Elections Bill

Baroness Hayman of Ullock Excerpts

Report stage
Monday 25th April 2022 Lords Chamber

[Lord Wallace of Saltaire (LD)]

My Lords, my name is on these amendments. We have had a very powerful debate from all sides of the House, and I suggest that we now ought to move towards the Minister’s response.

I remind the Minister of the constitutional context we are in and of his responsibilities as, in effect, the only member of the Government with responsibility for the constitution and constitutional propriety. Noble Lords may not be fully aware that, since the last reshuffle, there is no longer any Minister within the Government who has been given the specific responsibility of being Minister for the Constitution. The responsibility for this Bill has been moved from the Cabinet Office to the department for levelling up, communities, local government and various other things which provide a very extensive portfolio for Michael Gove. That leaves the Minister in some ways stranded, but in other ways he is the only member of the Government—apart from the Prime Minister himself—who specifically has responsibility for constitutional propriety among his major responsibilities.

The Minister will be well aware that the noble Lord, Lord Wolfson of Tredegar, referred to issues of constitutional principle in his resignation letter and that, before him, the noble Lord, Lord Faulks, also resigned on a matter of constitutional principle. I hope that the Minister will address the constitutional propriety of these two clauses in winding up. After all, we are in a wider constitutional crisis, both domestically—I have referred to the context of that—and internationally, given what is happening in Ukraine and the growth of autocracies around the world.

The noble Lord, Lord Finkelstein, who sadly is not in his place, addressed Britain’s constitutional crisis in his article in the Times last Wednesday. He reminded his readers:

“The British constitution, because it is unwritten, is particularly vulnerable to its limitations being resisted at the top of government … It is the responsibility of parliamentarians, and in particular Conservative ones, to insist”


that constitutional rules and conventions are followed. I welcome the reaffirmation made by the noble Lord, Lord Finkelstein, of the Conservative Party’s proud tradition as the constitutional party—from Burke through successive Salisburys to the noble Viscount’s father, Lord Hailsham—and I regret our current Government’s failure to maintain fully that tradition.

I invite the Minister to explain to the House how he considers these proposals to be compatible with Conservative principles of limited government and parliamentary sovereignty. If he cannot reconcile the tried and tested principles of Conservatism—about which he has often spoken eloquently—with these proposals, he should accept that they should be removed.

[Baroness Hayman of Ullock (Lab)]

My Lords, we very much welcome these amendments. We thank the noble and learned Lord, Lord Judge, for tabling them and for his excellent and clear introduction on his concerns about the implications of leaving these clauses in the Bill. I will be brief, as he and many other noble Lords made excellent speeches today.

We have made it extremely clear on previous stages of the Bill’s consideration that we are extremely concerned about its intention to make provisions for a power to designate a strategy and policy statement for the Electoral Commission, drafted by government. As other noble Lords have said, this would allow political interference in the regulation of our elections and calls into question the independence of the Electoral Commission from government and political control. This simply cannot be allowed to happen. It is a dangerous precedent. If we look at similar democracies such as Canada, New Zealand or Australia, there is always a complete separation between government and the electoral commission. It is essential that our regulatory framework strikes the right balance between upholding the independence of the Electoral Commission and ensuring it is properly scrutinised and held to account. The noble Lord, Lord Hayward, made some good points about the fact that we need to look at how it operates, but this is absolutely not the way to go about it.

I remind those noble Lords who have said that this is not of any concern that new Section 4B(2) in Clause 15 says that:

“The Commission must have regard to the statement when carrying out their functions”—


“must”, not “may”. That is what really concerns us. We have had many excellent speeches, so I urge the Minister to listen very carefully to what has been said in the defence of our democracy. That is what we are talking about. We fully support these amendments and urge other noble Lords to do the same when this is put to the House.

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, I have not detected universal enthusiasm for these clauses in the debate, but I will seek to persuade your Lordships that they should remain. Of course, in remaining, one of the things they do is provide a basis for further discussion.

