Political Parties and Elections Bill

Public Bill Committee, 6 November 2008.

Written evidence to be reported to the House

Nicholas Winterton (Conservative, Macclesfield)

We will now hear oral evidence from witnesses from the Electoral Commission, both of whom I most warmly welcome to the sitting. For the record, Peter Wardle and Lisa Klein, will you identify yourselves and your position to members of the Committee?

Nicholas Winterton (Conservative, Macclesfield)

I think that you have introduced your colleague—unless she would like to say anything else.

Nicholas Winterton (Conservative, Macclesfield)

Excellent. Before calling the first hon. Member to ask a question of our witnesses, I remind all members of the Committee that questions should be limited to matters within the scope of the Bill. In view of time constraints, I request that both questions and perhaps the answers of our witnesses should be succinct.

Jonathan Djanogly (Conservative, Huntingdon)

Good morning. I want to talk about schedule 1 to the Bill, but before doing so I wish to ask whether there are any particular points that the Electoral Commission would like to discuss this morning, because we can address them as well.

Jonathan Djanogly (Conservative, Huntingdon)

Right. That is a fitting point on which to start. In terms of size, schedule 1 takes up well over half of the Bill, so it is an important part. There is some confusion about who actually prepared or wanted what has now become schedule 1. Some of it clearly comes from the Political Parties, Elections and Referendums Act 2000, some seems to have been proposed by the Electoral Commission and some seems to have been proposed by the Ministry of Justice. It might be helpful if you could go briefly through the schedule and identify the new powers, and say who proposed them.

Jonathan Djanogly (Conservative, Huntingdon)

Can you explain to what extent you differed in approach from the MOJ? You have mentioned having a court process rather than a magistrates process. Are there any other areas that you had a difference of opinion on?

Jonathan Djanogly (Conservative, Huntingdon)

A number of people are asking whether the proposed powers will be justified. Do you think that they are justified in terms of the number of people on whom they are likely to be used? Also, how will the commission be held to account for the decisions that it takes with the new powers?

Jonathan Djanogly (Conservative, Huntingdon)

Right, and through parliamentary scrutiny? Could you explain to the Committee how that works?

Nicholas Winterton (Conservative, Macclesfield)

Mr. Djanogly will have one further question, then I will call any other member of the Committee who wishes to ask a question on investigation powers, so that we can deal with this tidily. Then I shall move on to David Howarth, who wants to ask questions on triggering.

Jonathan Djanogly (Conservative, Huntingdon)

Thank you, Sir Nicholas. If I can stick to parliamentary scrutiny for my final question, are you saying that you think you should be more responsible to the MOJ on this matter rather than the Speaker’s Committee? There will be concern among Members of Parliament that these new powers, which are extensive, will be adequately reviewed by Parliament on an ongoing basis. When you have made a decision that hon. Members want to question, how do you see that going through the system?

Tony Lloyd (Labour, Manchester Central)

I will want to return more generally to themes in clauses 8 and 9 and sources of donations at a more appropriate stage, Sir Nicholas.

Specifically in the context of investigation, may we have some comments on the Electoral Commission’s own views in the paper that it sent to us? Paragraph 20 discusses the changes in the audit process with respect to donors and unincorporated associations. In this regard, specifically, the commission argues that these changes will not add materially to transparency. Have there been instances where the lack of investigation powers has prevented the removal of the veil of the unincorporated association or discussion of the vexed question of foreign donors? Are investigation powers enough now? Will the new powers make this a more straightforward process?

Martin Linton (Labour, Battersea)

I want to ask about the provisions, both in the existing Bill and the new Bill, to deal with unintended errors. Obviously, the main part of your work is searching out intended deceit and corruption, which is important, but equally it is important to know how the commission deals with honest mistakes, when it comes across them. As I understand it, section 167 of the Representation of the People Act 1983 allows people to seek relief if they make an honest mistake. Should there not be a similar provision in your investigative powers? If you come across a case where you do not believe that there was any intention to deceive or to fail to comply, but nevertheless a mistake was made, will you have sufficient latitude under the Bill to say that because there was no intention to deceive, you do not need to proceed?

Martin Linton (Labour, Battersea)

You are saying that a sanction is necessarily appropriate if there is an unintended error. Surely, for many unintended errors, you would not want a sanction.

Andrew Turner (Conservative, Isle of Wight)

What penalty or sanction will you be evidencing? Will it be a criminal action or a civil action?

Nicholas Winterton (Conservative, Macclesfield)

We shall now move on to triggering, and I call the Liberal Democrat spokesman.

David Howarth (Liberal Democrat, Cambridge)

Thank you, Sir Nicholas. Clause 10 proposes to bring back the system of triggering so that instead of there being a clear date for when election expenses start, there will be different dates for different people depending on whether they behave like candidates. I believe that you said in September that it is important in this area for lines to be drawn clearly in legislation, otherwise there will be great scope for confusion and avoidance. The last time we had this type of rule, many people said that it was unenforceable because it was so unclear.

What is your view of the present state of the Bill? How clear is it, and to what extent will you have to give supplementary guidance, as you are invited to do in the Bill, before the measure can effectively be put into operation?

David Howarth (Liberal Democrat, Cambridge)

On the assumption that the Bill stays as it is, how long do you think that it will take to produce the best guidance that you can produce in the circumstances, after the Bill becomes law?

David Howarth (Liberal Democrat, Cambridge)

The Secretary of State said that one of the reasons why the situation was clearer now was that the law had changed on what counted as an expense. Does that help you to issue the guidance or does it make it more difficult because, in a way, it wipes out the previous case law?

Eleanor Laing (Conservative, Epping Forest)

Continuing on the same subject, on Tuesday, the Secretary of State seemed to agree with the Committee that unclear law is bad law. He appeared to suggest that the relevant part of the Bill would not come into effect until after the Electoral Commission had produced its guidelines. That puts an enormous onus on your organisation. Given the current lack of clarity in the Bill, do you have specific recommendations for improving the drafting, so as to make your task of producing clear guidelines more possible?

