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European Union Referendum Bill

Volume 767: debated on Wednesday 18 November 2015

Report (1st Day) (Continued)

Amendment 12

Moved by

12: Schedule 1, page 17, line 1, leave out sub-paragraph (2) and insert—

“(2) Paragraph 1 of that Schedule (limits in relation to referendums held throughout United Kingdom) has effect for the purposes of the referendum as if for sub-paragraphs (2) to (5) there were substituted—

“(2) The Electoral Commission shall by order set a limit on the total permitted referendum expenses for those campaigning to remain a member of the European Union, and for those campaigning to leave the European Union.(3) The limit set under sub-paragraph (2) shall be the same for both campaigns.(4) For each campaign, the limit set under sub-paragraph (2) shall apply to the sum of—(a) expenditure by the designated organisation for that campaign, and(b) expenditure by any registered party in support of that campaign.(5) An order under sub-paragraph (2) may specify, within the overall limit, a sub-limit for the designated organisation for a campaign, and sub-limits for specified registered parties supporting that campaign.(6) An order under sub-paragraph (2) must be made by statutory instrument, which must not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.””

My Lords, I raised this issue in Committee, but in the debate it was made pretty clear that my previous effort did not work because it had the effect of preventing political parties from spending any money at all. I do not want to repeat the arguments that we had in Committee, but what this is about is tackling the basic unfairness which the Bill creates for spending limits between the two camps—the leave and the stay camps. As the Bill is currently drafted, it will mean in practice that those who wish to campaign to stay in the European Union will have more than twice the funds to spend of those who wish to campaign to leave. Perhaps I am a bit naive, but I thought that the whole point of having expenditure limits was to ensure fairness so that no party, whichever side it is on, is able to outspend the other unfairly. Yet what the Bill does is to enshrine in legislation as an absolute fact the ability of the stay campaign to spend more than twice what the leave campaign can spend.

This arises because, although the Bill provides for equal expenditure for the two designated campaigns, the political parties are able to spend money at similar levels according to the share of the vote that they got at the last general election. I just do not understand why the amount that the political parties can spend on the referendum campaign should be related to the votes they got at the last general election. In the case of the Conservative Party, many of the people who voted Conservative will have wanted to leave the European Union. To be fair to the Conservative Party, it has decided that it will be neutral during the course of the campaign.

I suppose it could be argued that the Labour and Liberal Democrat parties have no money because they have been bankrupted by their efforts in the election campaign and therefore that this is not something to be too concerned about. But that does not stop people giving money to those parties in order to support the campaign that wishes to stay in the European Union. This seems to go to the heart of what these limits are about. My first question for the Minister is: if we cannot devise a way in which the limits ensure that both campaigns are treated fairly and are able to spend the same amount, what is the point of having the limits at all? Further, why should these limits be related to the vote at the last general election?

I noted that the Electoral Commission sent out a missive to us all suggesting that it could not support this amendment. I had a word on the telephone with the nice lady who sent out the press release and asked her to explain why the Electoral Commission was not concerned about the issue of fairness. She said that it was a matter for the political parties and not something that the commission could concern itself with. I asked her to send me a brief indicating what the position of the commission is on these issues, but I have to say that it has not come in time to discuss the amendment—which I suppose could be because the commission is short of resources. It does actually cost as much as half the cost of the Royal Family; it is a very expensive quango indeed, and I would have thought that it would have been able to find the resource to think of a way to ensure that there is fairness in the funding of these campaigns. Rather naively, I thought that the reason we are spending £25 million or £26 million of taxpayers’ money every year on the Electoral Commission is so that it can ensure that elections and referenda are fair. But apparently the commission cannot think of anything and it is not its job to do that, it is up to the Government.

At an earlier stage my noble friend said that it was quite difficult to make this work. I did not draft the legislation and I did not suggest the limits. I cannot for the life of me understand why we should have limits which have the perverse effect of creating a great unfairness. Earlier in our consideration of amendments today, my noble friend Lord Faulks made a really important point. He said that it was very important at the end of the day that everyone accepted the result of the referendum and that no one could cry unfairness. I do not know how, if it turns out that one side is able to spend two and a half times or 2.3 times as much as the other, it will be possible for the Government to avoid the accusation of unfairness.

Some people say, “Actually, how much you spend does not have much of an influence”—in which case, why have spending limits? The perverse effect of this legislation, as it stands, is that it will limit the amount that those of us who wish to leave the European Union can spend, simply because the political parties have taken a particular view. In the case of my own party, where the leadership has a particular view that seems to be towards staying in the European Union, the vast majority of the members would take the opposite view. It could be argued—I do not want to tread into the dangerous territory of suggesting that there is some kind of operation going on here—that the decision to make the Conservative Party neutral was to avoid the embarrassment of finding that the money which it could spend, some £7 million, might have gone to the leave campaign.

I know that my amendment may not be perfect. I know that the Electoral Commission cannot possibly take on this role because it does not have the resources even to explain why it cannot take on the role, or how it could ensure fairness if it did take it on. I think that my noble friend needs to think about this from the point of view of ensuring that we have a fair campaign and that we do not have all kinds of abuses happening. We can see, for example, that people might be tempted to fund the political parties that wish to stay as a way of getting round the limitations that are put on expenditure that would otherwise be available to the campaigns.

I apologise for raising the issue again, but I have produced a different amendment which approaches it in a different way. I am not as clever as my noble friend and I certainly do not have the resources of the Electoral Commission, so I cannot believe that between them they could not devise a way to ensure that we have a limit on expenditure that is fair to all parties. I beg to move.

I very much support my noble friend Lord Forsyth in his amendment. He mentions that, because we have this completely disparate allocation of funds, we may have a rather ridiculous situation. Let us suppose that a Conservative donor wants to donate towards staying in. He cannot donate to the Tory party because it is neutral and is not allocating funds in either direction, so he may end up giving funds to the rather bankrupt Liberal Democrats as a way of getting his funds into supporting the staying-in campaign.

The real problem with all this is that the results of the last election are completely immaterial. Why should somebody who is Labour vote to stay in? I can tell noble Lords that hosts of Labour supporters will vote to come out. Even some members of UKIP will vote to stay in. This will break in every direction. The Liberal Democrats are these fanatical pro-Europeans. Their supporters, who I know well down in the West Country, are not fanatical pro-Europeans. Many of them were extremely tempted to vote for UKIP in the last election. The reasons are: they are chapel, anti-establishment and do not terribly like the major parties either way round. The Liberal Democrats know that well but they have a leadership in the country that is completely unrepresentative of their members and voters all around.

This is the problem: all parties will break in different directions, so what on earth are we doing basing the financing of an in or an out campaign on the results of the last election? It is completely irrelevant because everybody will vote in different directions. They will be influenced by a lot of different factors. It is inconceivable how we could have dreamed up this extraordinary funding system, which allocates a lot more money to the “stay in” campaign than it does to those who want to pull out. We know the figures: £7 million for each— £7 million for the Labour Party because it seems to be pretending that all its members want to stay in. Then the Liberal Democrats get £3 million; the CBI and the SNP will allocate their funds for staying in. That comes to more than £11 million. What have we got on the other side? We have £7 million for the allocated body, then we have £4 million for UKIP, which makes £11 million, so you have £11 million against £18 million. This is supposed to be a fair, level playing field but the financing of it is completely skewed. Everyone will say that money was used to completely skew the result.

My noble friend is absolutely right. If the Conservative Party had decided to support the “staying in” campaign it would have been £25 million to £11 million, which is extraordinarily disproportionate in the circumstances.

I do not know what the thinking is behind this. I cannot understand where everybody is coming from. This is a referendum on whether we stay in the EU or whether we leave. It is nothing to do with how we all voted in the last election. How can the whole basis of financing be based on that? It is quite beyond me.

