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Political Parties and Elections Bill

My Lords, I welcome this chance to speak to the Motion before us. If the House will bear with me, it is worth taking a few minutes to recap as to how we come to be in the position we are now in. An attempt was made by Mr Prentice to table an amendment on Report in the other place. The government business managers decided that they did not want the matter to be debated and therefore it came to this place. The noble Lord, Lord Campbell-Savours, took up the amendment and with his characteristic skill and ability in Committee, again on Report and at Third Reading, brought it back here. At that point there was quite strong opposition to it. I shall come to my views shortly, but first I shall quote the Minister: ""The Government have stated their firm belief that it would be wrong in principle to create an anomaly by introducing extra restrictions on only one form of participation without considering"," other forms. The other forms to which that remark relates are mentioned earlier in the Minister’s speech where he says: ""As we have said before, the Government recognise and understand the sentiment behind the amendments … We also recognise, however, that making a donation is just one way in which an individual can participate in our democracy. There are many other ways, ranging from exercising the right to vote in an election to standing as a candidate".—[Official Report, 15/6/09; col. 914.]" In this sense, by introducing two specific additional tests in respect of donations, the Government said that we would be in danger of creating an "anomaly". I am sure that the Minister will be able to confirm that those were very much his sentiments which he set out in Committee and repeated here. A very high quality debate then took place in which many excellent contributions were made. A Division was called and the amendment tabled by the noble Lord, Lord Campbell-Savours, was carried. It went down to the other place, and after what I should say what was a slight delay on the part of the business managers in bringing the Bill back to the Floor of the other place, every indication was given to the press—it was reported in the Guardian, no less—that Mr Straw, the Secretary of State, had stated that the Government Benches would be whipped to vote against the noble Lord’s amendments. That was a clearly stated position. Something happened then, we know not what, but there was a Damascus road conversion in the other place and we found that some six pages of amendments, where previously the noble Lord, Lord Campbell-Savours, had sent down a paragraph, were put forward in the other place for consideration. It is interesting that those six pages of amendments have now been superseded by another six pages of different amendments, which brings us to where we are now. It is worth putting on record the circuitous route taken by the legislation and that the previous publicly stated positions of the Minister and the Secretary of State have been turned on their head for no apparent reason. Let me set out some of the problems. We remember that when the Bill was introduced the idea was to avoid the possibility of innocent mistakes and to make the process simple and transparent. While there is nothing transparent about the way in which the Government have changed their view and introduced these amendments, certainly the objective was that the Bill should be transparent in the way that it operated. Therefore the transparency of simply registering people on an electoral register which is supplied to each party seemed a simple way forward. Now some additional tests have been introduced. It is worth going through what the tests are and what their implications are and I shall be interested to hear the Minister’s response. First, on residence, the Explanatory Notes to Part 14 of the Income Tax Act 2007 state in paragraph 2455: ""The question whether or not a person is UK resident is primarily to be determined in accordance with case law. A limited number of statutory rules either supplement or disapply the case law rules in specific circumstances"." In other words, there is no statutory definition of residence. Therefore, if this is to appear in the Bill as a test which donors are required to pass, and there is no statutory definition of residence, it could cause a problem. I hope the Minister will touch on these points in his response. I am happy to give way at any stage if he has a specific answer because that would aid the understanding of the House, and not least myself. The Explanatory Notes continue: ""There is no register of UK resident individuals; it would therefore be necessary to provide individuals with information to try to enable them to determine whether or not they are resident in the UK and then require individuals to make a declaration that they are resident at the time they make their donation … By way of example, a person will always be treated as a UK resident where they spend 183 days or more in the UK"." That is very clear. They go on: ""However, where a person spends less than 183 days in a tax year in the UK, but comes to the UK with the intention of spending on average at least 91 days or more in the tax year and they in fact spent on average 91 days or more per tax year over a four year period, then they will be treated as resident from the tax year in which they first come to the UK"." In case your Lordships do not think that is complicated enough, the Explanatory Notes continue: ""If however the person’s intention failed and they left the UK earlier than expected, then they may not be treated as UK resident from the date upon which they first come to the UK. Clearly one would be unable to determine with certainty until the end of the 4 year period whether or not a person were to be treated as UK resident under this test. This may therefore affect the validity of any donation made to a political party during the 4 year period"" This is a moot point. In speaking to it, the noble Lord, Lord Tyler, commented on the change which had been made in the other place, along with many others, from the previous tax year to the current tax year. Will the Minister deal with that specific point? The absence of a statutory definition and the four-year aggregate of 91 days’ residence are an example of the complexity that we are dealing with here. What would happen in those circumstances? The second test that has been introduced relates to domicile. Political parties will have to determine, in relation to every political donation, whether the donor is not a non-domiciled UK resident. HMRC has recently issued the new technical guidance on domicile, consisting of 42 pages. The introduction to this technical guidance stresses the difficulties inherent in the determination of domicile. If we thought that residence was a difficult concept to uphold in the Bill, domicile is even more complex. Add to that complexity another concern about the penalties that would be