Your Lordships’ House is a revising Chamber, but we do not have here amendments to revise. These amendments would simply remove clauses on the basis of arguments which, in my submission, are exaggerated in their concerns, although I understand and share the concerns for democratic responsibility and respect. We have even heard several threats to kill the whole Bill. I must remind noble Lords that this is a Bill that prevents election fraud and abuse; introduces the first controls on digital campaigning; cracks down in many ways on foreign spending; and improves the integrity of postal voting. These are matters which have wide assent across the Chamber and across both Houses. It would not be wise or proportionate for your Lordships to consider killing those proposals on the basis of this particular issue.

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Moved by

[Baroness Hayman of Ullock]

63: After Clause 60, insert the following new Clause—
“Permissible donors
(1) Section 54 (permissible donors) of PPERA is amended as follows.(2) In subsection (2)(a), after “register” insert “at the time at which the donation is made, but not an individual so registered as an overseas elector”.”Member’s explanatory statement
This new Clause would prevent overseas electors donating to political parties in the UK.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Lord, Lord Wallace of Saltaire, and the noble Baroness, Lady Bennett of Manor Castle, for their support. This amendment would prevent overseas electors donating to political parties in the UK. We had quite a debate about this in Committee so I will not go over all the points, but I want to talk about the reasons behind our concerns and to raise a few key things.

We are concerned that the change to remove the 15-year limit on registering overseas electors creates a loophole in donation law that would allow wealthy donors unlimited access to our democracy and the opportunity for unprecedentedly large donations. We do not believe that foreign donors should be allowed to financially influence our democratic processes; that right should be reserved for citizens who actually live in this country. The Electoral Commission recommended introducing new duties on parties to enhance due diligence and risk assessment of donations based on existing money laundering regulations, which would protect parties and build confidence among voters, so that sources of party funding would be thoroughly and properly scrutinised.

We are therefore disappointed that the Bill does nothing about this and does not bring in what is urgently needed—an effective regulatory and enforcement regime to ensure that foreign money and dark money cannot enter our political system through donations to political parties. We have tabled Amendment 63 to protect our democracy from this foreign money, which we know is already impacting our politics. Concerns about how our democracy is being influenced by malign foreign influences has been highlighted already in the Russia report. That was debated at length in Committee, so I will not go into that any further, but it provides a clear example and concern.

Our fear is that the Government have, potentially inadvertently, created a system vulnerable to overseas interference. It allows a person to call up any or every local authority to say they were resident in the area 30 or 40 years ago with pretty flimsy proof and then be able to be registered and donate enormous sums of money. That is our key concern. When this was debated in Committee, the Minister said that if you have the right to vote, you should have the right to donate. Although I understand entirely the principle behind this, it does not address our very real concerns. If I am not satisfied by the Minister’s response that there is genuine recognition of this concern and that action will be taken by the Government to stop this potential foreign influence on our elections and political parties, I will wish to divide the House.

[Lord Wallace of Saltaire (LD)]

My Lords, my name is on Amendment 63. I strongly support it and I trust the House will give it its support. The absence of any detail from the Government on how they will implement the idea of overseas votes for life is quite remarkable. There is nothing on how they would check the bona fides of expatriates claiming to be citizens and to have lived in particular UK constituencies, perhaps half a century ago, in contrast to the proposals to tighten domestic identity checks. There is nothing on new measures for getting ballots out to these new voters and returning them in the span of our short campaigns. From the hundreds of messages I have had from expatriate voters, that is one of the issues about which they are most concerned: how difficult it is to get the ballots out or get them back. There is nothing on the current distribution of overseas voters in constituencies or how the expansion might affect the current balance of our constituencies in terms of size and the equalisation of the numbers of voters in each. The Government do not know what the current distribution of voters by constituency is—at least, the Minister did not when I submitted the Written Question to him—or how overseas voters are distributed by overseas countries or how many would be likely to register.

In these circumstances, one has to conclude that the Government’s main objective in extending expatriate votes for life is to tap wealthy donors who long ago moved abroad to avoid paying UK tax to increase the structural advantages from which the Conservatives already benefit in funding electoral campaigns. All the amendments in this group address the huge question of how to maintain a level playing field in the financing of political campaigns. This is one of the many issues on which the Bill falls short. Noble Lords will recall that the Committee on Standards in Public Life published a substantial report on political finance last summer, just two days after the Government had published the Elections Bill. The Government have made no effort since then to incorporate its proposals into the Bill, in spite of introducing a number of other significant amendments.

