because he recognised that there is a genuine anxiety here that we all share. However, finding the right practical solution is more elusive. We will look carefully at what the Minister said and at what the noble Lord, Lord Marland, said, because he speaks with great practical experience in this field as a former national treasurer of the Conservative Party. If we can find a way in which this can be addressed more effectively between now and Report, we will bring it back. In the mean time, I beg leave to withdraw the amendment.

This may be a convenient moment for the Committee to adjourn until next Tuesday at 3.30 pm.