Political Parties and Elections Bill

I must say that officials and ourselves had also read the amendment as implying that it would apply to Members of your Lordships’ House, but shall adjust my notes for brevity and we will look at the words even more carefully if this amendment comes forward on Report. This group of amendments seeks to effect a significant change in the regulation of donations to political parties. Amendment 89 adds to the permissibility requirements for political donations from companies and would prevent companies which are controlled by impermissible donors from donating to UK political parties. Under the proposed new clause, a company would be deemed as being controlled by an impermissible donor in a range of specified circumstances. For example, it would be deemed as being controlled by impermissible donors where 75 per cent of the voting shares are held by an impermissible donor or a combination of impermissible donors. It would also be deemed as being controlled by impermissible donors where a person who would be an impermissible donor under the 2000 Act acts as a shadow director of the company, or where the majority of the board of directors of the company would be impermissible donors if they were donating in their capacity as individuals. Amendment 90 defines an impermissible donor as one who is not registered to vote in the UK, either in parliamentary, local or European elections. Amendment 90 extends this proposed exclusion whereby a company controlled by an impermissible donor by virtue of this proposed provision should also be deemed to be an impermissible donor. Amendment 142 would mean that the provisions in the proposed new clauses would come into effect on Royal Assent. I begin by saying that I am sympathetic to the intention behind these amendments which seem primarily intended to prevent foreign donations from being channelled through companies operating in the UK. We owe a huge debt of gratitude to the noble Lord, Lord Neill, under whose stewardship the Committee on Standards in Public Life provided the blueprint for the Political Parties and Referendums Act, which was a major reform in the area of party funding. It is therefore right that we take a step back and look at what the noble Lord said when considering these amendments. His report stated that, ""political parties should in principle be banned from receiving foreign donations"." The Government welcomed this recommendation and sought to implement it in the Bill which became the Political Parties, Elections and Referendums Act 2000. I assure noble Lords that we remain committed to the important principle that political parties should not receive foreign donations; and some of the provisions in the Bill would provide a disincentive for foreign donors channelling donations through legitimate structures to circumvent the rules on transparency—for example, the proposals in Clause 8 which seek to ensure that provisions regarding donations on behalf of others are understood and complied with, and those in Clause 12 which seek to bring more transparency to donations from unincorporated associations. The provisions preventing foreign companies from donating to UK political parties have existed since 2000 and are a vital component of the regulatory regime. Section 54 of the 2000 Act requires a company to be registered in the UK or in a member state, and carrying on business in the UK. I understand that there are some concerns about whether those provisions go far enough and I do not want to dismiss those concerns out of hand. However, I do not believe that the amendments proposed here are effective. The scheme envisaged by these amendments would almost certainly require a party or other donee to verify the permissibility status of those who own voting shares, of shadow directors and of board members. For example, although "shadow director" is defined in legislation, it would require considerable expertise in the law relating to companies to be able to say for certain whether someone was or was not such a director. Therefore, it seems clear that verifying these new permissibility requirements would be, at the very least, a difficult and onerous task. It could greatly increase the possibility of parties and others inadvertently accepting donations that they had concluded were valid. I cannot see that the resulting damage to trust in politics which might follow, even in cases where there is no blame to speak of, would be at all desirable. Ultimately, these amendments may well have the effect of substantially reducing the number of companies from which donations can be accepted if those matters cannot positively be verified, including companies about which there is no real concern but in relation to which the relevant details are simply unavailable. Consequently, the potential effects of the amendments could be far-reaching and disproportionate. Amendment 90, which prevents those ineligible to vote in UK elections donating to UK political parties, is also something that I have to oppose. The existing provisions in the 2000 Act require individuals donating to a regulated recipient to be on an electoral register. Extending this provision so that it excludes those who are not "qualified to vote" would seem to have no positive effect. Finally, as noble Lords will know by now, consensus is a watch-word of the Bill. A significant step such as that proposed by the amendments would need to command broad cross-party consensus, and I am not convinced that such a climate exists at present. Therefore, I hope that the noble Lord will withdraw the amendment.