Eleanor Laing (Conservative, Epping Forest)

Thank you for that. We are also concerned about the retrospective nature of the Bill. Last Tuesday, the Secretary of State clearly told the Committee that it was not his intention for the Bill to be retrospective, and he agreed in principle with the point that retrospective law is bad law. As the Bill stands, do you think it likely that there will be a retrospective effect if it goes through? It might not be the intention of the Secretary of State, but will it be a fact arising from the Bill?

Nicholas Winterton (Conservative, Macclesfield)

This is interpretation, Mr. Wardle.

Eleanor Laing (Conservative, Epping Forest)

Thank you. That is very helpful. If we take that a step further and consider the Bill’s possible retrospective effect—whether intentional or not—I am also concerned about its disproportionate effect. If our democratic process is to be respected, it must be seen to be fair. It would also appear that, if the Bill in its current form becomes an Act of Parliament, candidates will be disadvantaged by comparison with sitting Members of Parliament. Is it possible that a situation could arise whereby a candidate could be deemed, at the point of triggering, to have already spent to the extent allowed for election expenses, and would therefore not be able to campaign at all during the election period?

Eleanor Laing (Conservative, Epping Forest)

That is very helpful. Thank you very much.

Alan Reid (Liberal Democrat, Argyll and Bute)

To pursue the last question, the Bill talks of expenses being incurred. What is your definition of “incurred”? For example, what if a candidate contracted with a printer for, say, four leaflet runs for the whole constituency and paid before Royal Assent? If the money was handed over before Royal Assent, would that be a loophole in the present wording of the Bill?

Alan Reid (Liberal Democrat, Argyll and Bute)

Existing legislation allows you to recommend increases in the expenses limit. If the Bill is passed, so that expenses limits cover a much longer period, would you recommend an increase in the expenses limit? If so, have you given any thought to what that would be?

Alan Reid (Liberal Democrat, Argyll and Bute)

Finally, in paragraph 25 you raised the problem of transport, and how that could be apportioned for election expenses. To give you an example from my own constituency, as a sitting MP, I fly out to one of the islands to hold a surgery and, while I am there, distribute some leaflets about voting for me at the next general election. The literature itself is clearly election expenses, but how do you apportion the travelling expenses? If my main purpose for going was to hold a surgery but, in addition, while I am there, I incur election expenses, how do you apportion the travel?

Alan Reid (Liberal Democrat, Argyll and Bute)

Only in the regulated period.

Alan Reid (Liberal Democrat, Argyll and Bute)

Thank you.

Nicholas Winterton (Conservative, Macclesfield)

Two hon. Members wish to come in on this subject, and I want to help the Committee. We have three other important areas to cover: the composition of the commission, donations, and registration. Will hon. Members who wish to ask a brief question under this heading of triggering do so quickly?

Tony Lloyd (Labour, Manchester Central)

This relates back to ambiguity about the timing of the impact of candidacy. I have been surprised by Peter Wardle’s remarks so far, because clause 10(5) on page 9 states:

“The amendments made by this section do not apply to any expenses incurred before the commencement of this section.”

Is there really any ambiguity in that?

Eleanor Laing (Conservative, Epping Forest)

Has the Electoral Commission made any assessment or comparison of the effectiveness of recent general elections when there was a triggering mechanism, and when there was not? In the recent past, we have had general elections when there was triggering, as you mentioned, Mr. Wardle, but during the last two there was not. Has there been an assessment or comparison of the effect of that?

Martin Linton (Labour, Battersea)

It was written by Lord Ashcroft and called “Dirty politics, Dirty times”.

Nicholas Winterton (Conservative, Macclesfield)

Order.

Nicholas Winterton (Conservative, Macclesfield)

Thank you. May we now pass on to the commission’s composition? I call, first, David Howarth.

David Howarth (Liberal Democrat, Cambridge)

The commission has expressed concern about the proposal to add to the commissioners some who would be exempt from the normal rule that people involved in politics recently cannot be commissioners. I think there has been some change of emphasis or change in the way that the commission expresses its objections, so will you put on the record your present thoughts on that proposal?

David Howarth (Liberal Democrat, Cambridge)

On the first concern, which is the reduction from 10 to five years for the non-political commissioners, the response that has been put to me is that since those appointments will still be Nolan appointments—we are talking about the code of practice for public appointments—the situation is not as dangerous or as risky as you are saying. That will be taken into account in the appointment procedure, and it will not involve the new rather awkward process that you described for the appointment of political commissioners through the Speaker’s Committee. How do you respond to that?

Tony Lloyd (Labour, Manchester Central)

I would like to turn specifically to clauses 8 and 9, which deal with the source of donation. For the record, may I ask a simple question? Does the commission consider that it has a primary duty to encourage and insist on transparency of the ultimate donor?

Nicholas Winterton (Conservative, Macclesfield)

By the way, we have moved on to donations.

Tony Lloyd (Labour, Manchester Central)

Yes, I did say that, Sir Nicholas.

Nicholas Winterton (Conservative, Macclesfield)

But I was under the impression that you wanted to come in under composition of the commission. So, for the information of members of the Committee, we are on donations.

Tony Lloyd (Labour, Manchester Central)

Indeed. The commission in its paper to the Committee states:

“We welcome the Government’s decision to look beyond unincorporated associations”,

but you go on to say that

“the benefits of these proposals may be quite limited, since the law already prohibits concealing the source of a donation by channelling the money through others.”

You then say that they are effectively restricted because

“the new declarations which donors are to be obliged to provide to donees will not be sent to the Commission or made public”.

With unincorporated associations, such as dinner clubs, it is difficult or impossible for the commission to bring transparency forward. You are saying that, as drafted, the Bill does not do enough to allow you take away the veil that restricts public knowledge of the ultimate donor. What powers do you seek that would allow you to strip away the veil provided by incorporation or the dinner club structure?

Tony Lloyd (Labour, Manchester Central)

But there is a question of power. At the moment, if an agent operates on behalf of a unincorporated association, he has a duty under the law to say that the donations comply with the law. There is no ambiguity in the law about that. You are saying that we need to change the nature of the total structure to require an agent to declare, for example, that the donations are legitimate and within the law, such as that the donors are UK nationals and comply with the donation limits. What would you need to pursue that matter?

Tony Lloyd (Labour, Manchester Central)

Specifically, would the Electoral Commission seek that change in the law to strip away the scale of unincorporation?

