Political Parties, Elections and Referendums (Civil Sanctions) Order 2010

Wednesday 20th October 2010 Lords Chamber

Motion to Approve

17:40

Moved By

[Lord McNally]

That the draft order laid before the House on 8 April be approved.

Relevant Document: First Report from the Joint Committee on Statutory Instruments.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, this order, which is to be made under Schedule 19C to the Political Parties, Elections and Referendums Act 2000, as amended by the Political Parties and Elections Act 2009, permits the Electoral Commission to impose civil sanctions for breaches of the party funding regime established by the 2000 Act. The Committee on Standards in Public Life conducted a review of the Electoral Commission in 2007. It found that currently:

“The only sanction that the Electoral Commission has if the parties do not comply with legislation is to name or shame or, if the offence is sufficiently serious, it can refer it to the Crown Prosecution Service for criminal prosecution”.

The committee recommended a new system of penalties to enforce the regulatory framework set out in the 2000 Act. The 2009 Act was intended to tighten the controls on spending by political parties and candidates, and part of that process was to strengthen the regulatory role of the Electoral Commission. As such, that Act gave the Electoral Commission new powers to investigate potential breaches of party funding law itself rather than have to refer most things of any potential seriousness to the police and to apply a range of civil sanctions as an alternative to criminal prosecutions. We are keen to fulfil this commitment, one that was made by the previous Government.

Following Royal Assent to the 2009 Act, the Electoral Commission initiated a consultation on its proposed enforcement policy. The responses to the consultation and the commission’s resulting recommendations were considered by the Government during the development of the order, alongside the valuable technical advice which was received from the Electoral Commission itself. The 2009 Act inserted into the 2000 Act the key principles behind the powers to impose civil sanctions, including the type of civil sanctions that will be available to the commission, broadly how they will operate and the right of notice prior to the imposition of sanctions, and appeal to the county court or sheriff thereafter. The powers closely mirror those set out in the Regulatory Enforcement and Sanctions Act 2008, which established a sanctions framework for analogous regulators.

It is important to make it clear that these new powers are intended to supplement, and not to replace, the existing ability of the police to investigate an offence, and the Crown Prosecution Service to bring a criminal prosecution. Part 1 of Schedule 2 to the order specifies those offences that will be capable of attracting either criminal or civil sanctions depending on what the commission, the police and the CPS think is the right approach in each case. An individual cannot be proceeded against for the same wrong by the civil and criminal routes. Part 2 specifies these restrictions and requirements that will be capable of attracting only civil sanctions.

Part 3 ensures the continuation of provisions which are currently set out in Section 147 of the 2000 Act and which will be removed from the Act when the new powers are commenced. These provisions enable the commission to impose a sanction on an organisation for the act of one of its officers for a limited range of transgressions. The list set out in Part 3 reflects the list currently set out in Section 147 of the 2000 Act with the addition of Section 41(1), failure to keep accounts, and Sections 41(4) and (5), failure to maintain accounts for six years.

By contrast, those offences in the 2000 Act which are not included in Schedule 2 to the order will remain subject only to criminal sanctions. Examples of such offences are in Section 61(2), knowingly giving false information to a party treasurer, or withholding information with intent to deceive, as set in Section 148(1), or altering, suppressing, concealing or destroying, or permitting the same, of documents relating to the financial affairs of a supervised organisation or individuals.

17:45

The standard of proof for imposition of penalties remains of a criminal standard. This has always been the intent as the aim is not to weaken the standard of proof required for a penalty to be imposed but, rather, to improve the processes that link an offence or some other contravention of the rules to enforcement action, and to ensure proportionate action.

Four categories of civil sanctions are being made available which, taken in conjunction with the existing penalties, the Government and the Electoral Commission believe will allow the punishment to fit the offence. There will be fixed monetary penalties, discretionary requirements, stop notices and enforcement undertakings. The first two require positive action by the person concerned and are the type of sanctions that require a criminal standard of proof being imposed. Fixed monetary penalties have been set at £200 and will be used for minor breaches. Discretionary requirements can take the form of a variable monetary penalty up to a maximum value of £20,000 or, alternatively, an instruction to take specified actions. A stop notice acts much like a civil injunction, requiring the person, political party, recognised third party or permitted participant to cease activity immediately. A criminal standard of proof is not required before a stop notice is imposed but, of course, if the person concerned is not committing the breach that they are required to stop, the stop notice would not cause them any difficulty. Enforcement undertakings are where the Electoral Commission accepts a proposal from a person that outlines the action that they will take within a specified period with a view to preventing the recurrence of an offence or contravention.