We all recognise that uncontrolled flows of money into political campaigns can unbalance and corrupt democratic politics. We see the extent to which American politics has become the plaything of the super-rich. Noble Lords may have noted that in the last three months of 2019, in the run-up to our last general election, two-thirds of the money reported by the Electoral Commission to have been contributed to UK parties flowed to the Conservatives. Quite possibly, as much again flowed to the think tanks of the right, including from non-UK citizens in the USA and non-democratic states. We are drifting closer to the American situation, with the difference that only one of our major parties has easy access to large-scale donors.

As other amendments in this group suggest, we need a broader review of political funding than the Bill permits. Amendment 63 thus offers a stop-gap measure. Those who have moved to Monaco, the Channel Islands, the Isle of Man or Caribbean tax havens to avoid paying UK tax should not be permitted to bias our domestic politics by funding political campaigns. Yes, we should allow them to vote as citizens. But we have learned from flows of money from Russia and right-wing foundations in the USA that the buying of influence over British politics from overseas undermines the level playing field that democratic campaigns depend on and that I hope the Minister still supports. It also corrodes trust in the integrity of our democratic process. I regard Amendment 63 as an important stop-gap measure until, perhaps, a different Government tackle the question of political finance and its regulation. I hope the House will support it.

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[Lord True (Con)]

My Lords, again, I think that is a false question. In our democracy an independent person is entitled to stand in a constituency, for a cause that he or she believes in, and may choose to fund that campaign. Nobody else may want to give any money. That would be an example of 100% funding of a campaign by a small campaign or individual. There are complexities here, and the fundamental position to stand on is that in free democracy, people should be able to make a contribution of whatever sort they choose, provided it is permissible and legal.

[Baroness Hayman of Ullock (Lab)]

My Lords, it has been very clear from the debate we have just had and the other amendments that have been discussed, as well as my Amendment 63, that there are some really broad concerns about political donations, electoral finance and the procedures and systems that underpin and manage this. I urge the Government to take away those concerns more broadly and consider how they may be addressed in the future.

In response to the noble Lord, Lord Butler of Brockwell, I thought I had made it really clear, both in Committee and in my opening remarks today, that we are very concerned about the potential for dirty money infiltrating and influencing our political system. If I was not clear, I am very happy to confirm that we do have those very deep concerns.

I thank the Minister for his very detailed response, but I disagree with him that the Bill makes it harder to make overseas donations. Instead, our concern is that part of removing the 15-year limit actually makes it easier for people from foreign locations to donate to our political system. We are concerned that often it allows very wealthy donors unlimited access to our democracy, through what we could see to be unprecedentedly large donations. That is our big concern with this and why we have put this amendment forward. To avoid that kind of outside influence in our democracy, the right to make those kinds of donations should be reserved for citizens actually living in this country.

As I say, I thank the Minister for his detailed response, but do not believe he has addressed the real concerns expressed by us and other Members who have taken part in the debate. Therefore, I wish to test the opinion of the House on my Amendment 63.

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Moved by

[Baroness Hayman of Ullock]

64: After Clause 60, insert the following new Clause—
“Review and consolidation of electoral law
Within 12 months of the passing of this Act, the Secretary of State must publish a timetable for undertaking a wholesale review and consolidation of electoral law.”Member’s explanatory statement
This amendment would implement a recommendation of the House of Commons Public Administration and Constitutional Affairs Committee in its report on the Elections Bill.

[Baroness Hayman of Ullock (Lab)]

My Lords, our Amendment 64 looks to bring in one of the recommendations that came from PACAC around the consolidation of electoral law. The Elections Bill makes substantial changes to electoral law, but it does not tackle something that has been fundamentally and widely recognised: the need to consolidate the existing voluminous and fragmented body of electoral law. Amendment 64 aims to address this.

PACAC has done a number of reports on electoral law. In 2019, Electoral Law: The Urgent Need for Review noted that even the most professional agents can worry about falling foul of electoral law and the complexity that it currently contains, and that this provides serious risks and difficulties for electoral administrators. PACAC has been recommending for some time now that the Government should look at prioritising non-controversial consolidation of electoral law that can command cross-party support. Much of this would have cross-party support because we all recognise that this needs sorting out. Once that consolidation has been achieved, the Government should proceed to evaluate the effectiveness of electoral law more generally to see where we could bring in further reforms to make it more straightforward for those involved in it to manage.

