Electoral Administration Bill

My Lords, I shall briefly intervene here. I wanted to find a peg this evening on which to hang an issue that arises under Amendment No. 68. The House will recognise that we are at the beginning of a discussion on the loans regime, which has not been before the House of Commons. When it considers the Bill that we will send to it, it will be considering for the first time the whole question of loans. I was in correspondence with the chairman of the Electoral Commission, Sam Younger, until 12 May when I received a letter from him, part of which I want to draw to the attention of the House. I had been asking questions about the case of Fifth Avenue Partners Limited, not for any particular political reason but because I wanted to try to understand the extent to which it had implications for the loans regime, although it related to a donation. I will not quote the section of Sam Younger’s letter which deals with Fifth Avenue Partners Limited, but I will quote the section that is relevant to this Bill:"““The measures being proposed in the Electoral Administration Bill concerning loans are based on the rules for donations. Hence, in order for a loan from a company to be permissible it has to pass the same three tests as for a donation””." We all know that the three tests a company must pass—as must a loan—are that the company is registered in the United Kingdom, that the company is incorporated in the United Kingdom or another member state, and that the company carries on business in the United Kingdom."““As a result, the position that exists currently in relation to Fifth Avenue Partners””—" which is a donation discussion—"““could recur in the case of a loan—or indeed an otherwise ‘straightforward’ donation—to a party from a company.""In the light of the issue surrounding Fifth Avenue Partners, we are preparing guidance for political parties on the questions we think should be asked in relation to the ‘carrying on business’ test. Of course in the vast majority of cases a copy of the latest audited set of accounts filed at Companies House would be enough. However, we are considering what guidelines could be set down to cover, for example, newly established companies. On a practical level, we are inclined to suggest that, before accepting a donation, a party ought to see the company’s latest set of audited accounts and/or a signed statement by (for example) the company secretary confirming that the companying is carrying on business.""Under the current legislation, it is for the party receiving a donation to satisfy itself that the donation is permissible. The provision of detailed guidance on what constitutes carrying on business should help parties,””—" that is, guidance that the Electoral Commission will be issuing—"““although any definitive statement of what constitutes carrying on business could only be given by a court of law. One way of giving parties more certainty about whether they are right to accept donations (or loans) would be to change the rules to specify that the Commission must receive and approve specified documentary evidence in relation to the donation (or loan) before it is accepted. This, however, would require a change in the law””." In many ways, that is a different approach from that which is being adopted by the Government. I recognise that we could not have a system where the Electoral Commission was required to clear and approve at an early stage every possible loan given to a political party. However, it seems to me that one could set a fairly high threshold and ensure that every loan was approved by the Electoral Commission. We are not talking about large numbers of loans; we are talking about a very small group of substantial transactions, which in my view the Electoral Commission should be given the right to approve prior to that money being allocated to a political party. The result would be that many of the clauses in the Bill that we are discussing might not be necessary. Many of the problems alluded to by the noble Lord, Lord Kingsland, about whether it is fair to penalise people who might have acted honourably, would not even arise. In those conditions, approval having been given by the Electoral Commission, the responsibility would have passed to it. When I discussed this with Sam Younger, he said that he did not have the resources. However, I wonder what resources would be required to police all this in the event that it might go wrong. One has not estimated what might happen in the event that the structure that we are establishing has to be used. What will the cost of that be in terms of carrying out administrative and judicial requirements? All I am saying is that there is another approach to this which is much simpler, and I suggest to the Government that they might want to consider it, even at this late stage. As this Bill moves to the Commons—because we are giving the Bill its first consideration—Members in the other place might want to consider a much simpler approach.