A second level of sanctions is available where the initial sanction is not complied with. The order provides for monetary penalties to be increased if not paid on time and to be recoverable as if they were payable under a court order. If a person fails to comply with a non-monetary discretionary requirement, the Act enables a monetary penalty to be imposed. The order sets the level of these non-compliance penalties at between £500 and £20,000. A failure to comply with a stop notice is a criminal offence under the Act. While an enforcement undertaking is being complied with, the person who gave the undertaking is protected from other sanctions under the Act, but if it is not complied with the full range of sanctions becomes available to the commission.

It is important that the Electoral Commission has the correct tools to regulate and tackle non-compliance with the law on party funding in an effective, proportionate and fair way. The Government believe that the order before us today, in combination with the powers inserted into the 2000 Act by the 2009 Act, will give the commission those tools. The Electoral Commission has published its enforcement guidance setting out how it intends to use the new civil sanction powers and how it intends, wherever possible, to use advice and guidance proactively in order to assist individuals and organisations to meet their legislative requirements. I commend the draft order to the House.

[Lord Martin of Springburn]

My Lords, I rise not to oppose but to ask questions on this matter. My experience of the Electoral Commission—although this may have changed—was that people were not allowed to become commissioners if they had been agents or senior officials of parties in the previous 10 years. This meant that we were denied the expertise of retired party agents from the main political parties, and even minority parties. When the commissioners were meeting, it therefore meant that when any ideas came up and those around the table were, perhaps, executives or previous executives of local authorities, they never had the background to know what happened at grass-roots level when political parties were seeking the support of the electorate. They did not have experience of putting leaflets through doors, going into housing estates or, sometimes, even of speaking to electors. I would hope that this matter has been resolved. It would be excellent if the Electoral Commission was able to get commissioners who were previously national or assistant national agents of political parties.

Sometimes in political parties, volunteers are required to take office. Sometimes, on a cold winter night, it is not so much a volunteer but a conscript who becomes the party treasurer or some other officeholder. If a political organisation got into difficulty, it would be very sad if an officeholder, having taken office in good faith while expecting the support of others, made a mistake through inexperience and was charged in any way as being a wrongdoer. Can the Minister help me on that?

It should be borne in mind that the Electoral Commission is in many ways an inexperienced organisation because, as noble Lords might remember, there was a shambles in the Scottish parliamentary elections because of electronic voting. Since the Electoral Commission participated in that new voting system, there was a requirement to bring in an adviser from Canada to investigate the matter, because there would have been a conflict of interest in the commission being involved in it.

[Lord Tyler]

My Lords, I can take my text now from the noble Lord, Lord Martin of Springburn, because I have been an active member at every sort of division of party activity for over 50 years. I want to take this opportunity to ask the House to think a bit about the volunteers who make our democracy happen. These are the people who, through all the circumstances that the noble Lord referred to, make it possible for democracy to be effective in this country. These people seldom end up on green or red Benches. They are rarely quoted in the newspapers or on television, but they are the essential manpower and womanpower for running our democracy.

During the passage of the Political Parties and Elections Act 2009, to which my noble friend has referred, all three major parties made this point. As the Minister responsible, Mr Michael Wills—as he then was—said,

“we must also address legitimate concerns about the burden of reporting relatively small donations in the context of the public's interest in bigger political donations ... we must never forget that political activity in this country is largely carried out by volunteers—selfless people who give their time and effort to political parties across the House. Without them, none of us could function effectively in representing our constituents”.—[Official Report, Commons, 2/3/09; col. 590.]