liable to the party if it accepted an impermissible donation. Again, that is relevant. We are dealing here with the difficult concepts of residence and domicile; I think that everyone is agreed on that. Often one’s tax status and domicile may be determined retrospectively, yet the Bill is set out to relate to the current year. The prohibition on the acceptance of impermissible donations and the duty to return any such donations within 30 days of receipt, in Clause 54(1) and 56(2) respectively, are subject to criminal and civil enforcement regimes. The party and the treasurer are guilty of an offence if the donation is not from a permissible donor and is not sent back to the donor within 30 days of receipt. In addition to the points that have been raised, the Minister referred to the fact that HMRC will not be able to keep these data and there will be no register. The system of policing will therefore not be in place. If HMRC, the Government and the Electoral Commission cannot prove the offence, how can these sanctions be applied to a party treasurer who has just 30 days to understand and test these levels of residency and tax domicile? My next point is a very interesting one that has been raised with me. The Minister said that he felt this measure was consistent with the European Convention on Human Rights. I want to test him further on that. In the case of Bowman v United Kingdom, the European Court of Human Rights proved that it would step in to protect the right to freedom of expression even in the case of UK primary legislation designed to regulate the conduct of elections. In Bowman it was found that a spending limit on third parties of £5 imposed in Section 75 of the Representation of the People Act 1983 was an infringement of the right to freedom of expression under Article 10 of the European Convention on Human Rights. There is a statutory responsibility to have an impact assessment; the Minister states in the Bill: ""In my view, the provisions of the Political Parties and Elections Bill are compatible with the Convention rights"." Is that still the case? Can the noble Lord still make that statement, given some of the precedents that relate to this? Indeed, we extend that through EU law to issues relating to human rights. The Maastricht treaty introduced the concept of Union citizenship. According to Article 18, Union citizens have the right to move and reside freely within the territory of any of the member states, subject to the limitations and conditions contained in the EU treaty and secondary legislation. The European Court of Justice has defined Union citizenship as the "fundamental status" of Union citizens. Union citizens have a right of conditional residence and limited right to equal treatment. On that basis, they therefore have the right as European citizens to participate in and stand for elections in this country. Does the Minister believe that the new test of tax residence is consistent with EU law and the European Convention on Human Rights? Section 1 of the Representation of the People Act 1985 permits overseas British citizens to vote at a parliamentary election if they are registered on the electoral roll, were resident at a UK address within the previous 15 years and registered at that address or, if they were too young to be registered, a parent or guardian was registered at that address. The requirement in PPERA that an individual be on the electoral roll therefore already incorporates a test of connection, or involvement, with the United Kingdom. This is important because it is clear that questions will be raised, time wasted and important matters debated if that matter is tested in a prosecution. Does the Minister stand by the statements about the complexity of tax and residence, and their potential for creating anomaly, that he made in Committee and on Report? A simple yes-or-no answer to that would be very helpful. Is this the thin end of the wedge? By linking the ability to vote and donate to tax status, the Bill risks establishing a principle that political rights should be in some way based on making a contribution to the state through taxation. Has the Minister considered that aspect and, if so, what is his conclusion? I shall touch briefly on some of the observations that have been made by the Electoral Commission, which will be landed with the responsibility for upholding the legislation. In a briefing which I am sure has been circulated to all Members who have an interest in this debate, it expresses concern. It recognises that new Amendments 12G to 12N represent an improvement over Amendments 11 and 12 which were tabled in the other place—I think that we would accept that, too. Page 2 of the document states that, ""amendments 12G to 12N go some way to addressing our previous concerns. In particular, they appear for the most part to remove the need for those receiving donations that attract the new tax status criterion for permissibility to seek to validate declarations from donors about tax status … We note that amendment 121 contains a delegated power for the Government to make supplementary provision to give full effect to the new requirements, and we urge the Government to consult with us and with those we regulate, in order to consider what further provision may be necessary"." The Electoral Commission is therefore saying, "Well, we understand very much what you want to do". The Minister has said, "Well, listen, you might want to do it and it might actually please some Members of this House and the other House that you are attempting to do this, but it is going to be impossible to police"—I think he used the word "impossible". He said that all that can be required is for somebody to make a self-declaration. I think he said that it would be up to the criminal authorities to decide whether an offence had been committed. In other words, there is no access to any information for the Electoral Commission to take the lead on this—a matter that the Bill was meant to tackle. I apologise for speaking at length but it is important to place on record legitimate questions about why the Government changed their view—if, indeed, they have done so—from that consistently argued in Committee and on Report to that proposed in these revised amendments. I am sure they recognise that they are now creating an anomaly within the tax system whereby somebody can vote in an election in this country, can stand at an election in this country but cannot give a donation to a party in this country which exceeds the threshold of £7,500. The Minister has accepted that this will be impossible to police. Very serious questions remain about these amendments. The pace at which they have been introduced is likely to lead to great confusion. We desperately wanted clarity from the Bill but we have confusion. That is regrettable and in no way helps the aim to which we all aspire of ensuring that the public have confidence in the system of electoral representation and the working of political parties in this country.