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Political Parties, Elections And Referendums Bill


 

These notes refer to the Political Parties, Elections and Referendums Bill
as brought from the House of Commons on 16th March 2000 [HL Bill 48]

Political Parties, Elections And Referendums Bill


EXPLANATORY NOTES

INTRODUCTION

1.     These explanatory notes relate to the provisions of the Political Parties, Elections and Referendums Bill as brought from the House of Commons on 16th March 2000. They have been prepared by the Home Office in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.

2.     These notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment none is given.

SUMMARY

Part I : The Electoral Commission

3.     Part I of the Bill would establish an Electoral Commission and sets out the general functions proposed for it, other than those functions relating to the registration of political parties, the scrutiny of political parties' and third parties' income and expenditure and the administration of referendums which are covered in Parts II to VII. The general functions of the Commission include: reporting on particular elections and referendums; the review of electoral law; the provision of guidance in relation to party political broadcasts; and promoting understanding of electoral and political matters. Part I also provides for the transfer to the Electoral Commission of the functions of the four Parliamentary Boundary Commissions and of the Local Government Commission for England and the Local Government Boundary Commission for Wales.

Part II : Registration of Political Parties

4.     Part II of the Bill is concerned with the registration of political parties. It would re-enact the Registration of Political Parties Act 1998 but with significant modifications. The modifications are for the purpose of establishing a scheme of registration which brings political parties within the controls on accounting and funding set out in Parts III and IV and the controls on campaign expenditure set out in Part V of the Bill.

Part III : Accounting requirements for registered parties

5.     Part III would require registered parties to maintain accounts of their income and expenditure and to submit an annual statement of accounts to the Electoral Commission.

Part IV : Control of donations to registered parties and their members etc.

6.     Part IV imposes restrictions on the sources of donations so as to prohibit foreign and anonymous donations to political parties and make registered parties subject to reporting requirements in respect of donations above a certain value.

Part V : Control of campaign expenditure

7.     Part V would apply restrictions on campaign expenditure incurred by political parties in respect of Westminster Parliamentary elections, European Parliamentary elections and elections to the devolved legislatures. These limits are distinct from the separate restrictions under the Representation of the People Act 1983 and other enactments relating to elections, which would continue to apply to candidates' election expenses.

Part VI : Controls relating to third party national election campaigns

8.     Part VI sets out controls on national election expenditure by individuals and organisations other than political parties. The controls seek to limit national expenditure by third parties in support of or in opposition to political parties, in the same way as the controls in section 75 of the Representation of the People Act 1983 seek to control expenditure by third parties in support of or in opposition to individual candidates.

Part VII : Referendums

9.     Part VII of the Bill would introduce generic provisions to ensure the fair conduct of referendums. It provides for the designation of campaign bodies which will be entitled to particular forms of assistance, including a grant from public funds of up to £600,000, the free mailing of referendum addresses and free air time for referendum campaign broadcasts. Part VII also provides for restrictions on the publication and distribution of promotional material by central and local government in the 28 days prior to the holding of a referendum and restrictions on referendum campaign expenditure by political parties and by other campaigning individuals and organisations.

Part VIII : Election campaigns and proceedings

10.     Part VIII of the Bill makes a number of amendments to the Representation of the People Act 1983. It imposes controls on donations to candidates, increases the limit on expenses which may be incurred by a candidate at a parliamentary by-election, clarifies the meaning of "election expenses", amends the law in relation to election petitions and clarifies the law in respect of the consequences of the commission of corrupt and illegal practices.

Part IX : Political donations and expenditure by companies

11.     Part IX introduces a requirement that shareholder consent must be obtained before a company makes a donation to a political party or incurs political expenditure. It also requires the disclosure of political expenditure in directors' annual reports to shareholders.

Part X : Miscellaneous and general

12.     Part X includes provision for the enforcement of the Bill by the Electoral Commission and the civil and criminal courts.

BACKGROUND

13.     The Prime Minister announced, on 12 November 1997, extended terms of reference for the Committee on Standards in Public Life, chaired by Lord Neill of Bladen QC (the 'Neill Committee'), to enable the Committee to study the funding of political parties. These additional terms of reference were:

To review issues in relation to the funding of political parties, and to make recommendations as to any changes in present arrangements.