Tony Lloyd (Labour, Manchester Central)

But to be clear, what you are saying at the moment is that an unincorporated association could have the doubtless unintended consequence of totally disguising the fact that the ultimate source of a donation was one that would not be permitted if that donor gave the money directly to a political party.

Tony Lloyd (Labour, Manchester Central)

I am saying that the consequence of the way that the law would stand even if the Bill was passed would be that an unincorporated association could be a channel so that money could go to a political party, which, if given directly by the ultimate donor, would not be permissible under our laws.

Tony Lloyd (Labour, Manchester Central)

How could that not be the case?

Tony Lloyd (Labour, Manchester Central)

I have a final question, which is almost about the area that Lisa Klein has just taken us into. You said in an earlier answer that the investigative powers that you have are not adequate. On the problem of the unincorporated association and the question of the foreign donor—for example, whether the foreign donor is registered in the UK for tax purposes or for elections, which of course would mean that they were a permissible donor—will you have enough powers after the Bill has been passed properly to investigate allegations of impropriety in both those cases?

Nicholas Winterton (Conservative, Macclesfield)

We have approximately 20 minutes left. On the issue of donations, three other Members have caught my eye and want to ask questions: Andrew Tyrie, whom I will call first; Martin Linton; and Mr. Djanogly.

Andrew Tyrie (Conservative, Chichester)

I think that, perhaps inadvertently, a large part of what I wanted to ask has already been answered in your response to questions from Tony Lloyd. We are at one in wanting to ensure that these intermediaries are not permissible and cannot be used. The question is, what framework of law is most appropriate for dealing with them?

I would like you to summarise your views. What you are saying is that the proposals will not extend the existing legal restrictions and will not add materially to transparency, but they will impose an extra large compliance burden. Is that correct?

Andrew Tyrie (Conservative, Chichester)

Therefore, is the clause worth the candle?

Andrew Tyrie (Conservative, Chichester)

But it sounds like you would not dissent from the summary that, in a nutshell, the clause is at best a waste of time.

Andrew Tyrie (Conservative, Chichester)

While I have the floor, may I quickly ask you for a piece of information about an issue mentioned earlier, which I have been thinking about? Perhaps you will send it to us in writing. You said that the triggering rules will generate a huge extra administrative burden by creating 646 bodies that will need to be monitored, as opposed to one. Can you give the Committee an estimate of the administrative burden generated by the existing law and let us know, in cost terms, what that will rise to as a consequence of the implementation of the proposals?

Andrew Tyrie (Conservative, Chichester)

Sir Nicholas, I have questions on individual registration, but perhaps we shall come to that later.

Nicholas Winterton (Conservative, Macclesfield)

Mr. Wardle, if you feel that you would like to answer Mr. Tyrie’s questions with a written submission that perhaps gives rather more information than you have been able to provide off the cuff, the Committee would be pleased to receive it.

We now move from Mr. Tyrie to Mr. Linton. We want to get registration in, so I hope that the questions from you, Mr. Linton, and from Mr. Djanogly will be relatively succinct.

Martin Linton (Labour, Battersea)

I want to understand exactly how clause 8 will work and I am not quite there yet. In principle, the purpose of the Bill is that the identity of donors who give over £200 should be disclosed. In some cases, unincorporated associations have been used as a device to transfer money without disclosing the name of individual donors. Is that accepted?

Martin Linton (Labour, Battersea)

The identities and names of donors must be disclosed—

Martin Linton (Labour, Battersea)

Nevertheless, with some unincorporated associations giving well over £1 million, it is likely that there are donors of over £5,000 who use such associations to channel their donations.

Martin Linton (Labour, Battersea)

But the amendment that clause 8 will make is simply that the secretary or chairman of that unincorporated association will have to write a declaration with the names of donors of over £200 and give it to the donee. Is that right?

Martin Linton (Labour, Battersea)

And that declaration will then be sent to you?

Martin Linton (Labour, Battersea)

Would you do so?

Martin Linton (Labour, Battersea)

Do you not think it would be better if all donations of more than £5,000 were disclosed publicly?

Martin Linton (Labour, Battersea)

If you receive a declaration from a party showing that there are many donations of more than £5,000 through unincorporated associations, which have not been declared publicly, would you not think it a good thing if you were able to publish the names?

Martin Linton (Labour, Battersea)

Even though it is through an unincorporated association.

Martin Linton (Labour, Battersea)

Would it not be simpler if, as we amend the Political Parties, Elections and Referendums Act 2000, we wrote that in for all donations of more than £5,000? You would have it within your power to publish the names of such donors, but there could be an amendment so that it was automatic that donors of more than £5,000, even through unincorporated associations, should be identified.

Jonathan Djanogly (Conservative, Huntingdon)

On clause 8, I am just having a look at your October 2008 memorandum. You state:

“On the other hand, the changes will impose potentially substantial new administrative burdens on parties and donors. Political parties have expressed reservations to us about the impact of these compliance requirements, particularly on their volunteer officers.”

Do you think that the implication of clause 8 could be to dissuade people from wanting to be donors because of the administrative and bureaucratic implications?

Jonathan Djanogly (Conservative, Huntingdon)

I was moving beyond what you have heard from political parties. I was asking whether you have a view on what donors to political parties might think of the proposals.

Jonathan Djanogly (Conservative, Huntingdon)

And what did the political parties say to you?

Michael Wills (Labour, North Swindon)

I, too, want to dwell on that point, and perhaps return you to the briefing that you helpfully provided for the Committee. May I first check that you are aware, of course, that the Government have indicated that we are willing to be flexible about the limits? We absolutely accept the need not to overburden volunteers who, in the overwhelming majority of cases, are engaged in a noble voluntary activity.

Michael Wills (Labour, North Swindon)

Thank you. May I direct you to the words in your briefing? Under the heading “Sources of donations” you say that you believe the benefits of these changes will be “quite limited”. That is not to say that they will have no advantage at all, is it?

Michael Wills (Labour, North Swindon)

So that we are absolutely clear, I think that we can accept that there is a consensus about the need to strike a balance between overburdening volunteers and dissuading donors from making legitimate donations on the one hand, and ensuring transparency on the other. However, I think that I have just heard you say, although I would be grateful if you confirmed it, that there is merit in measures that draw attention to and focus both donor and recipient on the need to show that they have complied with the law.