My Lords, I support the amendment because it is absolutely necessary. I support it very much because I took part in the last referendum in 1975. The claim that those of us who wanted to come out at that stage have always been able to make—of course, some, like myself, remain of the opinion that we should come out as soon as possible—was that we were on the outside, outgunned in finance by £20 million to £1 million. That was why the in side was able to convince the people that they should remain—by money, not by any other means. In spite of that, 33% of the voting population voted to come out, so there is all to play for when we get to the referendum.

It is important that we get balance. The system that has just been outlined, where the funding is dependent on the votes cast in the last election, is absurd. What is even more absurd is that the Conservative Party, which would get about £9 million, I think, is not going to use it. I have never had much respect for the thinking of the Tory party, but this really takes the biscuit. We have a party led by a Prime Minister, who is negotiating with his partners in Europe and is apparently agreeing with his party that it should be outspent by the other parties. That seems absolutely crazy. I would have thought that the Tory party would be up in arms about it, sending in resolutions, demonstrating outside the headquarters and all that sort of thing so that we could have a bit of fairness.

So I agree with this amendment and for other reasons, too. In 1975 the Tory party campaigned to stay in Europe, as of course did the Liberals—I think they were called the Liberals then, not the Lib Dems—and big business. I well remember that Sir Donald Stokes, who later became Lord Stokes, wrote to all my former constituents in Swindon, because there was a BLMC factory there, warning them that if they voted to come out their jobs would be at stake. That, of course, was a lie because at that time we had a surplus in car exports to the continent. However, by 1975, we were in deficit. That deficit had grown to a huge figure of £69 billion overall per annum. My constituents were told not only by Sir Donald Stokes but by those running other big businesses in Swindon and elsewhere that coming out would harm their prospects. Of course, that is where the big money came from—big business.

It is essential that there should be fairness between the campaigns. The amendment of the noble Lord, Lord Forsyth, would ensure that that happens, or at least go a long way to do so. If it does not, once again we will hear the losing side say, “We were outgunned by the others on finance”. Therefore, I hope that the Government will accept the amendment. The Tory party may be able to exert influence over the Government by saying to them, “Look here, you have this opportunity. You really must take it so that there is a proper balance between the parties during the referendum”.

My Lords, I support the amendment in the name of the noble Lord, Lord Forsyth. I declare my interests as a member of UKIP and a dedicated “outer”. I am not sure which members of UKIP the noble Lord, Lord Hamilton, thinks will vote to stay in. I hope he was not referring to my noble friend Lord Pearson. I assure the noble Lord that he definitely wants us to get out. I cannot imagine that a UKIP member would vote to stay in the EU.

Leaving that aside, on all the previous amendments the noble Lord, Lord Faulks, rightly made the point that this referendum needed to be seen to be fair. He has said that on several occasions today and in Committee. However, regardless of who wins or loses, the referendum will be seen to be manifestly unfair if one campaign, whether in or out, is preponderantly better financed than the other. I do not agree with the noble Lord, Lord Stoddart, who seemed to imply that just because an organisation has less money, it will lose. That is not necessarily the case at all. Even if we have a few pounds less than the “stay in” campaign, we will still win. However, it would be much nicer and better, and would be seen to be fairer, if the campaigns had equality of financing.

Surely the real problem is that if the “stay ins” win the referendum by a very narrow margin, and they are seen to have been financed much more heavily than those who want to leave, those who want to leave will cry foul and say that the others won because they had more money. Whether that does the trick at the end of the day is debatable, but the fact is that it would be used as a reason to say that the referendum was completely slanted in the direction of the people who wanted to stay in.

The noble Lord is absolutely right. I do not disagree with him, but it reinforces the point of the amendment of the noble Lord, Lord Forsyth, that we need equality of financing, however that may be achieved. That is up to the Government, I hope, in spite of the Electoral Commission’s worst efforts. We do not seem to be getting anywhere with the Electoral Commission so the Government ought to take this amendment seriously and look at how they can reallocate the financing arrangements so that both the ins and the outs have the same amount of money to spend. It is not, as they say, rocket science. It is actually quite simple to do. That will eliminate the concerns that the noble Lord, Lord Hamilton, expressed, that either side may have cause for complaint at the end of the referendum. There has to be equality of financing so I very much support the noble Lord’s amendment.

I am going to repeat some of the arguments I made in Committee because I think that this amendment is basically doing the same thing.

There is an assumption behind the contributions we have heard so far that we are dealing with a pot of money. We are not. We are dealing with a spending limit. We are not dealing with an allocation of funds that should be distributed fairly. Perhaps we could do that. I have not heard many noble Lords opposite support state funding of political parties, but that is the only way to guarantee fairness.

I am really surprised by the noble Lord, Lord Willoughby de Broke. Let us say the leave campaign got all the money in, spent the upper limit and then it was discovered that UKIP spent more than the limit. UKIP would then have to give all its money back. That is the reality. You are trying to set a limit when you do not even know who is going to be participating in the campaign.

First, it is not a pot of money to be spent. Secondly, this referendum is not going to be fought by just two sides. Political parties, civil society, trade unions, churches and other groups that have an opinion will not keep their mouths shut simply because the Conservative Party is unsure of what position it will take as a whole. Perhaps the noble Lord, Lord Lawson, is correct that this whole thing about registration and the Conservative Party not registering is more to do with the state of the Conservative Party than the rights and wrongs of how the referendum campaign should be conducted.

I do not know whether the noble Lord has had a chance to read my amendment, which is completely different from that which he made a speech about in Committee. But I am following his argument so would I be right in deducing that he would be quite happy to have no limits at all?

No, I would not because the Electoral Commission is trying to address quite a complex situation. A referendum is not a usual situation. Political activity in this country is predominantly, although not wholly, through political parties, and PPERA sets out all kinds of constraints and limitations on donations. It has created an environment of transparency, and spending limits.

My view is that spending limits are not particularly effective in establishing a level playing field, particularly when they are set so high and no one can ever reach them. That is why we have quite big imbalances in general elections. That is why the Conservative Party regularly outspends the Labour Party: it has at least 300 people who can give more than £50,000 a year to the party, which I suspect is why the party has in the past supported a cap of £50,000 on donations. Personally, I think the smaller the cap the fairer it becomes. You would then have to look at how to replace that money and what mechanisms to use to ensure that there is an allocation of public funds on a fair basis—hence, I suspect, why the Electoral Commission is using that methodology.

The fact is that spending limits are not the whole picture. What the Electoral Commission is trying to say to us is that the “remain” and “leave” campaigns are not the only participants. We are not going to silence everyone else in this referendum. We are not going to say to civil society, “You have no right to speak”, and we are certainly not going to say to UKIP, “By the way, you will have no right to spend money in this campaign unless it is through the official ‘leave’ campaign”. I do not think that it would tolerate that or accept it—I would notbut that would be the effect of the noble Lord’s amendment. We cannot be certain of what other people will be spending and we do not know the number of participants.

The rules should not be used to reduce the number of participants. That would be unfair and not democratic. I do not want to bang on too much about this, as I have given sufficient reasons why we will not be supporting this amendment, but it is clear that the amount of money available will not be determined by rules set out in the Bill. It will be determined by people donating and raising money. I do not think that even the Conservative Party, if it said that it would register, could put its hands on £20 million that easily. I certainly know that the Labour Party cannot put its hands on £9 million that easily. We have to understand that these are mechanisms to ensure transparency and accountability but they will not necessarily deliver fairness because the campaign is not designed that way.

The noble Lord says that the Labour Party cannot lay its hands on £9 million to fight the referendum. Why does he take this depressing view? Are there not a very large number of business people out there who are passionate to stay in the EU? They would be more than happy to finance the Labour Party, even if they are not Labour supporters. As long as the money goes into the “stay in” campaign, they would not care what label it comes under. Why is the noble Lord taking this despondent view that the Labour Party will not be able to raise the money?