14.     In a submission from the Home Office dated 6 March 1998, the Government sought the Neill Committee's advice on the following specific topics:

         a)     How should 'foreign' funding be defined? Should personal donations be restricted to persons on the electoral register eligible to vote in the United Kingdom? How should foreign donations in relation to companies and voluntary associations be defined? How can circumvention of the ban on foreign funding be prevented?

         b)     What should be the mechanics for disclosure of donations? Should there be a separate threshold for the acceptance or rejection of anonymous donations? What should be the timing of disclosure?

         c)     What are the implications of the Bowman judgment? (This was a judgment in February 1998 by the European Court of Human Rights about how far third-party individuals and organisations should be free to spend money on promoting a particular cause during election campaigns.)

         d)     What new rules on limits on election expenditure should be introduced to accommodate the new electoral systems?

         e)     How should the future financial arrangements for the political parties be linked with the Government's proposed legislation on the registration of political parties (now the Registration of Political Parties Act 1998)?

15.     The Neill Committee addressed these points, and others, in their Fifth Report on the Funding of Political Parties in the United Kingdom published in October 1998 (Cm 4057). Altogether the report contained one hundred recommendations dealing with the reporting of donations, the banning of foreign donations, shareholder approval for donations by companies, financing political parties in Parliament, limits on election campaign expenditure, the conduct of referendums, media and advertising, and the Honours system.

16.     The Government's response to the Neill Committee's report was set out in a White Paper (Cm 4413) published on 27 July 1999. The White Paper included a draft Political Parties, Elections and Referendums Bill which set out legislative proposals for giving effect to the Neill Committee's recommendations.

Overview of the Neill Committee report and the Government's response

The role of political parties

17.     Electoral procedures are described in considerable detail in legislation. The principal legislation is the Representation of the People Act 1983 together with Regulations made under that Act. The 1983 Act is a consolidation of legislation dating back to the nineteenth century. Its general thrust, and a good deal of the detail, date from 1883. The legislation contains extensive provisions concerning candidates' election expenses. These provisions limit the maximum levels of expenditure by or on behalf of candidates at parliamentary elections and require detailed returns to be delivered to the returning officer. They also control, very tightly, expenditure by "third parties" (that is, people or organisations other than candidates) who wish to issue material which bears on a particular person's candidature. But there is currently no legislation or other legal requirement relating to the funding of political parties generally. Nor is there any limit on the expenditure which political parties may incur in connection with elections otherwise than on behalf of candidates in constituencies. The 1983 Act simply does not recognise the role of political parties in elections.

18.     The situation now is very different from what it was in 1883. The political parties, operating at national level, play a much larger role. British people now vote largely for parties rather than candidates. It is the national party as well as the local organisation which assumes the responsibility for getting its candidates elected. Above all, spending by or on behalf of candidates now forms only a proportion of what a party spends on contesting an election. Restrictions on candidates' expenses at a constituency level no longer serve as an effective control of what the political parties as a whole spend on fighting elections.

19.     The Neill Committee's report addresses this point by recommending limits on what political parties can spend in connection with elections, additional to the amounts spent by or on behalf of candidates themselves. To enforce this control, they propose a detailed set of requirements, along similar lines to those already in operation at constituency level, on the political parties.

Donations to political parties

20.     The Committee's report endorses and develops the Government's proposals for a ban on foreign donations to political parties and for open declaration of donations at the level of £5,000 or above. The scheme of control which the Committee proposes is again a detailed one, with significant implications for the political parties as well as for the regulatory apparatus. The Government agrees that a regulatory scheme of some rigour is needed to enable the restrictions to be enforced. The Government's proposals follow the Neill Committee report in using the concept of a "permissible donor". The principal target is to require political parties to reject donations which are anonymous or which do not appear to be either from a person registered to vote in the United Kingdom or from a company incorporated in the European Union and carrying on business in the United Kingdom or from an unincorporated association having its main office and its principal sphere of operation in the United Kingdom.

21.     The Neill Committee recommended, in general, against attracting any form of liability to donors or would-be donors themselves, except to the extent that they conspire with recipients to evade the recommended restrictions on receipts. There is, however, one significant exception to this general rule. The Committee recommended that, before a company makes a donation, it should be required to obtain the approval of its shareholders. The Government announced its general acceptance of this recommendation, but sought comment on how it should be implemented, in a separate consultation document published by the Department of Trade and Industry in March 1999 (DTI reference URN 99/757).

Third parties

22.     Some organisations which are not political parties in the sense of sponsoring candidates nevertheless incur expenditure directly on advertising etc., in connection with elections. The Neill report made recommendations for regulating the expenditure of such organisations and donations to them on a similar basis as for political parties. Organisations of this kind are referred to in the Neill report and in the Bill as "third parties".