Nicholas Winterton (Conservative, Macclesfield)

May we move on to registration?

Andrew Tyrie (Conservative, Chichester)

I just want to ask you about individual registration. I am confident that you heard Sir Christopher’s remarks in our first evidence session, that the introduction of postal voting on demand, combined with the retention of householder registration, generates conditions where the electoral system is “fundamentally flawed”. I would like you to comment on whether you agree with that conclusion of the chairman of the Committee on Standards in Public Life. What is your view?

Andrew Tyrie (Conservative, Chichester)

That is a pretty clear answer. Just to make it crystal clear, do you think that there are at the moment any practical or technical obstacles to which you do not readily see a solution, and which might not command general support, that lie in the way of beginning this process of implementation? How long would that process take?

Nicholas Winterton (Conservative, Macclesfield)

Two hon. Members have caught my eye: David Kidney and David Howarth. If they put a question for a yes or no answer, I hope that one of our witnesses will be able to respond.

David Kidney (Labour, Stafford)

Mr. Wardle, can we achieve a single registration of donations and benefits to Members of Parliament in place of the current system without changing this Bill?

Nicholas Winterton (Conservative, Macclesfield)

That is the first question.

David Howarth (Liberal Democrat, Cambridge)

To come back to individual registration, you have answered most of my questions, but on one practical point, you would agree, would you not, that there are certain practical difficulties in simply translating the Northern Ireland legislation into Great Britain? For example, the three-month rule that was brought in for a particular reason in Northern Ireland would not necessary apply in Britain.

Nicholas Winterton (Conservative, Macclesfield)

Thank you very much. I am afraid that that brings us to the end of the time allocated for the Committee to ask questions of the Electoral Commission. I thank Peter Wardle and Lisa Klein very much indeed for the way in which they have dealt with our questions; it has been most helpful. Thank you for giving evidence.

Further written evidence to be reported to the House

Nicholas Winterton (Conservative, Macclesfield)

Before I welcome our distinguished guests this afternoon, I want to say a few words to the Committee. Before we begin to take evidence, I would like to respond, briefly but fully, to a point raised in Committee by Mr. Reid on Tuesday and again, informally, this morning by Mr. Duddridge. Mr. Reid drew attention to the short time between the end of the evidence sessions and the deadline for the tabling of amendments for Tuesday’s sittings, and asked whether starred amendments might be selected.

My co-Chairmen and I appreciate that there is limited time before the rise of the House this evening, but the decision to structure the Committee’s time in this way was taken by the Programming Sub-Committee and I remind the Committee that it was done so after considerable discussion. The programme motion was approved by this Committee on Tuesday morning, when one of my co-Chairmen was in the Chair. It was in the gift of the Committee to provide itself with a bigger gap after the evidence sessions. The deadlines for the tabling of amendments are there for the benefit of all Committee members, who need sufficient time to consider the amendments before they are debated.

I also note that the issues discussed in the evidence sessions so far are not entirely new. The views of the Electoral Commission, for example, and two of our three distinguished academics have already been submitted in written evidence to the Committee. In such circumstances, and in line with existing practice in Public Bill Committees, I can confirm that my fellow Chairmen and I do not intend to select starred amendments. That is my statement; if Mr. Duddridge wishes to rise on a point of order, I am happy for him to do so, but he should remain seated, so that his voice can be picked up by the microphone.

James Duddridge (Conservative, Rochford and Southend East)

On a point of order, Sir Nicholas. I wish to remain seated. Notwithstanding what you said, I ask you to look at the matter a second time. The Opposition Front-Bench team found that there were significant new pieces of information this morning—tangible differences—that were not mentioned in the written submissions and of we were not aware before. As the Whip, I shall not go into policy issues, but there are significant changes—that is the Opposition’s position. Furthermore, during the Programming Sub-Committee, if I may refer to that, we were given reassurances. While there was no commitment to take starred amendments, an indication was given that the Committee would be able to review the issue—and on that basis we were happy to proceed. I do not know whether there is another way forward, whereby we could table starred amendments, then circulate them to the various parties on Friday. They would still be starred amendments on a day on which the House is not sitting, but we would be happy to circulate them then.

There are significant amendments that we want to table as a consequence of evidence. This meeting does not break up until 3 o’clock and we do not know when the business of the House will be completed—it could even be completed very shortly after us, so that there would not be time for us, physically, to go and table the amendments.

Nicholas Winterton (Conservative, Macclesfield)

I note what Mr. Duddridge says. I remind him and other Committee members that they have until 6.30 pm to table amendments. I have not received notice—the Government, who would be more in the know, have made no such indication—that today’s business will finish early but, at the moment, I do not anticipate that it will do so. I am certainly prepared to listen to any representations made by the Opposition parties. I would be happy to receive any evidence, perhaps in writing, as to where they believe the evidence given this morning, perhaps by the Electoral Commission, differed dramatically from the evidence that it submitted in writing. My fellow Chairmen and I should certainly give the matter consideration. However, I cannot promise that we shall change our ruling and select starred amendments. [Interruption.]

Nicholas Winterton (Conservative, Macclesfield)

Briefly, Mr. Djanogly.

Jonathan Djanogly (Conservative, Huntingdon)

Further to that point of order, Sir Nicholas. My understanding was that the point of hearing the evidence in these sessions was to see whether we needed to table amendments to the Bill as a result. According to your ruling, we shall have a very short time this evening to go through Hansard—if that has been produced by the time our proceedings end. It would be of help if the Clerks could advise us whether that would be the case, because we shall have to take Hansard, study it—some complicated concepts and issues were discussed this morning—and review whether further amendments need to be filed, all within a matter of hours. As my colleague said, that would only be if the business of the House lasts until 6.30 pm today.

Nicholas Winterton (Conservative, Macclesfield)

Two things. First, the Opposition could advise the Chair as to what important amendments they believe need to be tabled, based on the evidence given so far. Of course, next week—I am in the Chair on Tuesday morning—the Committee can make what progress it chooses. It could well be the case that the areas covered by the amendments that the Opposition might wish to table will not be taken on Tuesday morning. Therefore, to an extent, the Opposition and the Committee as a whole are in control of their own business in that connection.