I am not taking a despondent view. The Labour Party will no doubt raise a lot of money through a lot of individuals, as it does at every general election, and it will account for that. For me, the most important element of this referendum campaign is about who is donating—to have transparency on how much—not the idea that we should limit the campaign. This amendment would in effect limit the number of participants. I repeat the point about UKIP: if the “leave” campaign spends the limit laid out in this amendment, what is left for UKIP to spend? What if it has already spent it? Does it then have to hand all the money back?

The fact of the matter is that this campaign will be about a range of voices. The noble Lord, Lord Stoddart, talked about the 1975 campaign. I was a participant in that campaign and there were a lot of different voices in it. There were certainly voices that did not share the same platform; I think that will be true of this referendum campaign. The policy of the Labour Party and its views about the future of the European Union are not necessarily those of the Prime Minister and the Conservative Party. There will be different views and expressions of what they hope for the future, and we have to make sure that this referendum campaign is able to hear those different views. We should not have rules that limit it.

My Lords, my noble friend’s Amendment 12 would introduce an overall cap on referendum spending by political parties and the designated lead organisations that will campaign for each outcome: either leave or remain. As my noble friend explained, it arises from his concern that the rules as they stand create great unfairness and that the remain side will be able to spend more than the leave side.

Amendment 12 would unpick one of the fundamental principles in the Political Parties, Elections and Referendums Act 2000, which provides a framework for this as for other referendums since its passage. My noble friend Lord Forsyth asked why we have limits and why are they linked to the results of the general election. My noble friend Lord Hamilton asked how we arrived at the provisions. We arrived at them after an exhaustive and exhausting parliamentary method of having draft legislation scrutinised carefully by Members of both Houses. After draft legislation, a Bill was drawn up that reflected the submissions that had been made. In particular, the Fifth Report of the Committee on Standards in Public Life, chaired by the noble Lord, Lord Neill of Bladen, provided recommendations that led to PPERA being passed. These provisions have been in place for 15 years. I was in the House 15 years ago. I did not take part in discussions on the Bill—at the time I was on the Front Bench carrying another brief—but I recall that much careful attention was paid to the Bill.

Having said that, I appreciate that there are concerns about unfairness. In this particular case, the concern appears to be that particular parties may support particular sides of the referendum. That is as may be. The report produced by the Committee on Standards in Public Life considered an overall cap for all campaigners on each side of the argument. The noble Lord, Lord Neill, concluded:

“The administrative apparatus required would resemble one of Heath Robinson’s most outlandish contraptions—and would almost certainly not work”.

Those are his words, not mine. As well as being administratively impractical, the report further noted that such a cap,

“would, or at least might, impose an unwarranted restriction on freedom of speech”.

I appreciate that my noble friend has tried to avoid some of the pitfalls of his earlier amendment in devising this one by focusing purely on certain categories of potential campaigners—the political parties and the designated organisations. However, as others, including the noble Lord, Lord Collins of Highbury, said, if one is a Conservative and finds that one’s national party is taking a neutral position, there are still places where one can put one’s money if one wants to bet on the outcome of the referendum. Political parties will not be the only campaigners at the referendum—far from it.

Although I know that my noble friend has tried to take great care to narrow down his amendment and focus it more, it still will not deliver what he might intend. The amendment provides that the Electoral Commission must set an overall spending limit and can then apportion this between the political parties and lead campaigners on each side. We believe that the spending limits are a matter for Parliament. They were decided by Parliament in legislation, on the basis that changes would also be made by legislation. The spending limits which apply to the EU referendum are therefore in the Act and, as I said, have been in operation for 15 years.

There is no guarantee that each of the campaigners within the umbrella cap will be able to raise the funds necessary to hit the spending limits. One or two noble Lords have referred to that, perhaps with some feeling of regret. We will have to see what happens. Perhaps to avoid the risk of restricting freedom of speech, the amendment does not deal with the other committed participants, each of whom will be able to spend up to £700,000. So the referendum will not only feature campaigning by political parties and the lead campaigners; there will be interest, and lots of voices, on both sides. But I would say that it is highly unlikely that exactly the same number of committed participants will register on each side of the argument. One can imagine that it would take an imbalance of only 10 campaigners on one side or the other to create a £7 million difference in overall potential spending.

These are the kind of vagaries with which this House and another place had to struggle when the initial Bill was considered and became an Act. Indeed, I note that when the draft Bill was published, the spending limits for political parties were the same—but it was then challenged during the course of the scrutiny of the Bill, particularly by the Committee on Standards in Public Life, which questioned whether it was right that political parties were subject to the same limits regardless of their respective number of MPs. So the sliding scale that we see now in PPERA was introduced in response to consultation on the Bill back in 2000. Therefore, we are not seeking to amend that basic framework.

These matters have been of concern before and I recognise my noble friend’s concerns, but they were considered carefully when the legislation was under consideration here, both in draft form and on the Floor of the House. Certainly, it is the case that the approach taken in this Bill by applying PPERA is that those who seek to spend modest amounts—that is, no more than £10,000, which I know some people reading this debate in Hansard may consider is by no means modest, but in the context of elections it is—can decide not to register and so be subject only to a relatively light-touch regulatory regime. Meanwhile, to prevent wealthy campaigners having an undue influence, there are individual spending caps for those who register.

What we see in the Bill is a well-established approach which is practicable and enforceable and, most importantly, encourages participation. So although I understand my noble friend’s concerns, I hope that, with that explanation, he will feel able to withdraw his amendment.

Oh dear. I have to say to my noble friend that, although I understand the practical difficulties, she has not addressed the point. The reason why we have spending limits is to create fairness. People will be able to provide funding through political parties and other organisations. Some may say that people could set up 10 organisations to compensate for a political party’s spending, but a political party will have an organisation on the ground. It is not about the quantity of money; it is also about how it is spent, the organisation and the machine behind it.

Throughout the conduct of this Bill, my noble friend has been extremely patient and helpful and I pay tribute to the way in which she has handled the Bill, but this just will not do, because the Government’s declared policy is that there should be seen to be a level playing field.

My Lords, I am not trying to address the overall point of fairness. In each and every referendum, the perception of what is fair will vary according to the position taken by the groups, as my noble friend has pointed out in his amendment, and according to the nature of the event. I am saying that these matters were considered carefully by this House and another place in drafting the legislation used for referendums. It is only on that basis that I am explaining that there is statutory provision for how we address the matter of donations. I am not seeking to put the world to rights in this case, in the way that I know my noble friend would like to put it to rights, as he sees it. I am saying that there is a statutory basis on which this system has to rely.

But my noble friend is the Government. It is not necessary to rely on the provisions in the PPERA legislation. It would be perfectly possible to put in place arrangements with regard to expenditure that ensured fairness. Once this legislation is in place, if it remains as it is, throughout the whole campaign I certainly will be arguing that it has been rigged in a way that gives an advantage to people who wish to stay in the European Union. I can understand why the Labour Party may feel at the moment that it may not be able to get lots of funding from people, but there will be people who will see this as an opportunity to provide more resource for what they believe to be an appropriate decision for the country. If we end up with limits that have the perverse effect of giving one side more funds than the other, it will be a source of grievance throughout the campaign—and if we end up with a close result, as has already been pointed out, people will argue that the result was bought and that it was unfair.

I understand the difficulties from the Government’s point of view, but to argue that legislation that was passed in 2000, which was thinking of referenda where, by their very nature, political parties would be divided, as opposed to this European issue where the first referendum was about sorting out the problems in a divided Labour Party—

I do not think the noble Lord is in a very good position to talk about divided political parties at the moment. If I were him, I would keep my head down on that subject.