I am aware that the Government agree in principle that electoral law needs consolidation but at the moment consider that there are more immediate challenges outside of the structures, which presumably is what much of the basis of the Bill before us is looking at. We agree with PACAC that electoral law needs looking at. It needs consolidating and, in many areas, it needs simplifying. We have tabled this amendment to ask the Government to look very seriously at this recommendation and to take some action on it, if not now then as soon as is practically possible.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I was delighted to sign this and could see from the Minister’s face that he was thoroughly in agreement that it is a very good move. It is a constructive suggestion of something that desperately needs doing. We are rushing to pass legislation in this final week or fortnight of the parliamentary Session, but this is an early request to the Government to include an election law consolidation Bill in the coming Queen’s Speech. It would be very practical and, as the noble Baroness, Lady Hayman of Ullock, said, it would have cross-party support, so it would be a rather nice note to start the new parliamentary term on.

A lot of the groundwork has been laid already. The Commons Public Administration and Constitutional Affairs Committee produced a report on this in 2019 and the Law Commission has done extensive work as well, which culminated in a 207-page report with 106 recommendations. That sounds a very practical document. The recommendations include consolidating and modernising our election law, which is currently spread across 55 Acts of Parliament and over 200 other pieces of legislation, most of which are derived from centuries-old rules and regulations.

Modern electoral rules would make the administration of elections more straightforward and more accessible to the public. Better democracy is better for everyone, as we have been saying all afternoon, but this will be particularly important for independent candidates and smaller parties, because at the moment they are navigating a minefield. There is always a risk of innocent mistakes.

I hope that the Minister will respond very positively to this and that we can look forward to supporting him wholeheartedly on a Bill in the next Session.

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[Baroness Hayman of Ullock (Lab)]

My Lords, I always do my very best to be inoffensive, so it is nice to know that my amendment has been appreciated. It is good to hear from the Minister that the Government in principle support what we are trying to achieve with it. This may take a long time and it may be complicated, but it will be very worth while in the end and I encourage the Government not to throw this away and to keep it as something to be done in the near future, if possible. In the meantime, I beg leave to withdraw my amendment.

Amendment 64 withdrawn.

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Moved by

[Baroness Hayman of Ullock]

69A: After Clause 60, insert the following new Clause—
“Non-resident donors
Within the period of 3 months beginning with the day on which this Act is passed, the Secretary of State must make an order under section 43 of the Political Parties and Elections Act 2009 so as to bring section 10 of that Act (non-resident donors etc) into force.”Member’s explanatory statement
This amendment requires the Secretary of State to bring the provisions of section 10 of the Political Parties and Elections Act 2009, relating to non-resident donors, into force within 3 months of this Act being passed.

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[Baroness Hayman of Ullock]

My Lords, this amendment was not tabled in Committee. This is the first time we have looked at it. It addresses recent concerns that have been raised around non-dom status and donations from non-doms. I thought it was important that this was acknowledged during our discussions on the Bill.

The Labour Party believes that non-dom status should be abolished. We have recently made that very clear. We believe that there should instead be a modern scheme for people who are genuinely living in the UK for short periods. We want to address the fact that we can have small group of high-income people who live in the UK and are able to access non-dom status. We do not believe that they should be able to continue to avoid paying UK tax on their overseas income for up to 15 years, as is currently possible with the system we have at the moment.

We believe we should look at the systems in other countries and put in place something similar that is suitable for our country. For example, Japan, France and Canada have much better systems in place, where genuinely temporary residents who are here for short periods would not pay tax on overseas income gains, but that would not be possible for those who are here much longer.

This would bring about a clear, simple system. If we look at what we are doing at the moment, the rules are around 200 years old. It also means that the domicile is passed down through people’s fathers. It seems extraordinary that we still work by those laws. Surely it needs to be properly looked at and considered. I understand that HMRC has to use four complicated flow charts just to determine someone’s domicile. We have been talking about simplifying electoral law; this is something else that clearly needs looking at and simplifying.