Andrew Tyrie (Conservative, Chichester)

Further to that point of order, Sir Nicholas. I am very concerned about this, first, because it was discussed informally before we met the first time. I received clarification that, under the new public Bill procedure, there would be scope for flexibility, to enable the tabling of amendments in the light of evidence that was submitted. I specifically discussed that, and was given the same information that we have just received about what happened through the usual channels, before the start of our formal meetings.

Secondly, if I may say so, it is a little unreasonable to ask us to provide written evidence of where we think that we might need to table amendments, bearing in mind that all the relevant people are sitting here in front of you for the whole period, Sir Nicholas. We cannot even be sure that the House will run until 6.30 pm; debate may close earlier. Thirdly, to provide one example, you were in the Chair, Sir Nicholas, when the Electoral Commission said that it would like to add to the evidence. It produced a specific example relating to its concerns about the appointment to the commission board, and the change of the 10-year rule to five years. [Interruption.] I am pleased that the Minister wishes to speak, but I do not wish to prejudge whom the Chair might call.

Nicholas Winterton (Conservative, Macclesfield)

I am going to call the Minister, then I will stop taking points of order. We have distinguished witnesses here and we must finish taking evidence from them by 2 o’clock. If necessary, we can continue the points of order then, but I prefer to call the Minister first.

Michael Wills (Labour, North Swindon)

Thank you, Sir Nicholas. In the spirit of helpfulness with which Government Members have approached the matter, we want amendments to be tabled as long as they are genuinely based on new information. We want to be helpful and will be as accommodating as possible on an informal basis, but only if there is genuinely new information. I am always prepared to be enlightened, but so far the discussion has been a recycling of familiar points on all sides. We have a useful memorandum, and there are genuinely new points that need to be considered. However, we will be as flexible as possible.

Nicholas Winterton (Conservative, Macclesfield)

I intend to make progress. Perhaps we need to sit after 3 o’clock, informally, to see whether we can resolve the matter. I do not wish to embarrass our witnesses who, in some cases, have come at great inconvenience to themselves. We should do them the courtesy of listening to them at this stage, and we will find another way to resolve the problem. The Minister has indicated that he is prepared to be flexible, and the Chair wants to ensure that all important matters are debated. I suggest that we make progress. If the Whips on both sides of the Committee wish to come to the Chair during the discussion over the next two hours, I would be happy to receive representations.

David Howarth (Liberal Democrat, Cambridge)

That procedure excludes me, and I am the person who has the example.

Andrew Turner (Conservative, Isle of Wight)

He is a Liberal; he cannot help it.

Nicholas Winterton (Conservative, Macclesfield)

Mr. Howarth is being very agreeable.

David Howarth (Liberal Democrat, Cambridge)

The specific example that the Minister should consider came up this morning. The Electoral Commission said that there is a problem about what will happen in clauses 4 to 7—the clauses we will consider first on Tuesday—should a political party fail or refuse to appoint a commissioner. That is a brand new point and is not in any of the written submissions. It is a technically difficult point to deal with, but I do not think that we will be able to discuss it on Tuesday, given the rules.

Andrew Tyrie (Conservative, Chichester)

That is exactly the point I raised. In a similar area, the chief executive of the Electoral Commission said that for the first time, he found difficulty with the switch from ten to 5 years for the bar on party political affiliation before appointment to the board.

Nicholas Winterton (Conservative, Macclesfield)

I have heard what has been said. I have indicated that I wish to make progress and I intend to do so. I am sure that Mr. Duddridge and Mr. Lucas can make representations to the Chair as we perform our business this afternoon.

On behalf of the Committee I extend a warm welcome—at last—to our three distinguished visitors. For the record, will you identify yourselves?

Nicholas Winterton (Conservative, Macclesfield)

Thank you. The first question will come from Mr. Djanogly.

Nicholas Winterton (Conservative, Macclesfield)

Does Mr. Pinto-Duschinsky want to come in here? He appears to have made some remark.

Nicholas Winterton (Conservative, Macclesfield)

What about Professor Justin Fisher?

Nicholas Winterton (Conservative, Macclesfield)

Does Professor Ewing want to come back? You had a short innings, so do you want to add to your opening remarks?

David Howarth (Liberal Democrat, Cambridge)

Professor Fisher started to answer this question in his earlier remarks, so perhaps I can give the other two a go first and come back to him. Looking specifically at the party fundraising and expenditure parts of the Bill, what do you think are the leading problems in that area and to what extent do you think the Bill solves those problems?

David Howarth (Liberal Democrat, Cambridge)

The idea of anticipating loopholes in the Bill raises the big issue of party spending as opposed to candidate spending. Do you agree that we can see that that is going to be a problem in the future, and that we should be doing something to address it either at national level or—this is a big gap in the Bill—at the local level. We currently have national spending limits, although only for a year, and candidate spending limits in the election period, but we have no party local spending limit at all.

David Howarth (Liberal Democrat, Cambridge)

Yes.

David Howarth (Liberal Democrat, Cambridge)

May I come back with just one more question?

Nicholas Winterton (Conservative, Macclesfield)

Order. I ask colleagues to ask brief, succinct questions. Martin Linton caught my eye first, then Eleanor Laing, the Minister and, when he comes back, Mr. Tyrie. I see that David Howarth wants to come in again, but we must move on.

Martin Linton (Labour, Battersea)

Thank you, Sir Nicholas. I have some specific questions, but I shall try to be brief.

No one pretends that triggering is a 100 per cent. foolproof method, or even necessarily the long-term solution to the problem, but I cannot quite agree with Professor Fisher. On the one hand, he says that it is impossible to police but, on the other, points out that there has been only one case in living memory. My specific question is, if we do not have triggering, what solution would Professor Fisher advocate? He mentioned four months, which I supported in the Electoral Administration Bill, but which the Lords did not like. What about 365 days, as with national expenditure? What about a solution advocated in the past by the Neill committee of a Canadian-style system, lumping local and national spending together and dividing it by the number of constituencies, so that, effectively, you have a single limit for local and national spending?