An Electoral Commission

23.     To supervise the restrictions on spending by and donations to the political parties (and third parties), the Neill Committee proposed the establishment of an independent Electoral Commission. The provisions of the Bill would give the Electoral Commission a somewhat broader remit than the one proposed by the Neill Committee, to include a responsibility for promoting participation in the democratic process and to assume, after an interval, the functions of the Parliamentary and Local Government Boundary Commissions. The Electoral Commission is also, as recommended by the Neill Committee, to assume the role of registrar of political parties. It is to have the function of receiving accounts, reports of disclosable donations and returns as to election expenses from political parties (and third parties), and a duty to monitor compliance (but not to mount criminal prosecutions). But it is also to have the wider role of reporting on the conduct of elections and referendums and of advising the Government on any necessary changes to the law. It would take over a number of functions from the Home Office and act as a general reference point for advice for the parties, the broadcasting organisations and others on the conduct of elections and referendums.

Referendums

24.     The Neill Committee's report extends beyond the funding of political parties and spending in election campaign and makes a number of recommendations concerning referendums. These recommendations are directed principally at ensuring that the two sides in a referendum campaign each have a fair opportunity to put their views to the public and that referendum campaigns are not skewed by the intervention of the government of the day. Hitherto there have been no standing statutory arrangements for the conduct of referendums.

THE BILL : OVERVIEW

Part I : The Electoral Commission

25.     Part I of the Bill contains nineteen clauses. Clauses 1 to 3 and Schedules 1 and 2 establish the Electoral Commission and an oversight body, the Speaker's Committee. Clauses 4 to 12 set out the Commission's general functions. These include the functions of reporting on elections and referendums, reviewing electoral law, allocating to parties policy development grants and promoting participation and understanding of our democratic systems of government. Clauses 13 to 18 provide for the transfer to the Commission of the functions of the Parliamentary and Local Government Boundary Commissions.

Part II : Registration of political parties

26.     Part II of the Bill contains seventeen clauses. These clauses substantially re-enact, with modifications, the Registration of Political Parties Act 1998. Schedule 3 contains further details in respect of the registration of parties and alterations to the register.

Part III : Accounting requirements for registered parties

27.     Part III contains nine clauses. These set out requirements on political parties in respect of their accounting records and the preparation of an annual statement of accounts. Schedule 4 modifies the accounting requirements contained in Part III to fit the circumstances of parties with separate 'accounting units'.

Part IV : Control of donations to registered parties and their members etc.

28.     Part IV, which contains twenty-one clauses, is divided into four Chapters. Chapter I (clauses 46 to 48) defines donations for the purposes of this Part. Chapter II (clauses 49 to 56) gives effect to the prohibition on foreign donations. Chapter III (clauses 57 to 65 and Schedule 5) sets out the requirements as to the reporting of donations to the Electoral Commission. Chapter IV (clause 66 and Schedule 6) controls donations to individual members of a political party, groups composed of party members and holders of elective office.

Part V : Control of campaign expenditure

29.     This Part contains thirteen clauses which, together with Schedules 7 and 8, place limits on the campaign expenditure which may be incurred by registered political parties. Four of these clauses introduce a regime for the authorisation and payment of campaign expenditure and the settlement of claims. A further five clauses provide for the submission to the Electoral Commission of returns by parties as to their campaign expenditure, the auditing of such returns and their public inspection.

Part VI : Controls relating to third party national election campaigns

30.     Part VI, which contains seventeen clauses and Schedules 9 and 10, limits expenditure by third parties designed to promote or oppose the election of a political party or its candidates. The provisions are in many respects similar to those in Part V dealing with expenditure by political parties.

Part VII : Referendums

31.     The three Chapters in Part VII, which contain twenty-eight clauses and Schedules 11 to 14, set out the framework for the conduct of referendums. Chapter I (clauses 97 to 105) provides for the registration of campaign organisations and for financial and other assistance to be given to designated umbrella organisations. Chapter II (clauses 106 to 119) imposes financial controls on campaign organisations. Chapter III (clauses 120 to 122) places controls on referendum publications by government and others. Chapter IV (clauses 123 and 124) makes provision for the conduct of a referendum poll and for the counting of ballot papers.

Part VIII : Election campaigns and proceedings

32.     Part VIII contains seven clauses, and Schedules 15 to 17, which make miscellaneous amendments to the Representation of the People Act 1983.

Part IX : Political donations and expenditure by companies

33.     Part IX, which contains two clauses and Schedule 18, amends the Companies Act 1985 so as to require companies to obtain prior shareholder consent for donations to registered parties and other political expenditure.

Part X : Miscellaneous and general

34.     Part X contains eighteen clauses and Schedules 19 to 21. Four clauses make provision for enforcement of the Bill by the Electoral Commission and the civil and criminal courts. Five clauses contain provisions relating to offences and one clause contains a power to vary the various monetary limits set out in the Bill.