It is very disappointing that my noble friend is not able to respond, and I hope that she may give further thought to this and that the vastly expensive Electoral Commission with its vast resources may be able to be a little more constructive than saying that it is all a political problem for which it has no responsibility. I will reluctantly withdraw the amendment because I do not think that if I divided the House at present it would be much appreciated by my noble friends or anyone else, but the response is very unsatisfactory and I think it will be a source of grievance unless it is addressed before this Bill reaches the statute book. I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Amendment 13

Moved by

13: Schedule 1, page 17, line 19, at end insert—

“Restrictions on campaigning by the EU institutionsFor the purposes of the referendum, the following is to be treated as inserted after section 119 of the 2000 Act—

“119A Restrictions on the EU institutions

(1) Notwithstanding the European Communities Act 1972, during the referendum period, an EU institution must not incur referendum expenses or do anything else for referendum purposes.

(2) Notwithstanding the European Communities Act 1972, a permitted participant must not accept a donation from an EU institution.

(3) In this section, “EU institution” has the same meaning as in Article 13(1) of the Treaty on European Union.

(4) In this section, “for referendum purposes” and “referendum expenses” have the same meaning as in section 111 of this Act.””

My Lords, I shall speak also to Amendment 18. Amendment 13 is to do with the EU Commission and the EU generally in terms of financing, by one means or another, this referendum. We were reassured in Committee that there are two reasons why we should not worry about this. The first was that an undertaking had been made by the EU Commission not to interfere in this referendum and the second was that John Penrose had said in another place that the EU is not so stupid as to get involved in a UK referendum.

I agree with him on one thing: the EU is not stupid. Just to give an idea of how much it is intending not to interfere, it has an EU task force to do with the UK referendum which is made up of six administrators and two assistants. In 2014, the EU spent €560 million on self-promotion. The reason why it is not stupid is because it has spent money before interfering in other people’s referenda with enormous success. It spent €1.5 million to persuade the Irish to vote for the Lisbon treaty and €3.8 million over three years to persuade Croatia that it was a good idea to join the EU.

If you judge the EU, and the EU Commission particularly, on what they do rather than on what they say, the answer is that they have moved into the former offices of the Conservative Party in Smith Square. I have no doubt that there is a very large number of people sitting there, and do we really imagine that they are going to be sitting on their hands doing nothing during a referendum on whether the United Kingdom should leave the EU saying “It’s nothing to do with us. We’re completely neutral on all this. We’re just going to sit here and answer emails and provide information where it is requested”? Come on—let us live in the real world. In Ireland it went so far as to spend a very large sum of money on issuing 1.1 million pamphlets to the Irish about why the EU was such a good idea. The problem with all this is that the EU has set itself up so that it can interfere in our referendum, and because of the total lack of democratic accountability—

I will give way in a moment. We cannot actually stop the EU interfering in our referendum because it is written into its treaties that it is allowed to spill out information at will and there is nothing we can do to stop it.

My Lords, I believe that the noble Lord, Lord Hamilton, may be conflating two different things. The first is the period of renegotiation that Her Majesty’s Government are undertaking at present and the second is the referendum. My understanding is that the task force is actually to deal with the renegotiation, which is at the request of the Government, not an initiative of the European Union, and therefore is not an interference in the referendum. I also believe that such interference would be misguided; it would not be right for the EU institutions to be involved.

At the end of the day, the EU thinks that it is free to issue information. Information can take many different forms, and I do not see that there is anything that can be done. The Minister has already said that we cannot actually stop the EU financing activities because they are all done in the name of information—and what is the difference between information and propaganda?

Is the noble Lord a regular reader of the Daily Express and the Daily Mail? Does he think that they provide objective, truthful information about the European Union?

The noble Lord has intervened so let me answer his question. I think that the Daily Mail and the Daily Express have their own views, as do the Guardian and the Independent. We have a free press; it is up to them what they do. We are talking here about what the EU does to finance activities during this referendum.

My Lords, does the noble Lord believe it is wrong for the EU to provide factual information about what it does when in large sections of our press, which are foreign owned, lies are printed about the EU virtually every day?

As the noble Lord, Lord Liddle, will know well, factual information from the EU amounts to it advertising that it is spending inordinate amounts of money on different interest groups of one sort or another around the UK, as if this were all manna from heaven: “Gosh, you’re lucky, the EU has decided to spend some money on you”. What it does not bother to tell people is that it is their own money.

The great problem that Lord Joseph had when he was in the Thatcher Government was to persuade Ministers to talk not about “public money” that they were being so generous with, but about “taxpayers’ money”. He managed to hold that line for a time with the Conservative Cabinet, but quite quickly it drifted off and we got back to Ministers constantly talking about how incredibly generous they were being with “government money”, as if all this stuff came from heaven. Of course, half the government money that we have now is borrowed anyway. It is an absurd mentality to think that people can be generous with other people’s money and get credit for it. Why should they, when it is actually the money that they have taken off the people of this country? We must live in the real world.

Amendment 18 is about purdah. The problem with purdah, as we all know, is that the Government are arguing that they have to allow the normal functions of government to continue. Obviously that is quite justifiable, but the point of my amendment is to restrict what can be done with regard to purdah. To return once more to my noble friend Lord Forsyth’s argument that this has to be seen to be a fair referendum, our worry is that we should not, as we did in the Scottish referendum on independence, suddenly have an enormous initiative from the Government to try to swing the vote because the polls are going the wrong way. We do not want some great initiative from the EU saying how incredibly generous or wonderful it has been in order to try to swing the vote here.

I moved an amendment on this in Committee, partly in jest. If the noble Lord wants a fair referendum, why does he not persuade his friends in the Conservative newspapers to give equal space to people who are in favour of our membership and people who are against?

I think that was for me. I am confused by the noble Lord, Lord Liddle, because he always produces these amendments in jest. I remember another one that said that the referendum should be delayed until 2019. That was tongue in cheek, was it not? The fact is that the Government do not control a free press in this country. You either have a free press or you do not, and if it is free it can take whatever line it wants to take. Perhaps we should be controlling the Guardian, with its attitudes to all this. This is absurd. We have a free press, which takes different sides on different things, and that is not a responsibility of the Government. Does the noble Lord want me to give way again? No, he does not.

I remind the House that before the dinner break I suggested that noble Lords should read page 151 of the Companion. I will repeat it, because obviously noble Lords have not been able to remember it:

“On report no member may speak more than once to an amendment, except the mover of the amendment in reply or a member who has obtained leave of the House, which may only be granted to: a member to explain himself in some material point of his speech, no new matter being introduced”.

My Lords, I think this is the only time I have spoken on this amendment, and with the permission of the noble Lord, Lord Liddle, and your Lordships, I will do so. I would add the BBC to the list of media outlets that my noble friend has been good enough to name. I ask the noble Lord, Lord Liddle, whether he has read the News-watch website about the BBC’s behaviour in this matter and whether he hopes that the BBC—

I am afraid that the noble Lord, Lord Pearson, has slightly confused things, because he was intervening on the intervention of the noble Lord, Lord Liddle, on me. Therefore this adds to the confusion. However, I do not think we will revert to talking about the free press and the fact that different newspapers have different views on things—I am not sure how productive that is. What we were talking about—or what I was talking about—was purdah and the fact that there is a concern, which I hope the Minister will address, that there will be some last-minute intervention, if the polls indicate that the country wants to pull out, to try to swing the vote with some bit of propaganda from the EU. Clearly, business has to continue to be done with the EU, but at the same time we do not want to see the whole referendum slewed by a last-minute intervention where the EU is being inordinately generous with other people’s money and doing something to try to swing the vote. That is what my Amendment 18 is about. I beg to move.

My Lords, I certainly support my noble friend, but I will speak to Amendment 21 in this group, which is in my name. We have had a lot of discussion, and my noble friend Lord Hamilton has emphasised the importance of having rules on purdah. I have to say to the noble Lord, Lord Liddle, that he needs to distinguish the difference between public and private money. The Daily Mail and other newspapers are not spending taxpayers’ money, while the EU is. My noble friend is concerned that money that is provided by the taxpayer should not be used for a political purpose. That is a very important principle. I know that he is so enthusiastic about the European Union that he sometimes finds it difficult to see the distinction, but that is what we are talking about, and that is why we have these rules on purdah.

