My Lords, third parties are by their very nature individuals or organisations who may undertake a main function, be it raising awareness of environmental issues, workers’ rights, animal rights or electoral reform, or who are set up for the purpose of campaigning in election. It is because third parties do not fight elections themselves, but seek to participate in them, often alongside another main function, that the regulatory regime for third parties relates to the activities they undertake. Where a third party’s activities,
“can reasonably be regarded as intended to promote or procure the electoral success of a party or candidate”,
this is regulated. The Electoral Commission guidance says that the full costs of any activity should be included, including expenditure on staff costs. This is to ensure that activities that seek to influence the votes of electors are transparent. This is a fundamental principle of our democracy.
The noble and right reverend Lord, Lord Harries, stated on Report:
“It is easy to assess the amount of money you are going to spend on hiring the hall for a public rally; you get an invoice for that. You do not get an invoice for a member of staff or the 10% of their time spent over four weeks doing that”.—[Official Report, 15/1/14; col. 279.]
That statement raises important issues which go to the heart of the Government's belief that as a matter of principle staff costs should be included within the calculation of controlled expenditure. However, we do agree with the noble and right reverend Lord that third parties should not have to account for every small or insignificant amount of staff time. The amendment that noble Lords passed on Report has as its heading, “Exclusions of background staff costs”. I understand and recognise that particular concern. Indeed, the conversation that I had with the noble and right reverend Lord made it very clear where his concerns were. There should not be an accounting for every small or insignificant amount of staff time.
Campaigners, as well as noble Lords in debates in this House, have raised concerns over how a third party would be able to calculate these costs. The Electoral Commission, in its guidance, outlines that third parties should provide an honest assessment. It is important to stress this because I think this is where some of the concern comes from. That does not mean that staff have to keep timesheets, for example, of five-minute breakdowns of how their time was spent, nor has the regime around staff costs operated on this basis for the past two general elections. Under PPERA, staff costs associated with election materials have had to be accounted for. Neither the legislation, nor the guidance from the Electoral Commission, has even suggested that that kind of detailed breakdown of how time is spent is required of third parties.
An honest assessment must be made and this should not be burdensome for third parties. I will use the example that the noble and right reverend Lord, Lord Harries, used on Report. If a third party employee spends 10 per cent of his or her time over a four-week period on election activity, and has an annual salary of £30,000, that is divided by the weeks in the year, which provides a figure of £577 a week. If we multiply that by four, we get a figure of £2,308, 10 per cent of which is approximately £230.
There is nothing in PPERA, nor in this Bill, that suggests that every small or insignificant amount of staff time must be accounted for such as the few hours a member of staff otherwise not involved in the campaign spent proofreading a document, or directing attendees to an event. It must involve expenditure—whether because a person was employed for a specific task, or because the extent to which a person was diverted from their normal duties was sufficient to constitute some additional cost.
That leads me to my second point. The amendment of the noble and right reverend Lord, Lord Harries, appears to accept the principle of including staff costs; his amendment excludes the calculation of staff costs from certain activities—public rallies, organised media events and transport. However, third parties would still have to account for staff time where it formed part of the controlled expenditure for items such as election materials or canvassing.
I ask noble Lords to consider and reflect that if it is deemed reasonable and possible to calculate and include the cost of an in-house designer spending 10% of their time over a four-week period designing an election leaflet, why is it not reasonable and possible to calculate
a communications officer spending 10% of their time over a four-week period organising press conferences or a public event? The answer is that it is not unreasonable, and it is not an overly burdensome requirement, to ask third parties to make such an honest assessment.
The final point I would like to highlight to noble Lords regards the statutory review period provided for by the Bill. The review will carry out a comprehensive assessment of the operation of the Bill as it operates during the 2015 general election. It will then make recommendations on how the regulatory regime for third parties may be improved. Surely we want the review to have available to it all the necessary information as to how the third party regulatory regime operates. While it is true to say that both the Electoral Commission and the Political and Constitutional Reform Select Committee in the House of Commons argue that staff costs should be excluded for the 2015 general election, they both support the principle of staff costs being included. In light of this, the Government would argue that we should include staff costs for all controlled expenditure activity and let the review look at the evidence of how this regime operates during the 2015 general election. We will then have the fullest evidence base on which we can make sensible judgments for the future .
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In the debates on this Bill, no evidence has been provided that third-party campaigners cannot undertake this task; indeed, the evidence of the last two general elections clearly suggests that it has not been a problem to calculate these costs in respect of these two elections. If we are talking about having to do a five-minute timesheet, that is clearly not a burden that we want to impose on campaigning organisations. However, I think that the idea that the Electoral Commission has worked out for assessment—it has had to do this over the past two general elections—is the right one. I think I have mentioned before in general terms that the Government looked at bringing forward a de minimis exemption or exclusion of staffing costs. One text that we looked at said:
“Expenses incurred in respect of time spent by a member of the third-party staff—whether permanent or otherwise—on a matter listed in paragraph 1, where the total time spent by the member on the matter can reasonably be regarded as insignificant”.
I thought that if we had tabled that one, we would have just opened up another debate about what could reasonably be regarded as insignificant.
The proposal that has been put forward reflecting the way the Electoral Commission has operated is a sensible one. I emphasise that with the increased registration thresholds, small organisations will almost certainly be exempt from the regime. It is only when they are spending £20,000 in England that controlled expenditure kicks in. It is a threshold which shows serious intent to become involved in the election in a way which will be to the benefit of, or could reasonably be considered to be promoting, a particular candidate or party. Volunteer time will continue to be excluded.
I do not believe that the noble and right reverend Lord, Lord Harries, really intends the situation to arise that seconding a member of staff to run a series of rallies over the period of an election or hiring a
particular member of staff for a year—or in this case, seven and a half months for the controlled election period—should not count. I accept that he is trying to cover what he describes as “background staff costs”. Unfortunately, the way his amendment is drafted would allow staff costs for someone who was actually seconded to a particular campaign or was hired for the purpose of running a whole series of rallies to be brought within the definition of controlled expenditure. I therefore do not believe that that would lead to increased transparency, so, in these circumstances, I beg to move.
Motion C1