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Companies Bill [Lords]

The funding of political parties is a topical issue, with implications for all hon. Members and parties. However, I hope that we all recognise that, in the debate, we are considering the matter from the perspective of companies and their members, and how and when directors of companies need to obtain authorisation from their members before making a political donation or incurring political expenditure. The company law interest in the matter arises from the possibility that a director might put his personal interests or those of a political organisation before those of the company. In other words, a director might experience a conflict of interest when making a political donation or incurring political expenditure. The provisions therefore have an important but limited purpose. Company law is not an appropriate vehicle for delivering wider policy objectives in relation to political funding. Clause 380 provides that a trade union is not a political organisation for the purposes of part 15 of the Bill. This means that funding from a company for a trade union—for example, providing free meeting room facilities or giving employees paid time off for trade union activities—cannot be considered as a political donation requiring the authorisation of the company’s shareholders. As we said in Committee, clause 380 was included in the Bill at the express request of companies that felt strongly that they should be able to provide facilities for their work force through a trade union without it being deemed political funding. In Committee, however, a number of hon. Members expressed concerns that the provision might allow companies to circumvent the Bill’s requirement for authorisation by making donations to the political fund of a trade union, in the expectation that the trade union would make a donation to a political party. In response to those concerns, we propose to replace clause 380 with a new clause that would apply the controls of part 15 to donations made to the political fund of a trade union but to no other donations made to the union.