Electoral Administration Bill

moved Amendment No. 20:"Page 63, line 18, at end insert—" ““(4) For the purposes of subsections (1) and (2), no account is to be taken of the effect of any provision contained in a loan agreement or an agreement for a credit facility at the time it is entered into which enables outstanding interest to be added to any sum for the time being owed in respect of the loan or credit facility, whether or not any such interest has been so added.”” The noble Baroness said: My Lords, at Report I made a commitment to return to the House with provisions to resolve one particular issue concerning loans that contain capitalisation provisions. In moving Amendment No. 20, I should like to speak also to Amendment No. 60. My noble and learned friend and I have previously clarified to the House—in response to a probing amendment by the noble Lord, Lord Kingsland—the status of loans that contain capitalisation provisions. We are clear that where a regulated transaction provides for capitalisation at the outset, the provisions of the Bill are such that activation of the capitalisation provision is not to be treated as a new regulated transaction. The difficulty that we found, about which I agreed to return to your Lordships’ House, concerns the complexities that arise in determining the value of a loan that provides for capitalisation. For the purposes of reporting, there would be a difficulty where the value of a regulated transaction was just below the reporting threshold—let us say, £4,000—which might cross the reporting threshold if capitalisation provisions took effect. In those cases, the variable element would be crucial in deciding whether the transaction needed to be reported under the new regime and it would be impossible to make that decision with any certainty. Government Amendment No. 20 removes the need to consider capitalisation provisions which form part of an agreement at the outset when determining the value of a regulated transaction. For the reasons that I have just stated, to require political parties to consider capitalisation provisions in the valuation of regulated transactions would be unduly complex and would impose on political parties what could be described as a rather inexact science. As amended, all parties will have clarity in terms of the circumstances where the reporting threshold would be crossed. Where a transaction is recordable, Amendment No. 60 will make it a specific requirement to state in the transaction report whether the agreement contains a capitalisation provision. Where a recordable transaction that did not provide for capitalisation is later varied to provide for capitalisation, the change must be reported under the continuing reporting requirement in new Section 71N. The key drivers in all this are increasing openness and transparency, and the amendments provide for specific reporting of regulating transactions that contain capitalisation provisions. Once a regulated transaction has of its own right and not in respect of capitalisation provisions exceeded the reporting thresholds, these amendments require the reporting of the fact that the regulated transaction contains capitalisation provisions. We think these amendments strike the right balance between openness and practicability. They provide for the disclosure of regulated transactions that contain capitalisation provisions, but avoid the need for political parties to try to predict whether capitalisation provisions might or might not cause a regulated transaction to exceed the reporting threshold. I should add that we simply do not want to put anyone in the position where they could accidentally be criminalised when they could not possibly know in advance the value of the interest that might be capitalised. On that basis, I hope that noble Lords will accept the amendment, and I beg to move.