We think that a temporary tax regime for residents would work. It would provide some tax advantages, but only for short periods of time, unlike the way the system is at the moment. Fundamentally, we believe that if you make your home in Britain long-term, you should pay tax here on all your income.

We are also concerned that the current system prevents non-doms investing their foreign income in the UK, as bringing it here means that it then becomes liable for UK tax, so there is no advantage for them to do so. That means that non-doms who earn income in tax havens and other low-tax jurisdictions would face a large financial penalty if they attempted to bring that income here to the UK. We do not believe that this is good for business; we should be encouraging more investment in the UK through these wealthy people.

We are aware that the Government have a business investment relief scheme which is intended to fix this, but we do not believe that it is working properly. The latest figures show that less than 1% of non-doms invest their overseas income in the UK in any given year, and that cannot be good for UK business. In addition, if we made these changes, it would bring us into line with other major economies. The UK is one of the only large economies which has these arrangements. As I have said before, France and Canada, for example, have different regimes, as does Germany.

This issue needs serious consideration. The Government need to address it and the Elections Bill provides an opportunity to do so. I will be interested to hear what the Minister has to say in response. However, because this is such an important matter and it needs to be dealt with, if I do not hear from the Minister serious ways in which it can be addressed, I will consider testing the opinion of the House.

[Lord Rennard (LD)]

My Lords, elections and donations are about choice. People who have non-dom status choose not to pay their tax here and, while they have this status, they live abroad for more than nine months of the year. The fundamental question raised by this amendment is: should they be able to donate the perhaps millions of pounds which they save in taxes by being non-doms to a political party, for example, which might want to preserve that beneficial tax status for them? In other words, we might connect the two principles of being able to give millions to a party and benefit by not paying millions which other people might consider are owed in taxes.

There are a number of occasions in our debates when we say that what we are doing is asking the other place to think again. However, we are not, on this principle, asking the other place or even this House to think again. The legislation which said that non-doms should not be able to donate to political parties was passed by both Houses in 2009. So we are not asking anyone to think again; we are simply asking for the legislation, passed with the approval of both Houses, to be implemented. Since 2010, various excuses have been put forward as to why this has been supposedly difficult or impractical, even though it was approved by Parliament. Essentially, the excuse provided is that the HMRC says, “Well, all tax issues are confidential, so you can’t implement this”. However, a form of declaration accompanying any donation, saying, “I am not a non-dom, so I am entitled to donate”, might well suffice and fit the bill. If you were making a false declaration, that could be an offence.

However, I do not really accept the HMRC’s argument—or rather, the Government’s argument put forward on behalf of the HMRC. For example, when Parliament said that if you are a higher-rate taxpayer, you should not benefit from child benefit—which I think was a fair measure—you needed to sign a declaration to the HMRC saying, “Someone in this household pays a higher rate of tax, so I can’t receive child benefit”. Why, therefore, can you not sign a declaration saying, “Someone in this household is a non-dom and therefore cannot donate to a political party”?

This debate is really about some of the fundamental parts of the Bill. The extension of the right to vote beyond 15 years is not really going to extend voting rights for very many people. For the reasons I outlined at Second Reading and will not go through again, the postal vote system, needed by most people who vote overseas, is so slow that very few votes would count in a general election. However, through this Bill the ability to donate unlimited amounts of money is being extended to a lot of people, including non-doms. A little earlier today, when discussing a technical aspect of the Bill, the Minister kindly confirmed that the Government’s position is very much to maintain a level playing field at local constituency level and nationally. However, I do not believe that this is happening. This extension of the right to vote is more about the right to donate, and should not be applied to non-doms.

In December 2020, the Government said that they wanted to increase the national expenditure limits for political parties in a general election “in line with inflation”. In 2000, Parliament agreed that there should be a level playing field between the main parties in elections. The principle was very much that it had to be a level playing field, not that each of the parties should be able to spend up to £20 million. If we increase that £20 million limit, or thereabouts, by the rate of inflation since 2000, that is a 79% increase. Therefore, the national expenditure limit, if increased in line with inflation since 2000, would go up for the Conservative Party, for example, from almost £20 million to almost £36 million. Where is that extra £16 million going to come from? Much of it will come from overseas donors, many of whom are non-doms. I do not think that this appeals to the British sense of fair play, and it should not happen.

