Electoral Administration Bill

I shall deal first with the question put by the noble Baroness. If you say that you do not want your loan to be repaid, it becomes a donation. At that point, the donation provisions in the 2000 Act would apply. I assume, on the basis of the question put to me, that it was a genuine loan until the moment when the decision was made to convert it from a loan to a donation. I am very grateful to the noble Lords, Lord Kingsland and Lord Goodhart, for expressing their broad support for these provisions, which entirely reflects what their two respective political parties have said in the consultations that we have had. For convenience, perhaps I may deal now with the points made by the noble Lord, Lord Kingsland. I shall deal, first, with his point on commercial lending and, secondly, with his point on Europe, which I think is the order in which he made them. As regards commercial lending, the proposition advanced by the noble Lord, Lord Kingsland—I may have got this slightly wrong—is that where there is, in the ordinary course of business, a legitimate lending by a legitimate lending organisation, such as the National Westminster Bank, why do you need any provision which requires disclosure of that, or, indeed, which prevents such a transaction where the lending bank—because it will almost invariably be a bank—is a foreign bank? Why not just leave that provision out of the regime altogether? In support of that proposition, the noble Lord, Lord Kingsland, refers to the proposed new Section 71K and suggests that if an English bank which has your overdraft—although this is hard to believe—seeks to sell a loan to a political party as part of its portfolio of transactions, and then seeks to sell this portfolio to a foreign bank, the English bank would be rather worried because the proposition would not be so attractive if it had some prohibited loans in it. That is the example that the noble Lord gives of what the difficulties might be in relation to this. We have consulted the British Banking Association, which represents 218 banks operating within the UK, but it was not concerned about this point and did not raise it. I would have thought it a matter of very little interest and concern to the banks. As far as political parties are concerned, we believe that we have to ensure that there is no distinction whatever between loans of any kind. The moment you allow individuals to make judgments about whether a loan is proper or improper, you introduce difficulties for the political parties. It is far better to have an absolute rule which has to be applied because everybody then knows where they stand and it causes little difficulty. If the first of the noble Lord’s amendments was adopted, it would apply to every single bank throughout the world—and we cannot be entirely sure, to put it no higher, of the satisfactory nature or otherwise of the banking supervision regimes in other countries. So that is why we do not think the approach adopted in the first of the noble Lord’s proposed amendments is sensible. The noble Lord has reduced the second issue to whether European Union banks should be put in the same position as British banks. I think that this has been put as a legal question about a level playing field and whether European Union banks should be debarred from lending money to political parties if they do not carry on business here and are registered here, as that would put them in a different situation from British banks. The noble Lord asks whether that would be contrary to the legal position, either under the services directive or in relation to the single market. We think that the funding of political parties goes to the heart of the constitutional traditions of the individual member states of the European regime. We believe that it is perfectly possible to balance the constitutional interests of an individual state in determining how its political parties are funded against restrictions imposed, for example, by the services directive. But the noble Lord has raised an important point and we need to consider it further before we come to a conclusion. I should make it clear, however, that we approach the matter on the basis of determining what is the legal regime imposed by Europe. I think that that deals with every point that has been raised by noble Lords in relation to the first debate. As to the ““small”” point raised by the noble Lord, Lord Goodhart, I shall, with his agreement, leave that until he moves his amendments in relation to it.