It was with some dismay and utter disbelief that I discovered that if people break these rules on purdah—the Scottish Government, the British Government or some other public agency—there is no sanction or penalty for doing so. It is true that people can seek judicial review at vast expense and then get a judgment after the event. I think it very unlikely that any court would say, “You’ve got to rerun the referendum because a public body spent money which was prohibited by purdah”. Therefore, with this amendment I am seeking to create some kind of sanction.

In Committee, I suggested that we bring back the old thing that applied in local government. Very spectacularly, Dame Shirley Porter ended up getting a bill for £20 million for having transgressed in terms of her abilities to operate under statute. I understand that that system of surcharging councillors has now disappeared. In Committee, I suggested a system of surcharging but it was dismissed on the grounds that it was inappropriate. My friends in the Electoral Commission said that it would be wrong to hold individuals to account. I do not really understand that. I think that if people are responsible for spending public money in a way that is ultra vires, they should be held responsible for it. If no one is responsible then no one is going to make sure that the rules are obeyed.

Having found that that suggestion did not find favour with my noble friend the Minister, I have had another go. This amendment suggests that we create a system where a fine is imposed on whoever is responsible and that it should be not less than the amount of taxpayers’ money which they have had cause to spend in breach of the purdah rules. This may not be the ideal solution, but in Committee my noble friend was kind enough to indicate that she recognised that there was a problem and she said that she would think about what could be done by way of a sanction. I am hopeful that she might consider Amendment 21 to be the answer to this problem but, if it is not, that she herself will have an answer. If there is no effective sanction, it rather begs the question: what is the point of having the rules on purdah if they can be breached?

I anticipate that somewhere in her file my noble friend will have a note saying that it would be very embarrassing for any public institution to breach the purdah rules and that it would be disadvantageous to it in the campaign. All I can say is that, having experienced the Scottish referendum campaign, I would not put much trust or hope in that limiting the kind of misuse of public funds which my noble friend Lord Hamilton has talked about.

Does my noble friend agree that, if it comes to the difference between winning a referendum and losing it, a bit of embarrassment can be lived with?

I am sure that, like me, my noble friend would want always to strictly obey the law and the rules and that he would not be tempted to stray from the true path by the prospect of winning or losing. However, I am rather concerned that that might not be true of Governments. Individuals are not held responsible for the actions of Governments, which is why I am proposing this amendment.

My Lords, if I am free to talk to the amendment of the noble Lord, Lord Forsyth, there is perhaps a way in which we can penalise the European Commission if it cheats in this matter, as I assure your Lordships it will. We could withhold from our contribution to the corrupt coffers of Brussels an amount which would make the Commission think again before it behaved in a manner in which it certainly will. In the background, we have the gross figure that we pay to Brussels every year. According to the 2014 Pink Book, which has just come out, the figure was £19.994 billion, of which Brussels was graciously pleased to give us back £7.66 billion. That leaves £12.329 billion, which we pay net into the coffers of Brussels every year for it to waste on matters which do nothing in our national interest. I suggest to the Minister that the Government think about this. I ventilated this idea in Committee and repeat it now: if it behaves in the way that it certainly will, and if it knows that it is going to suffer a financial penalty, perhaps that will make it not worth its while doing so.

My Lords, I would like to speak briefly in support of the amendments from both my noble friends.

As my noble friend Lord Hamilton said, the Commission’s denial that it will campaign is belied by the evidence. We cannot take that promise on trust. Jonathan Faull stated in a letter dated 4 September that:

“The Commission will play the role that it is given by the treaties, notably to promote the general interest of the EU”.

That could be interpreted as campaigning or it could be seen as being more innocent than that. On 2 October, Jean Claude Juncker said that the European Commission would have,

“input into information activities in the run-up to the UK referendum”.

As my noble friend Lord Hamilton said, in the Irish referendum in 2009 and the Croatian referendum in 2012, it was very clear that the European Commission did use finance to, in the case of Croatia, foster an,

“increased level of public and political support to the EU”.

The EU institutions have budgets worth £3.1 billion, which include clauses allowing promotion of the EU.

In this country, the European Communities Act 1972 allows EU institutions to engage in activities that are authorised by EU law. To the extent that they are operating under EU law, EU institutions are exempt from UK campaign controls. The Electoral Commission says that it has no regulatory powers that could be used directly against these institutions if they do undertake such activity. That question needs to be addressed.

On Amendment 21, from my noble friend Lord Forsyth, I agree that judicial review is clearly a nuclear option that is not going to do much good if these rules are transgressed. If purdah is to be taken seriously, a more effective, prompter enforcement mechanism must be found.

My Lords, I do not want to say too much at this time of night but I want to make a couple of points.

First, on the amendment from the noble Lord, Lord Hamilton, the Commission can interfere, as he said, in all sorts of ways. One of the ways—this has some relationship to the alterations that were made earlier to the franchise—is through its entry into primary and secondary schools with what some of us would term propaganda material. The Education Act 1996 makes it clear in Clauses 406 and 407 that there should be balance. In spite of that, the Government, according to their Answers to my Written Questions, seem not to be very concerned with this and will do nothing to ensure that schools and head teachers make sure that there is balance on the question of Britain’s membership of the European Union.

Even now, the EU is seeking to advertise itself in our countryside. It wants farmers to put up huge advertising boards, saying, “You are getting all this money from the EU; you should be grateful and should therefore advertise the fact that this money is coming from the EU”. Not many farmers are going to be fooled by that, because they will know that, for every pound we get, we have first to give the EU three, so the grants to farmers are in fact some of our own money coming back. The rest of it, or much of it, goes to other farmers to subsidise their much less well-farmed areas.

There are all sorts of ways in which the EU can intervene in our affairs. It does so and it will continue do so. One way or another, by hook or by crook, the EU will interfere in the referendum when it comes.

My Lords, I want to pick up on the point made by the noble Lord, Lord Stoddart. As a farmer—I declare my interest as a farmer—I remember getting this directive that we must advertise that we are getting money from the EU through the single farm payment, or what now is the basic payment scheme. Of course, my noble friend Lord Pearson made the point it is not EU money at all. It is money that is given to the EU by the British taxpayer—mulcted from the British taxpayer—and recycled through Brussels, who tell us what to do with it. It seems completely absurd that we have to put up a big sign on our fields saying how generous it is of the EU to give us this money. It is not. I, of course, alter those signs slightly to put a different twist on them.

On the broader point of the noble Lord, Lord Hamilton—he made the case, I will not repeat it—it is essential that this provision be included in the Bill. Of course, the EU Commission has form when it comes to referendums, as we have heard, and I will not repeat the point. It is essential that Mr Jonathan Faull’s letter not be taken as gospel and that is the end of the story. Again, it is about fairness and the referendum’s being seen to be fair. It will not be seen to be fair if the EU Commission starts chucking its weight about, which it has always done and wishes to do in this case.

My Lords, I regret that some Members of this House appear to regard the European Commission as a malign force that is out to do down the United Kingdom. Jonathan Faull is head of the task force sent by the Commission to negotiate the renegotiation with the United Kingdom, which is an entirely legitimate and useful thing to do. I have no doubt that our free press will be very watchful if the Commission does anything in the referendum that is seen by the Telegraph or the Mail as overstepping the mark.

I want to say something that links this amendment with the one we will be coming to next, which is about impermissible external funds. I am very conscious that the Russian Government are supporting a number of right-wing parties in other countries in western Europe, and that Russia is the only major state which is thoroughly in favour of Britain’s leaving the European Union. I am not in any sense suggesting that funds have begun to pass in any direction to anyone. However, when I was in government and involved in the Transparency of Lobbying Bill, we were much concerned about funds from other countries—from right-wing sources in the United States, for example—coming to various campaigning bodies in this country. The amendment of the noble Lord, Lord Jay, touches on that issue.