I have another couple of quick questions, mainly addressed to Professor Ewing. I agree with him that, just as taxation legislation has to be renewed every year to deal with the accountants’ loopholes, this legislation has to be updated on a regular basis. I would be interested if he could elaborate a little on what he sees as a solution to two specific points he made. One concerns the unincorporated associations and private companies that have become a conduit for undeclared donations. Would it be possible to bring these bodies into the legislation, so that whatever applies to political party donations also applies to them? In many cases, they have just become a conduit for non-disclosed donations.

Nicholas Winterton (Conservative, Macclesfield)

Order. May I ask Mr. Linton to come to a conclusion? We have less than 20 minutes and there are a lot of people who want to come in. I apologise to our witnesses if they feel that things are being hurried, but unfortunately these are the procedures under which we operate. The Committee agreed with timings proposed by the Programming Sub-Committee, and I am in the Chair as an adjudicator.

Martin Linton (Labour, Battersea)

I have only four more words—what about private companies?

Eleanor Laing (Conservative, Epping Forest)

We have had in recent times two general elections that have been fought with triggering, and others still in recent memory that were fought without it, such as the one in 2000 that Mr. Linton referred to in the quote that Professor Fisher gave. As distinguished academics, are any of you aware of an assessment or a comparison having been made of the effects of one type of election or another?

Eleanor Laing (Conservative, Epping Forest)

For clarity, what is the right way to go about it?

Michael Wills (Labour, North Swindon)

I have brief points of clarification for Professor Ewing and Professor Fisher, but I would like to offer a summary assurance to Dr. Pinto-Duschinsky, who raised a valuable point about the legislative process. We should be clear that our discussion today relates only to amendments that arise out of the evidence that we have heard, out of this relatively new process. There will be plenty of time for amendments to be tabled on Report, for example. The Government have made it clear that as long as other members of the Committee come forward with proposals that are consonant with the overall objectives of the Bill, we will be flexible and accommodating as far as we can be.

I want to pick up two points. Professor Fisher, your remarks about minority parties and what you assume to be their reaction to proposals by party leaders suggest that you expect such commissioners to operate on a partisan basis. Do you agree that those with recent political experience could contribute to the work of the commission in an impartial and non-partisan way?

Michael Wills (Labour, North Swindon)

Minority.

Michael Wills (Labour, North Swindon)

Thank you very much. I am sure that we shall return to that point later in Committee.

Michael Wills (Labour, North Swindon)

As I say, we shall return to the matter. I am grateful for your contribution. I am conscious of the time and the fact that others still want to come in.

Professor Ewing, you made a good point about regulators regulating themselves. Aside from the fact that only four out of the 10 commissioners would be appointed in the proposed way and the rest of them would not have had political experience, do you agree that, if a person had recent political experience and is not currently an elected politician or seeking election, that would not be a case of the regulators regulating themselves?

Michael Wills (Labour, North Swindon)

We are not following the American model, but thank you very much.

Eleanor Laing (Conservative, Epping Forest)

On that very point, are you suggesting, Professor Ewing, that people who have stood for election, been elected or taken part in elections—the only people who, by definition, have gone through the unique experience of the election process—are, by nature of their belief in a political ideal, in some way untrustworthy and incapable of behaving in an impartial manner? It seems that that is what you are suggesting.

Eleanor Laing (Conservative, Epping Forest)

I wonder whether the other gentlemen agree with that point of view.

Tony Lloyd (Labour, Manchester Central)

Briefly, if I understood Professor Ewing correctly, he was suggesting that unincorporated associations, dinner clubs and so on should have a duty to report just as a political party has a duty to report, so that they would have to account for their donors in the same way. Obviously, that is to avoid the loophole that we cannot trace the original donor. What would be the trigger for a company or a dinner club to be considered reportable? Have Professor Ewing or other members of the panel given any thought to that?

Tony Lloyd (Labour, Manchester Central)

May I make it clear what I am asking? It is about avoiding a loophole within the loophole. Obviously, if I had an unincorporated association and I said that 27 per cent. of its activities were commercial trading activities, it would be clear that it was substantially a donating body, but there must come a point at which—

Nicholas Winterton (Conservative, Macclesfield)

Professor Fisher, do you agree with that?

Nicholas Winterton (Conservative, Macclesfield)

Mr. Pinto-Duschinsky, in 30 seconds?

Nicholas Winterton (Conservative, Macclesfield)

We have reached the appropriate time, 2 o’clock. I want to apologise to our very distinguished and helpful witnesses for slightly short-changing them by having points of order at the beginning of this evidence session. I am afraid that I am here merely to try to keep the peace between all parts of the Committee and to achieve progress. I had to take the points of order, which were very valid.

I thank Professor Ewing, Professor Fisher and Mr. Pinto-Duschinsky very much, not only for the articles that they have written, but for the valuable evidence that they have given us this afternoon. On behalf of all members of the Committee, I thank you most warmly.

As we change over to our witnesses from the Conservative party, the Labour party and the Liberal Democrats, I want to say to the Committee that, if it wants, it can carry on sitting after the evidence session ends at 3 o’clock. However, it would continue to be a public sitting to deal with points of order, if that is required. I say that now so that people do not feel inhibited, frustrated or impatient. As I say, we can sit for a short while after the evidence session has ended.

James Duddridge (Conservative, Rochford and Southend East)

At this stage, Sir Nicholas, we certainly do not intend troubling you any further today on the issues that have already been raised. I think that you made yourself very clear earlier, and we thank you for that.

Nicholas Winterton (Conservative, Macclesfield)

I am most grateful that you will not be troubling me further today. Thank you very much indeed. However, I wanted to make those remarks because I try to be as flexible as possible to accommodate the concerns of the Committee.

I now welcome our new witnesses: Ian McIsaac, financial director and registered party treasurer of the Conservative party, whom I know; Roy Kennedy, director of finance and compliance for the Labour party; and Hilary Stephenson, director of campaigns for the Liberal Democrats. I say to you, as I say to all witnesses, that I try to give Her Majesty’s Opposition, the Liberal Democrats and the Government party as much opportunity as possible to put questions, but I always start with the spokesman for Her Majesty’s Opposition, who today is Jonathan Djanogly.

Jonathan Djanogly (Conservative, Huntingdon)

Thank you, Sir Nicholas, and good afternoon to you all. I think it would be a fitting start if I asked you, in turn, what you like and do not like about the Bill. Ian McIsaac first, please.

