Electoral Administration Bill

My Lords, I am grateful to the noble Lord and I am pleased to see him in his place to deal with this amendment. My noble and learned friend the Lord Chancellor said that the funding of political parties is an issue which goes to the heart of the constitutional traditions of the individual member states of the European Union. The noble Lord would agree that political parties are essential to the operation of a modern democracy, and the proper regulation of their funding is a matter of acute public and constitutional significance. We have considered the point and taken advice on the matter raised by the noble Lord. However, we continue to believe that this new regime for loans strikes the right balance to meet the needs of our democratic system here in the United Kingdom. It will ensure that all those making loans to our political parties—and therefore holding financial influence over them—are individuals or organisations which have a sufficient connection to this country. The position will be, as it should be, the same for donations. We considered the questions about what falls within the scope of the treaty. There is no ““trade”” in party funding and the imposition on regulations of party funding is not something which seems to us to change the matter. Our position is that regulation of loans—whether from banks not carrying on business in the United Kingdom or other persons—to political parties is something that falls outside of the treaty itself. It might be suggested that the imposition of these controls interferes with the freedoms guaranteed by Community law of the free movement of capital and services. Should the regulation of political parties fall outside the treaty altogether then no such question can arise. Our view is that this is something that falls outside of the treaty itself. However, even if one took a different view, it is important to remember that those freedoms under Community law are not absolute. Rather, they may be justified—as the noble Lord himself acknowledged at recommitment—where necessary in the pursuit of a public policy aim. We think that these provisions would fall into that category. They promote trust and confidence in our political system and ensure that all those making loans to our political parties and holding financial influence over them are individuals or organisations with a sufficient connection to this country. It is our position, therefore, that they fall within the scope of the public policy exception. I hope that that answers the noble Lord’s question in the context of the service directive and European law in general. Our position is that we are outside their scope. I hope that he will feel comforted by that and able to withdraw his amendment.