Of course, we have to be concerned that this is a British debate and a British campaign, and that applies to all external actors. I think all of us agree that the Commission needs act extremely carefully. On the other hand, other Governments within the European Union will have their say, because they have national interests which they will wish to express. Therefore, the question of how we play this game—whether we would regard an intervention by the German Chancellor or the Dutch Prime Minister as untoward—is the sort of issue we will no doubt discuss. On the finances, we will wish to police this very carefully, but let us not go over the top. The noble Lord, Lord Hamilton, sometimes gives the impression that the enemy lies in Brussels and threatens to subvert our national sovereignty.

I think the noble Lord, Lord Wallace, hit the nail on the head when he said that transparency is key here. Obviously, the European Commission is acutely aware that any perception of interference in this referendum will have the opposite effect to what it intends.

The EU intervened on the Lisbon treaty referendum in Ireland, and the Irish passed it. The EU intervened for three years on trying to get Croatia into the EU, and Croatia came into the EU. It intervened in those two cases very successfully. Why should it change its spots and not intervene in this one?

Precisely because of the point that I make: I suspect that such intervention will have completely the opposite effect, whereas in Ireland perhaps it even encouraged people. I do not think that that will be the case here. If there is seen to be interference, people will see it that way and will not be very happy.

I am grateful to the Minister for circulating the correspondence on this, including the commitment by the Commission. Obviously, it states that it will carry out its treaty obligations, but in no way will it be involved in anything that could be perceived as interference in a matter that is strictly for the British people and the British Government—I agree with the noble Lord, Lord Wallace, on that.

Turning to the amendment in the name of the noble Lord, Lord Forsyth, I think that there is a legitimate point here that needs to be properly addressed—he should not look so surprised that I agree with him; I suspect that we agree on a lot of things. The point is that we have an offence where the sanction is in a way paid by the victim, which does not make sense. The Electoral Commission does not agree with the formulation because it does not want to accept such a responsibility. In Committee, I referred to sanctions other than judicial review that could be considered in relation to individuals. In all walks of life, people are subject to such sanctions. In the case of public office and civil servants, there is the Ministerial Code and the Civil Service Code. I would be keen to hear from the noble Baroness whether she has given any thought since Committee to how we can have a regime where, if an offence is committed, the perpetrator pays the cost and not the victim.

My Lords, Amendment 13, tabled by my noble friend Lord Hamilton, relates to the role of the EU institutions during the referendum. It follows the wording of a similar amendment that my noble friend tabled in Committee. The concern that he and other noble friends have expressed is that EU institutions may have an undue influence on the outcome of the referendum.

Although there are differing views on that, it is no doubt a legitimate concern and certainly one which the Government share. This is a referendum to be held on Britain’s membership of the European Union. It is therefore clear that the impression of outside interference or direct campaigning by overseas bodies with a vested interest would undermine public trust in the outcome. It would also be completely counterproductive; I think that people would see through it.

That is why the Government have ensured that sensible controls will apply on who can spend money to influence the referendum and how they can be funded. Some 44 of the Bill’s 62 pages relate to exactly these issues.

Campaigners at the referendum can accept money only from individuals or bodies who have a sufficient connection to the UK or to Gibraltar. In Committee, I went through in detail issues relating to permitted donors and permitted participants—I think that it would be wrong if I tried to go through that again on Report.

As the EU institutions are not eligible donors, a permitted participant would be committing an offence if they accepted money from the EU institutions to campaign. I should re-emphasise that permitted participants cannot accept donations of more than £500 from EU institutions. In part, therefore, my noble friend’s amendment is unnecessary.

The amendment has another arm to it, which applies directly to the EU institutions and would prevent them actively engaging in campaigning.

My Lords, I wonder whether I might address my noble friend’s point, because we are on Report and I am trying to give an answer to questions put by him in speaking to his amendments.

Specifically on that point, in the letter that the European Commission wrote—I refer to the letter that was circulated—the last part states that,

“the referendum itself and the related campaigns are a matter for the British government and the British people in which the Commission, in view of its institutional role, cannot and will not take an active part”.

I gave an undertaking, which the Government have fulfilled and will continue to fulfil, that we will engage at a diplomatic level with the European Commission to ensure that that is observed in spirit as well as in the letter.

I am saying that we are working with the European institutions and they should not break the rules. That, of course, is a matter of interstate agreement.

Where the institutions are operating in their official capacity within our jurisdiction they are afforded immunities and privileges under EU law. I know that the noble Lord has previously referred to that. However, as the Government have already made clear, the best way to prevent EU institutions from influencing the outcome of the referendum is through the process of constructive dialogue. That is what we have been doing and will firmly continue to do. That is why I circulated the letters. Indeed, I note that a written question was put in the summer or the spring—I suppose you could call it autumn in parliamentary terms; I always wonder what the seasons are—and on 4 September an answer was given by President Juncker on behalf of the Commission. He simply said that the Commission does not campaign in national referendums. We will hold him to that, and that is exactly the point.

My noble friend has referred to constructive dialogue. Does she think that there was constructive dialogue between the Irish Government and the EU when they put out 1.1 million leaflets, at a cost of €139,000, during the Lisbon referendum? Presumably the Irish Government were quite happy that the leaflet should go out, but it upset the people who did not want to accept the Lisbon treaty.

My Lords, the Government would not be happy with any such move and the European Commission is clearly aware of that. We are not the Irish Government and this is a referendum on a different matter.

I understand and recognise the legitimate concerns about these matters and that is exactly why the Government are putting so much effort into trying to address them. It is not a matter of taking our eye off the ball: we will continue working on these issues.

My noble friend Lord Hamilton has tabled two amendments, Amendments 18 and 19, to Clause 6. The clause provides a power for the Minister to make regulations modifying Section 125 for the purposes of the EU referendum. However, I repeat the assurance that I made in Committee that the Government have no plans to use the regulation-making power under Clause 6. I tried to make that as clear as I could. I appreciate though that my noble friend seeks to limit the power so that Ministers can make regulations only where they have reasonable grounds to consider that regulations are necessary to secure the continuing function of the Government or the safety of the public or a section of the public.

This follows on from our discussion in Committee when noble Lords were trying to get me to posit the future—to look into a crystal ball and say, “This is what may happen”. The very nature of why Clause 6 was inserted in another place was because this would be something that people could not foretell. Not one voice in the other place was raised against Clause 6 going into the Bill. We ought to bear that in mind because, having given the undertaking that we have no plans, we cannot foresee the future. We have to have a care for the safety and security of this country and it would be unfortunate for this House to consider constraining the ability of the Government properly to be able to respond.

The reason, I suspect, why not a voice was raised in another place is that safeguards requested by the other place were put into the use of this power before the amendments were brought forward. These state that regulations would need to be made at least four months ahead of the poll following consultation with the Electoral Commission—and of course that would be subject to the affirmative resolution procedure in both Houses.

As I say, although there are no plans to use the power, there may be exceptional circumstances which would require the Government to lay regulations before Parliament on this issue. No doubt we would all be rather surprised if that were to happen, because, as I say, we have no plans to do so at the moment. However, a responsible Government should be able to keep the power available.

My noble friend also tabled an amendment to remove Clause 6(8) because he is worried that it might ensure that the Government cannot disapply the restrictions in Section 125 under the power in Clause 4. What I hope to be able to do is give my noble friend a reassurance that his concerns are misplaced in this respect. I can assure him that Clause 4(1)(c) as currently drafted simply would not allow the Government to disapply in regulations the restrictions in Section 125 for the EU referendum; we could not do it. Like Clause 6, it could be used to modify aspects of Section 125, although we do not have plans to do so. But we consider that Clause 6(8) is necessary for a rather technical reason. It ensures that the power to amend Section 125 in Clause 6 does not in any way call into question the general regulation-making power in Clause 4 to make modifications to PPERA for the purpose of the EU referendum. The general regulation-making power is essential for aspects of the published conduct rules; it is not about the purdah enshrined in Section 125, about which I know and understand why some noble Lords have concerns. In this case, it could be used if we identify other issues with the PPERA provisions. I can give my noble friend an assurance that, like Clause 6, the power in Clause 4 can be used only following consultation with the Electoral Commission and will of course be subject to the affirmative resolution procedure.