Nicholas Winterton (Conservative, Macclesfield)

Any further questions, Mr. Djanogly?

Jonathan Djanogly (Conservative, Huntingdon)

I would like to put that question to each of the three panellists.

Nicholas Winterton (Conservative, Macclesfield)

Witnesses. [Laughter.] They may be candidates in the future.

Jonathan Djanogly (Conservative, Huntingdon)

Sorry. I said “panellists”.

Nicholas Winterton (Conservative, Macclesfield)

I will move from left to right and ask Hilary Stephenson to respond.

Jonathan Djanogly (Conservative, Huntingdon)

Each of you has, in different ways, mentioned the importance of the volunteer element of what you do. I should like to think that we all respect that. Looking specifically at clause 8, entitled

“Declaration as to source of donation”,

comments were made that there are problems with that in respect of motivational issues. It might be helpful to put on the record what actually happens in procedural terms when someone wants to make a donation at the current time. What mechanics do you go through that we should be worried about or have to think about?

Jonathan Djanogly (Conservative, Huntingdon)

At the moment.

Jonathan Djanogly (Conservative, Huntingdon)

What are your problems with this clause?

Jonathan Djanogly (Conservative, Huntingdon)

Thank you. Would either of the other two witnesses like to add to that?

David Howarth (Liberal Democrat, Cambridge)

May I come back to something that Hilary Stephenson said on the spending side? It was very striking, and I would like to have your reaction to it. She said that campaigning is now all the time, not just at elections, and that it is difficult to tell the difference between campaigning for one election and another. My experience is similar to that. If that is so, does not that mean that the idea of controlling election spending through candidate spending near the time of the poll is a 19th-century approach to a 21st-century problem, and that what we should be looking at is something like the Hayden Phillips global spending cap approach, throughout the electoral cycle? Taking into account what you have just said about the problems of compliance and voluntarism, there should be some way of dividing that up into a local cap too, so that it is comprehensive and does not depend on the accidents of when a general election might occur.

Nicholas Winterton (Conservative, Macclesfield)

I call Hilary Stephenson, if that was directed to her?

David Howarth (Liberal Democrat, Cambridge)

It was directed to the other two witnesses, because I was taking up what she said and putting it back to them.

Nicholas Winterton (Conservative, Macclesfield)

Let us start with Mr. McIsaac.

David Howarth (Liberal Democrat, Cambridge)

Is it the experience of your party that campaigning is constant and undifferentiated between elections? If so, is it the case that if we are to control campaign spending, we must control it all the time?

Andrew Tyrie (Conservative, Chichester)

It might be helpful if people amplified their answers to one part of David’s question, which is: in practice, is it feasible to try to divvy up a global cap that might run for the life of a Parliament between hundreds of individual associations—646 constituencies, or whatever—given the scope for being active in one period but in fact being active in another? I ask that because I know that this was discussed as part of the Hayden Phillips process, which I participated in. Hayden himself became sceptical about the feasibility, which is why he was seriously discussing only the development of a global cap.

Tony Lloyd (Labour, Manchester Central)

I want to pick up on a couple of comments that have been made by the different party representatives about the difficulty of policing donations. I think that Roy Kennedy said that there is a good argument for raising the limit from the current £200 to £1,000.

Tony Lloyd (Labour, Manchester Central)

So, the first part of my question is whether there would be rough agreement across the political parties for that kind of approach. Ian McIsaac mentioned the difficulty at local level, which most of us who have had practical experience of local parties would understand. At the other extreme is the more contentious policing of the irregular donor—the foreign donation, or whatever. Those donations do not tend to be the £201 ones; they tend to be significantly more. Is there any reason to believe that the political parties have a problem checking out the eligibility of donors regarding their taxation and residency status, and their registration on our electoral registers? In essence, there are clear concerns that foreign donations still come into our system. Do the political parties adequately police at that top level? So, the small issue is whether we should be raising the limits and whether the parties can agree on what they should be, and the big one is why we cannot get our collective houses in order and stop the irregular donors coming through.

Tony Lloyd (Labour, Manchester Central)

In terms of the large national donors, I take Ian McIsaac’s point, which the other witnesses generally concurred with, that there are difficulties in tracing things through. I appreciate the genuine problems in that. Do the parties now routinely ask those large donors to assert their ability to make a donation under existing law?

Eleanor Laing (Conservative, Epping Forest)

Can I take you to triggering and spending money rather than raising it? I appreciate that Mr. McIsaac has said that this is not his expert area, so perhaps I had better address my question to the other people before us.

We have spoken a bit during these Committee proceedings about the lack of clarity in the Bill and the uncertainty as far as triggering is concerned. I wonder if you have had any chance to consider the disproportionate effect that the Bill might have on a candidate, as opposed to a Member of Parliament?

I put it to the Secretary of State two days ago that, in my constituency, for example, I am the MP and am represented as the MP: I get coverage in the papers, and so on, and I can send out literature as a Member of Parliament. Could a candidate standing against me find that he or she has spent to the limit of the election expenses and, discovering that this Bill applies, therefore not be able to campaign in the period immediately before a general election?

Eleanor Laing (Conservative, Epping Forest)

You are assuming that it will not have a retrospective effect.

Eleanor Laing (Conservative, Epping Forest)

But we have advice that it could have a retrospective effect; that was my concern. Would you then be concerned for your candidates? I know that that is not a fair question.

Nicholas Winterton (Conservative, Macclesfield)

Do any of the other witnesses—Hilary Stephenson or Ian McIsaac, wish to comment on what Eleanor Laing has said? Do they foresee a problem?

Eleanor Laing (Conservative, Epping Forest)

But could it not have retrospective effect, because we do not know exactly what the triggering rules are as they are so unclear, or are you certain, at the moment, how you would advise candidates to behave to ensure that they do not trigger? With the triggering rules being so unclear, if they are clarified at some point—perhaps by a court judgment or by the Electoral Commission, or in some other way—you may discover that you have candidates who have inadvertently, but undoubtedly, triggered some months previously. They might have spent £10,000 in that time. Therefore, in the few months before a general election they would not be allowed to spend another penny. Could that not happen?

Eleanor Laing (Conservative, Epping Forest)

Somebody might already have triggered by now.