[Lord True (Con)]

My Lords, I fear that I am not going to be able to allow the noble Baroness to remain in her seat for the rest of the evening. The Government cannot agree to these provisions, which seek to bring into practice a provision from the 2009 Act regarding donations from non-resident donors. Noble Lords will recall that in Committee, my noble friend Lord Howe replied to the approach of the noble Lord, Lord Rennard, on this same uncommenced provision.

The Government’s position on the matter remains unchanged, but it is important briefly to place on record the reasons why. The Government have no current plans to bring into force the uncommenced provision, Section 10, regarding donations from non-resident donors. It would be extremely difficult to make the provision work, as the Electoral Commission warned in 2009 when the Bill was going through Parliament. The coalition Government, in which the noble Lord, Lord Rennard, was influential, did not implement it between 2010 and 2015. The fundamental issue is that it is not workable, given that an individual’s tax status is subject legally to confidentiality. It would therefore be difficult or even impossible for the Electoral Commission, political parties, which would face fines for this, and other campaigners accurately to determine whether a donor met the test set out in Section 10.

I acknowledge that the Labour Party has come forward. I do not wish to get into a debate about the Labour Party’s fiscal proposals—that is slightly outside the scope of the Bill—but I know that Sir Keir will send a thank you letter to the noble Baroness for having raised this issue. Our principle, basically, is that taxation is not the basis of enfranchisement in the UK. As a British citizen is able to vote in an election for a political party, they should be able to donate, subject to requirements for transparency in donations, which we have discussed. There is also a precedent whereby those who do not pay income tax rightly remain entitled to vote. A lot of low-paid people do not pay income tax, but they have a legitimate right to vote. I know that perceptions differ on this issue. I remind the House that on two occasions, in 2009 and 2013, the Electoral Commission warned about the practical implications of the policy. For these reasons, and because of the duty of confidentiality in taxation, which would have to be overridden by other legislation, the Government cannot support the noble Baroness’s amendment.

[Baroness Hayman of Ullock (Lab)]

I thank the noble Lord, Lord Rennard, for his support and for his excellent speech. I thank the Minister for his response, although I am sure he will not be surprised to hear that it is not a response that I am particularly happy with or happy to accept. This issue has concerned a lot of people in recent weeks and months, and the Government need to take the position of non-dom status very seriously and look at it again. On that basis, I would like to test the opinion of the House.

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[Lord True (Con)]

My Lords, I shall speak also to Amendment 69D. I believe both amendments are significant to the House and I hope it will reflect on their importance, because I know there are aspects of the Bill that have concerned Members on all sides of the House. The amendment establishes a statutory duty for post-legislative scrutiny of the Bill, something that has been asked for, certainly by the noble Baroness opposite.

We had believed, and I maintain, that it is standard practice to conduct post-legislative scrutiny of Acts following Royal Assent, but we have listened to the strength of interest in guaranteeing that scrutiny takes place which will go across the Bill and we have tabled this amendment requiring the Secretary of State to prepare, publish and lay before Parliament a review of the operation of this legislation, not less than four and not more than five years after it receives Royal Assent—in other words, in good time. We judge that this amendment supports the commonly shared aim of this House, and answers the recommendation made by PACAC, that the impact of the measures be assessed following implementation of the Bill.

The amendment also sets out that a report by the Secretary of State will need to be set before Parliament to allow debate and scrutiny of the operation of the Act, as your Lordships have asked. Amendment 69D is a minor and technical amendment necessary to state the territorial extent of paragraphs 25 and 26 of Schedule 1. I hope the House will understand that I wish to place on record in Hansard that I think this is a significant proposal from the Government which will allow and ensure statutory consideration and examination of the Bill as a whole if it is given Royal Assent. I beg to move.

[Baroness Hayman of Ullock (Lab)]

My Lords, in Committee I tabled Amendment 205 to ask the Government to include in the Bill a statutory commitment to post-legislative scrutiny of the Bill, as recommended by PACAC. I want to say very briefly how much I welcome the amendments that the Minister has just introduced and to thank him very much for listening to my concerns and the concerns of other Members of this House about the lack of pre-legislative consultation or scrutiny. The fact that this has been included in the Bill is extremely welcome.

Amendment 69C agreed.