Finally, I come to the amendment tabled by my noble friend Lord Forsyth, proposing a penalty for a breach of Section 125. Interesting questions have been raised about the whole issue of how one holds people to account. My noble friend is seeking to impose a monetary penalty on a person who breaches the restrictions in Section 125. The Electoral Commission has no role in the enforcement of Section 125, and has said in its response that it is not clear how this significant change to its role and powers would work in practice. That is the issue; it is not what the commission was set up to do and it would change its role.

We believe that the current arrangements are appropriate and that they work. Those within the scope of Section 125 will be legally obliged to comply with it. Like other legal obligations on public authorities across the statute book, it can be enforced through judicial review. That is the purpose of judicial review: to ensure that public authorities comply with the law. I know that my noble friend has concerns that this may be a paper tiger, but he has been an admirable Secretary of State in difficult times. He will know how difficult it is for a Government to face judicial review; he will know about the inconvenience and the cost. I would expect that others would be mindful of that as well. Judicial review is something that this Government seek to avoid having to incur, and I am sure that other public bodies take the same approach.

My Lords, with due respect, given the legal system of this country—in which I should declare an interest because my husband is a barrister—I would say that if a prosecution were to be brought in a civil case, or indeed in a criminal case, I doubt whether it would be resolved before the referendum had taken place. However, my noble friend has raised a justifiable concern about how we deal with these punitive matters. If we had the luxury of a separate piece of legislation to look at how all these matters are to be resolved, consideration could be given in relation to that. However, I think that that is a long way off at the moment. Of course, as a politician at the Dispatch Box, “long” to me can be a matter of just a few weeks because they can seem like a long time, too—particularly if I have breathing down my ear on my right-hand side a Chief Whip who has had an overfull session already, so I shall not try to offer extra legislation. I want to get out alive.

I do not know whether the noble Baroness is coming to the end of her peroration, but I have not yet heard her answer the question that I asked. Perhaps she will do so, in which case I will sit down and wait for the answer. I suggested in Committee, and again this evening, that because we are dealing not so much with the leopard that does not change its spots but with a corrupt octopus that cannot do anything else but extend its tentacles around every morsel of our democracy which comes within its reach, it is entirely possible that the Commission will break the rules. My noble friend Lord Hamilton mentioned Ireland and Croatia. I would mention Denmark and France—which voted clearly against the constitution that came back in the shape of the Lisbon treaty and it was persuaded to vote in favour of it.

We are dealing with a fundamentally dishonest, corrupt and failed body, which is bound to try one way or another to make sure that the British people do not vote to leave its clutches. I repeat again: why do we not make it clear to the Commission that if it breaks the rules and we catch it at it, we will fine it by a multiple of the amount of money it has spent? We have £12.329 billion at our disposal. Surely we should be able to make that clear to it.

My Lords, this Government are not corrupt. This Government have strong leadership. This Government have given their word to work with all our colleagues across Europe to ensure that this referendum is as fair as it can be—and this Government will deliver. I hope that my noble friend will feel able to withdraw his amendment.

My Lords, the amendments I tabled by necessity were probing for the simple reason that we cannot stop the EU getting involved in our referendum. All we can rely on is the voluntary statements that it has made. We need to have an act of faith over this. We have to presuppose that if this referendum runs and it is getting very tight up to referendum day, and it is debatable whether the country will vote to stay in our pull out, somehow the EU will stand back and not do anything when it has the power to do it—to actually influence that final result.

Some people will believe that the EU will be totally honourable to its word on this. Others will say that it had such success in Denmark, Ireland and Croatia, so why should it not try it here? The great argument is that it will not do it because it would be counter- productive. I do not quite understand that argument. It was not counterproductive in Denmark. It was not counterproductive in Croatia. It was not counterproductive in Ireland. Why should it be counterproductive here?

But as I say, these are probing amendments. There is nothing the Government can do to constrain the EU. I suspect that the idea of the noble Lord, Lord Pearson, that we should fine it is out of order completely, so there is nothing that we can do in this Bill to stop the EU interfering. If it does not, in my opinion it will be a miracle. But I am happy to withdraw the amendment.

Amendment 13 withdrawn.

Amendment 14

Moved by

14: Schedule 1, page 22, line 34, at end insert—

“Prohibition on use of impermissible funds to meet referendum expensesFor the purposes of the referendum, the following section is to be treated as inserted after section 119 of the 2000 Act (control of donations to permitted participants)—

“119A Prohibition on use of impermissible funds to meet referendum expenses

(1) Any money or other property received by any individual or other body, at any time, from a person who is not at the time of its receipt a permissible donor falling within section 52(2) or a person falling within paragraph 6(1A) of Schedule 15, must not be used to meet any referendum expenses.

(2) Any person who allows the use of such money or property as set out in subsection (1) to meet referendum expenses shall be guilty of an offence.

(3) Where a person is charged with an offence under subsection (2), it shall be a defence to prove that the person was unaware that the money or property was not received from a permissible donor.””

My Lords, Amendment 14 is a technical and—as I reassured the noble Lord, Lord Hamilton, in advance—neutral amendment, but nevertheless an important one. Its effect would be to clarify that funds from an impermissible source, whenever received, should not be spent on referendum campaigning.

The amendment is supported—indeed, encouraged —by the Electoral Commission, which has identified a clarification that is needed in the provisions designed to stop donations from foreign sources being spent on the referendum. My amendment is designed to address this.

As background, the Electoral Commission has come to the view that the controls in the Bill, which flow from the usual PPERA regime and which prevent campaigners accepting donations from foreign sources, come into effect only at the point the campaigner registers with the commission to be a permitted participant in the referendum. In practice, this means that there may be no control on the sources of funding a campaigner receives before it registers with the Electoral Commission, even if those funds are then used for campaigning during the referendum.

My amendment is designed to make clear that a campaigner cannot use any money for its referendum campaign from a source that would otherwise be impermissible under the PPERA regime. That, of course, includes donations from foreign sources. Without this clarification it would be possible for a campaign organisation to receive significant donations from foreign sources before it registered as a permitted participant. That money could then be spent in its entirety on campaigning during the referendum period. As I said, the amendment is designed to remove that risk.

This is a technical, neutral but important amendment that will help reduce the risk of accusations after the referendum that one side or the other has behaved improperly. I beg to move.

My Lords, this seems a very sensible amendment. I was going to try to save time by asking the noble Lord before he sat down whether “foreign sources” includes the European Commission and the European Union. I will give way to the noble Lord so that he can intervene and tell me the answer.

Because it seems to me that if it did not include the European Union and the European Commission, it would make something of a nonsense of the argument that he put forward. Perhaps my noble friend could indicate what the position is.

I have one brief question relating to Gibraltar. Political parties currently are not permitted to accept donations from Gibraltar, but when the Bill becomes enforceable they will be if it is for the purposes of the referendum. I want to understand how the amendment will impact in particular on the changes relating to Gibraltar.

My Lords, Amendment 14, tabled by the noble Lord, Lord Jay, relates to the controls that apply to donations received by campaigners. I was asked about the European Commission. As I explained in Committee, one of the technical issues is that permitted participants in these matters are individuals and bodies that intend to spend more than £10,000 on campaigning during the referendum period and so register with the Electoral Commission. The European Commission cannot be a permitted participant. If it were to spend money outside the campaign and in Europe, there are controls over where it can give that money and how it can give it. For example, there is a prohibition on accepting donations of more than £500 from an ineligible source, so people cannot accept money from it.