Eleanor Laing (Conservative, Epping Forest)

It is not fair to take you further on that because it is a question that we spoke about on Tuesday to the lawyers on the Bill .

Nicholas Winterton (Conservative, Macclesfield)

Mr. McIsaac, you are the only one who has not commented on this.

Nicholas Winterton (Conservative, Macclesfield)

I have to be entirely impartial in the Chair, but it seems to me, with the Minister sitting on my right, that this is perhaps a matter to which he may well direct his attention during the debate in Committee.

Martin Linton (Labour, Battersea)

I was fascinated to discover that Mr. McIsaac has experience from a previous job of money-laundering.

Martin Linton (Labour, Battersea)

I am not suggesting for a moment that that is relevant to your current job, but it might help you to explain to us the complexities of some of these issues to do with companies.

I have two particular problems with the Bill. One concerns these unincorporated associations and private companies, which are effectively excluded. Some of them, such as Midlands Industrial Council and Bearwood, have made donations of well over £1 million, so it is fair to assume that within that there might be donations well over the £5,000 declarable level.

I would like to hear your opinion of the idea of having declarations of the true individual source of donations over £5,000, even though they might be given through an unincorporated association or private company.

My second question relates to donations that a person or his party might receive, which are intended for a particular donee. I know that donations have been canvassed, for instance, for members of staff of George Osborne, the shadow Chancellor, which is perfectly legal and above board. As I understand it, these are declared in the Electoral Commission accounts, as opposed to the House of Commons register, as donations to the Conservative party, so there is no indication there that they are given for the shadow Chancellor’s staff. That raises all sorts of issues about shadow Ministers and their accountability. I wonder whether he would welcome a change in the law that would make that more explicit. I know that he wrote to the Electoral Commission saying that this money is, at the moment, commingled with other funds, not segregated. These people are employed by the Conservative party, so all the money goes into the same pot.

Nicholas Winterton (Conservative, Macclesfield)

Order. I am extremely patient. I did ask for succinct questions to our witnesses.

Martin Linton (Labour, Battersea)

I have asked some questions.

Nicholas Winterton (Conservative, Macclesfield)

This appears to be a speech. I am speaking not to you, Mr. McIsaac, but to Mr. Linton.

Martin Linton (Labour, Battersea)

I am asking not whether it obeys the letter of the current law—I am taking it for granted that it does—but about possible changes to the law that would make it more explicit.

Martin Linton (Labour, Battersea)

Clearly, if the money was not sent in that way, it would have to be declared, and the individual’s identity would have to be declared.

Martin Linton (Labour, Battersea)

But you would not have any objection if it was made clear in law that when a donation was made for a particular donee, that should be made clear in the party accounts.

Martin Linton (Labour, Battersea)

In the party declaration of donations, in the register of donations.

Martin Linton (Labour, Battersea)

Are you satisfied that the money from Bearwood is from a legal donor?

Nicholas Winterton (Conservative, Macclesfield)

A very good answer.

Hilary Stephenson, have you anything to say to Mr. Linton on behalf of the Liberal Democrats?

Nicholas Winterton (Conservative, Macclesfield)

Three people have caught my eye; the first is David Howarth.

David Howarth (Liberal Democrat, Cambridge)

My question has been answered.

Tony Lloyd (Labour, Manchester Central)

I have a specific question for Ian McIsaac, which is the stem of a general question for everybody. Mr. McIsaac said to us a few moments ago that where there was no unincorporated association, one would seek to know who the individuals who made a contribution through that association were. Do you make a public declaration on who those people are?

Tony Lloyd (Labour, Manchester Central)

And is registered with the—

Tony Lloyd (Labour, Manchester Central)

In fact, that moves us on to a more general question. In the previous sitting, Professor Ewing suggested that all associations and equivalent bodies ought to have a statutory duty to act, so that they police the donations going through those bodies in the first instance. Mr. McIsaac, you indicated that unincorporated associations do that, but I am not clear that that is the case. I would be grateful for your view on whether they already have that legal obligation.

Tony Lloyd (Labour, Manchester Central)

That it is a regulated donee?

Tony Lloyd (Labour, Manchester Central)

That is helpful in clarifying the position. Professor Ewing suggested that for those bodies that do not have a legal obligation to declare the sources of their income, there is inevitable concern about whether the ultimate sources of the donations are compatible with the law, even though they may have a legal structure. Should we force all such unincorporated associations to register and provide details of their donations, so that they have the duty to police the situation? Would the various parties support that?

Tony Lloyd (Labour, Manchester Central)

It is a common question, I agree.

Nicholas Winterton (Conservative, Macclesfield)

I call Andrew Tyrie.

Tony Lloyd (Labour, Manchester Central)

Sir Nicholas, this is a general question.

Nicholas Winterton (Conservative, Macclesfield)

You addressed it to Mr. McIsaac, but if you want the other witnesses to answer, please go on.

Tony Lloyd (Labour, Manchester Central)

To clarify, the first specific question was to Mr. McIsaac and the more general question was to all the witnesses.

Andrew Tyrie (Conservative, Chichester)

I have no questions. The point that I wanted to raise was answered by Ian McIsaac in response to a question put to him earlier.

Nicholas Winterton (Conservative, Macclesfield)

Does any member of the Committee wish to ask further questions?

David Kidney (Labour, Stafford)

I have a brief question for all the witnesses. Others witnesses have commented on things that they believe should in the Bill. Given that you have all stressed the voluntarism of your parties—mine included—is there anything that you regard as a missed opportunity and that should be in the Bill that would encourage voluntarism, strengthen it or acknowledge it? Shall we start with Mr. McIsaac?

Nicholas Winterton (Conservative, Macclesfield)

On behalf of the Committee, I ask our witnesses, who have been extremely helpful, whether they wish to express any views to us about the Bill that the Committee will be considering from next Tuesday morning—line by line, almost word by word?

Andrew Tyrie (Conservative, Chichester)

What are you suggesting?

Nicholas Winterton (Conservative, Macclesfield)

On behalf of the Committee, I thank our three witnesses from the Conservative, Liberal Democrat and Labour parties for the very helpful evidence that they have given, and for the frank and full way in which they dealt with every question put to them. Thank you very much indeed.

Further consideration adjourned.—[Ian Lucas.]