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Political Parties and Elections Bill

My Lords, the strength of feeling that the noble Lord showed today on this issue was not shown in the Division Lobby on Report when he led 40 of his own side into the Division Lobby in the vote that, I acknowledge, Her Majesty's Government lost. There was a lot of feeling on this side, as well as in other parts of the House, against the Government's position. Now, what do we do? We look and see what the strength of feeling is. We know that there were 218 names on an Early Day Motion in another place, well before the matter came to this House. We had the result of the vote in this place on Report. There clearly was a great deal of feeling in both Houses of Parliament that, on this issue, the line that the Government had taken was not the right one. So are Governments to be entirely stubborn, or should Governments do what they can to try to make what we have always argued is a good principle—I do not think that the noble Lord argues against the principle—practical? That is what we have attempted to do. I shall try to deal with some of the noble Lord’s points. He makes a legitimate point when he says that transparency about residence status and the lack of statutory definition makes it difficult to determine status. He is right; it does. However, there will be material to assist. First, the Electoral Commission will produce guidance, which is significant. Secondly, there is existing HMRC guidance, too. Thirdly, someone giving a donation of more than £7,500 who is unsure of their status can seek professional advice, because giving a false declaration is an offence only if it is given recklessly or intentionally. Someone who takes steps to satisfy themselves of their status will not have committed an offence. The noble Lord quite understandably also refers to the ECHR. Of course we have considered whether the ECHR is possibly infringed. We think that the statement in relation to these provisions being ECHR compliant stands. This amendment could be said to restrict rights to freedom of expression—which I think is the point that the noble Lord was getting at—or association, but we believe that the difference is that it does so proportionally. Donations of up to £7,500—not £500—can still be paid by non-domiciles. That is a clear protection, as I said in my opening remarks, and is very relevant to the ECHR argument. In short, we are satisfied that these amendments are compatible with the EU and ECHR. The noble Lord also made a point about party treasurers. Those of us who have been party treasurers at a very low level in our parties can only have some sympathy for the position in which they sometimes find themselves under the present law. The amendments make it clear that parties will in most cases be able to rely on declarations from the donor in order to satisfy the requirement to take reasonable steps to verify that a donation is permissible. In practice, we expect that this would need to go beyond that only when they have reasonable grounds to think that a declaration is incorrect. Even in that scenario we do not expect party treasurers to have to understand and apply concepts of residence and domicile. We expect, for example, that they could ask the donor for a letter from his or her accountant asserting that the donor is a UK resident and domiciled. We have drafted amendments to ensure that the burden on political volunteers is minimised. I hope the noble Lord thinks that, in principle, that is the right thing to do—to make it easier for volunteers rather than more difficult. The noble Lord made a point about previous and current tax years. We have changed the requirements so that the amendments propose requiring a donor to be resident or ordinarily resident and domiciled—ROD, in short—in the year of giving the donation or the loan. The version of the amendments debated in the other place referred to the previous tax year. Why did we make that change? We made it in the light of discussions with Her Majesty’s Revenue and Customs and Her Majesty’s Treasury. Fundamentally, we believe that it would be bizarre and an unintended effect if an individual who was not ROD but had been last year was a permissible donor whereas someone who was ordinarily resident and domiciled in the current year but had not been so in the year before was not a permissible donor. So we recognise that for some people it will not be clear in-year what their tax status is. If a donor or recipient is in doubt about the permissibility of their donation, they should not give it without independent advice to satisfy themselves of their position. He also makes a fair point about the complexity of the tax system. It is certainly an argument that we have employed, and it still exists: the tax system is still complicated in this field. Of course we are not claiming that it is straightforward but—and I go back to something I said a few minutes ago—what we have proposed is a workable and effective means of addressing a clear decision from Parliament, not least from this House on Report. When these matters went back to the other place and were debated through the Government’s then amendments, there was of course no Division called at the end of that debate this time last week. Finally, on why the anomaly is not a problem now, we took and stand by the view that it is better to tackle these issues in the round. The House decided that this issue ought to be addressed now, not at some time in the future, and we have sought to give effect to that decision. This does not prevent further consideration of the wider issue in due course; indeed, I would be very surprised if there were none. Motion agreed.