I was going to try to reduce the amount that I would read out at this late hour, but it looks as though I am being sucked back into doing exactly that. Perhaps I ought to try to address more closely Amendment 14 itself.

In considering the amendment, two questions have to be asked: is there a problem, and, if yes, does the amendment provide the solution? To the first question the answer is not straightforward, which is why the noble Lord tabled the amendment. He has done so after discussion with the Electoral Commission. It may come as a bit of a surprise to see this briefing from the Electoral Commission at such a late stage, particularly because I notice that my noble friend Lord Forsyth has been trying to get other information and has not been given the opportunity to obtain that. All I can say is that this briefing from the Electoral Commission that we have all seen arrived at about quarter to 12 in noble Lords’ in-boxes yesterday. The Electoral Commission has suggested that the rules are unclear. As I remarked earlier, it is 15 years since PPERA became an Act. Over that period, all the conditions which the Electoral Commission now calls into doubt have been operating. Therefore, it is rather a surprise that these matters have been raised at this stage, but there you go.

The conditions in PPERA applied for the AV referendum and were replicated, through an Act of the Scottish Parliament, for the Scottish independence referendum, and nobody called them into question then. Indeed, at that stage, guidance from the Electoral Commission itself clearly and accurately explained the rules to campaigners in Scotland. Furthermore, the commission’s own report on the Scottish independence referendum noted that it provided,

“a model that can be built on for any future referendums”.

Despite that, as noble Lords will note, the Electoral Commission’s briefing supports this amendment because the commission now has concerns about the rules. We have to take those concerns seriously because that is the whole point of trying to have rules upon which a fair referendum is to be based. The concerns relate to the fact that PPERA does not prevent campaigners accepting donations before they register as permitted participants, if the donation would have been impermissible after registration. If noble Lords consider that this is a problem, it must then be asked: is Amendment 14 the solution? Here the answer is clearly no for three reasons. First, it goes too far. The amendment would apply to donations received by any individual or organisation, regardless of whether or not they are, or later become, a permitted participant. At any point prior to the referendum, anyone, regardless of the size of the donation or the amount they will spend, could commit this new criminal offence. This really would be a sledgehammer to crack a nut.

Secondly, the amendment is unworkable. It would create an offence of allowing the use of money received from an impermissible source to meet referendum expenses. Currently, the rules do not require campaigners to track what each pound received is spent on. This is for a good reason, as attempting to do so would be a herculean task in administrative time. It would only ever create an arbitrary link between money in and money out. I find it difficult to imagine how that might be accurately assessed. How would anyone be able to prove that the £1,000 a campaigner received from a particular source was the exact same £1,000 spent on referendum expenses several months later? How could it work for charities and other organisations that receive donations from all over the world for different reasons? Clearly, that matter would have to be looked at if the amendment is to be put right but, as the amendment stands, it does not work.

The fundamental changes that Amendment 14 would introduce would begin to unstitch the fundamental principles that apply in PPERA, in particular the purposes of having a referendum period and permitted participants. These are all concepts which, to date, have been accepted by Parliament and endorsed by the Electoral Commission, and have provided the framework for well-controlled referendums in the UK.

The Government had questioned the whole issue of the potential for concern over donations received prior to registration. That is the kind of questioning one has to do. That is why we have required reporting ahead of the poll in the Bill, following the approach taken at the Scottish independence referendum. Where PPERA provides only for permitted participants to report on donations after the poll, the Bill also requires them to report publicly before the poll on donations received. That has two benefits. First, registered campaigners must be transparent about the sources of their funding before the vote takes place. More significantly in this context, the reports must detail reportable donations received during a set reporting period, even if received prior to that campaigner becoming a permitted participant—because you can change from being a campaigner to being a permitted participant—provided the donation was for the purposes of meeting referendum expenses during the referendum period.

This gives a flavour of how complicated this issue is. This approach works within the existing framework and maintains a proportionate approach to controlling campaign funding. Given the concern over the influence of overseas funding, we believe that having to report all these matters immediately prior to the referendum would act as a deterrent in most cases, even though the rules do not seek to regulate everybody at all times. It does mean that if you become a permitted participant, money received prior to that point from a source that would be impermissible once you had registered would have to be publicly declared before the referendum took place.

I come back to the underlying principle that it is important to ensure that there is transparency and that the transparency requirements imposed by pre-poll reporting are as effective as they can be. In the light of the noble Lord’s concerns, I give an undertaking that the Government will look again at how the controls on pre-poll reporting work to deliver the appropriate level of transparency, balanced with a sensible compliance burden. We will consider these matters but they are complicated and technical. I cannot promise to come back with something that actually works but we will do our best.

In coming up with its proposals, the Electoral Commission has diagnosed what it now sees to be a problem but has not found the solution in its amendment. I therefore hope that at this stage, with the commitment I have given to look at this very closely, the noble Lord, Lord Jay, will withdraw his amendment. Of course, I undertake to work with him between now and Third Reading to see what can be achieved on these matters.

I am very grateful to the Minister. I think there is an issue here but I am grateful for her commitment to look into it and particularly to focus on the need for transparency. In the light of that commitment, I am happy to withdraw the amendment.

Amendment 14 withdrawn.

Clause 4: Conduct regulations, etc

Amendment 15

Moved by

15: Clause 4, page 3, line 9, after “enactment” insert “(other than this Act)”

My Lords, in moving Amendment 15, I will speak also to government Amendments 16 and 17. These are technical amendments required to implement one of the recommendations of the Delegated Powers and Regulatory Reform Committee. They are to Clause 4, which provides that the Minister may make regulations about, among other things, the combination of the referendum poll with other polls taking place on the same day. The Delegated Powers and Regulatory Reform Committee raised concerns about the scope of the power to make combination regulations set out in Clause 4(2), as currently drafted. The committee’s concern was that the power to amend what will become the European Union Referendum Act itself was too broad.

I begin by saying that the Government have no intention of combining this poll with any other planned election, as I made clear at earlier stages. The Bill already prevents the referendum from being held on days in May 2016 or May 2017 when elections are already planned. So this power is very much a contingency one.

We have considered carefully the committee’s recommendation and the amendments we have tabled narrow the power contained in Clause 4(2) to amend or modify the Act. Under the amendments, the power would apply only to those parts of the Act that may need to be amended or modified in the event of the combination of the referendum with another poll. The relevant parts of the Act are: the definition of “counting officer” in Clause 9(1); Clause 9(2), which defines the voting areas to be used for the referendum; and Schedule 3, which makes further provision about the referendum. The power may not be used to amend any other part of the Act.

I am grateful for the work carried out by the Delegated Powers and Regulatory Reform Committee, as I said on the first day in Committee. I am pleased that the Government were able to respond by agreeing to all the committee’s recommendations. I beg to move.

Amendment 15 agreed.

Amendments 16 and 17

Moved by

16: Clause 4, page 3, line 16, leave out “this Act or any other” and insert “any”

17: Clause 4, page 3, line 18, at end insert—

“( ) The reference in subsection (2) to any enactment includes—

(a) the definition of “counting officer” in section 9(1), (b) section 9(2), and(c) Schedule 3,but does not include any other provision of this Act.”

Amendments 16 and 17 agreed.

Clause 6: Power to modify section 125 of the 2000 Act

Amendments 18 and 19 not moved.

Amendment 20 had been retabled as Amendment 7B.

Amendments 21 and 22 not moved.

Clause 7: Regulations

Amendments 23 and 24

Moved by

23: Clause 7, page 4, line 42, leave out paragraph (b)

24: Clause 7, page 5, line 2, leave out subsection (5)

Amendments 23 and 24 agreed.

Consideration on Report adjourned.

House adjourned at 10.46 pm.