Electoral Administration Bill

My Lords, the noble Lord, Lord Brooke, raises a very important point. I was looking at the example of a loan of £4,000, which, when rolled up, reaches £5,000. My knowledge of this subject has been extensively tested today in preparing for this amendment. As I understand it, an agreement can contain a penalty clause so that if you do not pay the interest by a certain point it can be rolled up into the capital owed. That may occur in particular circumstances about which we need to be clear. I am not going to try to emulate the illuminating explanation of my noble and learned friend the Lord Chancellor, but let me briefly place on the record the position that we are in at the moment. Where a regulatory transaction provides at the outset for capitalisation, the operation of the capitalisation provision is not to be treated as if a new regulated transaction has been made. However unlikely that may be in the eyes of the noble Lord, Lord Goodhart, none the less we are clear about that point. Therefore, it does not need to be reported to the Electoral Commission. However, where the original transaction did not include provision for capitalisation but that occurs subsequently, as the noble Lord said, that would be a new transaction and would need to be reported under new Section 71N. A matter that has given us pause for thought and which my noble and learned friend is considering carefully is how to value such transactions at the outset. Difficulties might occur in trying to make such a valuation, containing as it does a fixed and variable element, the latter of which may be known only at a later date by the nature of the way in which it would work. The example I have is where the fixed element was perhaps £4,000, in which case the variable element could be crucial in determining whether the transaction needed to be reported under the new regime. We have not resolved the issue yet. My noble and learned friend gave an undertaking at recommittal,"““to take that one away and think about it a bit more””.—[Official Report, 8/5/2006; col. 763.]" We are in the process of doing that and we will return to the matter, but I hope that noble Lords will understand the basis on which we are trying to explore the issue and to get it right. We will come back to noble Lords very quickly when we are able to resolve it in a way that I hope will be satisfactory to your Lordships’ House. I hope that on that basis the noble Lord, Lord Kingsland, will be able to withdraw his amendment.