Mr Jonathan Djanogly, the then Conservative spokesman, agreed. He said:

“I stress that we should be encouraging engagement at the grass-roots level of politics ... I am sure that all hon. Members will be aware that the voluntary levels of party structures and local fundraising are normally entirely divorced from the more complex upper echelons of party funding”.—[Official Report, Commons, 2/3/09; col. 605.]

My honourable friends in that House and my noble friends and I in this House made similar points throughout the discussions on that Bill, as the noble Lord who was then in charge of the Bill will confirm.

Schedule 2 to this order, as my noble friend has pointed out, sets out 69 offences that already exist under the Political Parties, Elections and Referendums Act. These are 69 ways in which local parties or associations and their officers—volunteers, in the main—can fall foul of the law. In principle, creating the possibility that these offences can, at least in the first instance, be removed from the sphere of criminality by bringing in civil sanctions instead is welcome, and I acknowledge precisely that point, which was made by my noble friend.

The Explanatory Notes make clear, however, that the criminal offences will remain. It is not a question of all those criminal offences being removed; it is simply that they will not necessarily be there at first instance. People will continue to be prosecuted in the criminal courts where there is evidence that they have acted knowingly or recklessly. Almost by definition, therefore, the new civil sanctions will apply to people who have made any of the 69 mistakes. Five more transgressions are also added to the list. These are the sort of non-offences that will not be susceptible to criminal prosecution but will be open to the civil sanctions that my noble friend has described.

I am sure that no one in your Lordships’ House doubts the importance of probity, accuracy and good record-keeping if we are to have a transparent system of political donations and campaign expenditure. However, we have to make sure, as the noble Lord has just said, that we do not set up an impossible task for those volunteers at local level—for example, the party chair who approaches an activist and says, “I’d really like you to stand to be the honorary treasurer of the St Albans Liberal Democrats. It’s not much work, you don’t have to worry; you won’t have any legal responsibilities and you’d really be very good at it”. I suspect that many of us in our time have asked people to do precisely that sort of job. Those putative officeholders whom we might try to cajole in future might look at the order that we are discussing today and think twice.

I hope that my noble friend can provide reassurances on two points. First, what de minimis provision is planned so that volunteers and their local parties are not penalised for small, innocent mistakes? My noble friend may say that of course the Electoral Commission will acknowledge when there is a genuine mistake and it will give advice, guidance and so on—I have worked with the Electoral Commission and I have great respect for its activities—but it is one thing to say that; it is not so easy to do it.

Secondly, is this order simply a small, interim step on the way to the full-scale reform of all the corruptive influence of the present situation that we face regarding party funding? Our worry on these Benches should not be about whether a treasurer in the Much-Puddle-Under-Ditchwater constituency Labour Party, the Nether Wallop Conservative association, or even the St Albans Liberal Democrats has notified or failed to notify the Electoral Commission of his or her change of address. That is the sort of issue that is addressed by this order, but it is not the big issue that we should be addressing. Instead, surely, the target should be the offshore bankrolling of political parties and the inexorable arms race in campaign spending. So I ask my noble friend when the Government will return to the much more urgent issue of the potentially corruptive influence of so-called big money in our political system. I am sure that my noble friend will recall that the coalition agreement stated:

“We will … pursue a detailed agreement on limiting donations and reforming party funding in order to remove big money from politics”.

A useful report has come out this week, Funding Political Parties in Great Britain: A Pathway to Reform by Democratic Audit, which explains the issues that we should be addressing with regard to the problems in our democratic system. Noble Lords will recall that the cross-party discussions under Sir Hayden Phillips came close to agreement on capping donations, a lower cap on national expenditure in elections, a cap on all party expenditure during each Parliament and—an important suggestion—the opportunity for political donations to be given the same tax concessions as charitable donations. That last could be introduced without any explicit increase in the already substantial state funding of our political parties and democratic system, of which the Labour Party is now the main beneficiary.

18:00

Looking at the whole range of these issues, it is surely a ludicrous anomaly that when the Reverend Ian Paisley asks his followers for donations to his church, they benefit from tax concessions, but if the noble Lord, Lord Bannside, seeks financial support from his followers for his political party, they cannot get that tax concession. That is surely absurd. What does that say about the relevant integrity and public spirit of those volunteers who make our democracy work? Even campaigning charities can benefit from tax concessions while democratic parties cannot.

I hope my noble friend will also recall that we on these Benches—those Benches, as it was—he, I and courageous Labour rebels, succeeded in amending the Political Parties and Elections Bill to prevent foreign-based billionaires spending huge sums to influence the outcome of British elections. Mr Jack Straw subsequently caved in and stopped the implementation of that measure before the recent general election. Will we now return to that very important issue? Will my noble friend give your Lordships' House an explicit assurance that cleaning up this mess will not be postponed any longer? The democratic audit reminds us that the role of the Electoral Commission is critical to this whole exercise, as, indeed, my noble friend has already said. However, the report states:

“The capacity of the Electoral Commission to enforce compliance and penalise non-compliance represents the other principal concern with the current arrangements … Further additions to the regulatory framework will almost certainly require that the Commission is granted additional powers to investigate and to enforce compliance”.

I think that the democratic audit was thinking not of that putative treasurer of the St Albans Liberal Democrat association, but rather of the much bigger, wider ways in which our democratic system can be undermined. Again, it seems we have to ensure that the sledgehammer of investigation and policing implied in this order is reserved for cracking the big nuts—the really big-scale attempts to corrupt our democratic system.

The introduction of these new disciplines and the failure to make progress on the bigger reforms threaten to discourage further individual, voluntary involvement in the democratic process, as the noble Lord, Lord Martin, said. Our political parties are wholly dependent on the commitment, enthusiasm and self-esteem of volunteers. Truly active involvement in the public life of our country, through the political parties, is an essential element in the so-called big society. The order is, of course, useful but it is a tiny answer to a much bigger problem.

[Lord Bach]

My Lords, I shall be fairly brief but I cannot resist commenting that it is slightly ironic that we should be debating this matter on the afternoon when staff in the Ministry of Justice—whether front-line staff or those who work in the main office—are being decimated by a Statement made in another place. The staff who produced this order and the Bill, which became the Act, are the ones who will have to suffer. It seems to me ironic that we should discuss such a good order on the very day when they are to be decimated as a result of government policy.

I thank the Minister for outlining so clearly and in such detail the statutory instrument that we are being asked to approve. We support the order, which is hardly surprising as it flows from two Acts of Parliament introduced by the previous Government. As we have heard, the civil sanctions were introduced by the Regulatory Enforcement and Sanctions Act 2008, and these regulations flow from the Political Parties and Elections Act 2009. As it happens, I played a small part in taking both those Bills through this House, so I am interested in the order which flows from those Acts.

The use of civil sanctions was not approved without controversy in this House when it considered the Bill. Their use, as opposed to criminal proceedings, is a flexible, sensible and proportionate step for many of the offences—for that is what they are—committed under the 2000 and 2009 Acts. As has already been said, criminal proceedings are appropriate and necessary in cases where a person has acted in a knowing or reckless way, but I hope that those cases are rare.

I say this with perhaps more feeling than some. I share the view of the noble Lord, Lord Tyler, on this and, no doubt, that of the noble Lord, Lord Martin. I was a constituency Labour Party treasurer for many years and now, for my sins, I am a chairman of a constituency Labour Party.

[Noble Lords]

Hear, hear!

[Lord Bach]

I am very grateful to the House for that acknowledgement. Both as treasurer and chairman I could be affected by the legislation that is now on the statute book.

I congratulate the Electoral Commission on the note it sent to noble Lords on this order, but I invite it to use its considerable powers—and they are considerable, as has been pointed out in the debate—with care, tolerance and humanity, bearing in mind the voluntary nature of so much political activity in this country. We support the order.

[Lord McNally]

My Lords, I shall reply briefly to this debate. I am sure that we are all impressed by the climb of the noble Lord, Lord Bach, from treasurer to party chairman. Disraeli called that climbing the greasy pole.

I shall also respond briefly to the noble Lord’s point about the Ministry of Justice. Twelve years ago, I served on an inquiry, initiated by this House and chaired by the late Lord Slynn, into whether the ethos of public service was still alive and well in our Civil Service after the changes that had taken place in the 1980s and 1990s. Our report stated that yes, it really was alive and well—people in our public service were motivated by a sense of public duty and public service. Since returning into government five months ago, my experience has been such that I would not change a word of that report. I have been much moved and impressed by the dedication of the public servants with whom I have worked at all levels. I am well aware that percentages are meaningless for the individuals concerned. For them, the unemployment is 100 per cent. Therefore, we will try to manage the changes that we judge to be inevitable with a duty of care to those people and with as much humanity as we possibly can.

I am very familiar with this topic because more than a decade ago I was on the Benches opposite arguing about the Bill and many of the things that the noble Lord, Lord Martin, raised. I remember the noble Baroness, Lady Gould, and myself, as two former party officials, pointing out that the Bill was couched in terms that made the treasurership of a political party sound like one of those golden prizes in politics, whereas the hard truth is that it is usually given to someone who has inadvertently left the room at the wrong time. It was argued at the time that the commission would have all kinds of talents except perhaps the most valuable talent of all—the ability to run elections at the sticky end for the political parties. The most recent appointments to the commission have been an attempt to remedy that, because the nominees have come from the political parties. I hope that that answer meets the point that was raised.

The noble Lord, Lord Martin, and my noble friend Lord Tyler asked whether the heavy hand of sanctions would come down on inexperience or on genuine mistakes. The Electoral Commission, in putting forward how it wants to approach these matters, said:

“We recognise that many of those responsible for complying with the law on party and election finance are volunteers … The new civil sanctions will allow us to use more constructive approaches to secure compliance in cases where the law has been broken. For example, we could issue a statutory notice designed to improve future compliance, rather than just imposing a less flexible penalty such as a fine.”

As the noble Lord, Lord Bach, said, a lot of work was done on this before the general election, and this order reflects that. The thinking behind it is that the Electoral Commission was faced with using either a tap on the wrist or a criminal prosecution. The order gives it a range of measures. What is in the order, and what is in the remarks that I made when I introduced it, is the point that the Electoral Commission is in no doubt that proportionality will be expected of it. With political experience in the commission, I hope that it will be able to use these powers with due proportionality and that there will be no sledgehammer, as the noble Lord, Lord Martin, and my noble friend Lord Tyler feared.

My only other point is in response to my noble friend Lord Tyler, who asked about the funding of political parties. This is a firm commitment in the coalition agreement. It was mentioned in the Queen’s Speech. I am tempted to say that the Government will move directly to the measure as soon as reform of the House of Lords has passed, but that might be seen as not the kind of commitment that the House is looking for. As my noble friend Lord Tyler said, noble Lords on all sides of the House know that in the previous Parliament we came very close to getting agreement on party funding. The coalition Government are committed to try again and we hope, as the Opposition are nodding vigorously, that if we initiate a new attempt to get agreement on party funding, we will succeed this time.

[Lord Bach]

I absolutely agree with everything that the noble Lord has said, but if he wants to know the reason why the talks on political funding failed—as Christopher Wren said when asked for what his monument would be—he should look around him. It is the people with whom he is in coalition who have prevented it happening.

[Lord McNally]

I would prefer to leave those matters to the historians. We are looking forward. The Committee on Standards in Public Life is making a report. The report to which my noble friend Lord Tyler referred is on my desk at the moment. I think that we have a really good chance of taking matters forward. As I have said before, all the major parties have at some time or other faced problems, embarrassments and difficulties because of our way of funding political parties. If we really apply ourselves early in this Parliament to the problem, we could and should find a solution.

I commend the order to the House. It will help the party activists. I finish by endorsing the comments made by my noble friend Lord Tyler and the noble Lords, Lord Martin and Lord Bach, who all have campaign medals as party activists. Nothing annoys me more during a general election than knocking on a door only to be told by some proud person that they never vote and that we are all in it for what we can get. We know that our democracy works because of the tens of thousands in every political party who are willing to do those hard, dull jobs such as sticking things through doors and knocking on the doors of perfect strangers to engage them in discussion. They are the people who make our democracy work. I pay tribute to them and hope that this order will make that voluntary work a little easier.

Motion agreed.