COMMENTARY ON CLAUSES

Part 1: The Electoral Commission

Clauses 1 to 3 and Schedules 1 and 2 : The Electoral Commission

35.     Clauses 1 to 3, together with Schedules 1 and 2, make provision for the establishment and the constitution of the Electoral Commission and the Speaker's Committee. The Electoral Commission will be a body corporate independent of any government department and will report directly to Parliament. The National Audit Office (established under section 3 of the National Audit Act 1983) is an example of a body which has a similar relationship to government and Parliament. The arrangements for the appointment of Commissioners are modelled upon those for the appointment of the Comptroller and Auditor General under section 1 of the National Audit Act.

36.     Electoral Commissioners will be appointed by Her Majesty on the presentation of an Address from the House of Commons. The procedure for their appointment will also require consultation with the leaders of each registered political party with two or more sitting Members of the House of Commons. It is envisaged that five Commissioners will be appointed initially, with the Commission's membership rising to nine when the functions of the Parliamentary and Local Government Boundary Commissions are transferred to the Commission under clauses 15, 17 and 18 of the Bill. The Commissioners will enjoy substantial security of tenure. Under subsection (3) of clause 3 appointments will be for up to ten years with, under subsection (4), the possibility of re-appointment. An Electoral Commissioner may only be removed from office on an Address of the House of Commons to that effect and such an Address may only be moved if the Speaker's Committee has presented a report stating that the Committee is satisfied that one or more of the grounds for removal, specified in paragraph 3(5) of Schedule 1, has or have been made out.

37.     Clause 2 establishes the Speaker's Committee which will have general oversight of the exercise of the Commission's functions and, in particular, responsibility for approving its budget and five-year corporate plan. Its role will be similar to that of the Public Accounts Commission (established by section 2 of the National Audit Act) in relation to the National Audit Office. The Committee will be chaired by the Speaker of the House of Commons. There will be eight other members, namely, the Home Secretary, the Minister for Local Government, the Chairman of the Home Affairs Select Committee and five Members of the House of Commons appointed by the Speaker.

38.     The Bill's provisions in relation to the funding and financial accountability of the Electoral Commission are intended to balance the need to ensure the Commission's financial independence from the government of the day with appropriate safeguards for ensuring proper financial control. Under paragraphs 14 and 15 of Schedule 1 the Commission will be required to produce both an annual estimate of its income and expenditure and, each year, a five-year plan covering its aims, objectives and resource requirements over that period. Both will be subject to the approval of the Speaker's Committee which, in examining the estimate and five-year plan, will have regard to whether they are consistent with the economical, efficient and effective discharge by the Commission of its functions. The Committee may make modifications to the estimate or plan insofar as they are appropriate in achieving those objectives.

39.     In examining the Commission's annual estimate and five-year plan, the Speaker's Committee will be required both to consult and to have regard to the advice of the Treasury and also to have regard to reports on examinations which the Comptroller and Auditor General will be required to undertake annually (under paragraph 16 of Schedule 1). It is intended that it should be possible for the Comptroller and Auditor General in any particular year to examine only selected aspects of the Commission's work, for example its voter education functions.

40.     Both the estimate and the five-year plan will be laid before Parliament. The Electoral Commission will also be required to prepare annual accounts in accordance with Treasury directions. These accounts will be examined and certified by the Comptroller and Auditor General before being laid before Parliament.

41.     Parliament's scrutiny of the work of the Commission will also be facilitated by the requirement that the Commission must lay before Parliament an annual report on the performance of its functions (paragraph 20 of Schedule 1). The Speaker's Committee, too, will be under an obligation to report at least annually to the House of Commons on the exercise of its functions (paragraph 1 of Schedule 2). Such reports will include the Committee's reasons for making any modifications to the annual estimates or five-year plan submitted by the Commission.

Commission's general functions

42.     Clauses 4 to 12 provide the Electoral Commission with a broad range of functions primarily in relation to the oversight of electoral matters in the United Kingdom.

Clause 4 : Reports on elections and referendums

43.     Clause 4 requires the Commission to prepare and publish reports on the administration of elections to the United Kingdom, European and Scottish Parliaments and to the Welsh and Northern Ireland Assemblies and of referendums to which Part VII of the Bill applies (that is, a referendum held throughout the United Kingdom or one or more of its constituent parts, or in one or more of the nine English regions specified in Schedule 1 to the Regional Development Agencies Act 1998). Subsection (3) additionally provides for the Commission, if requested to do so by the National Assembly for Wales, to report on referendums held under section 36 of the Government of Wales Act 1998. (Section 36 of the 1998 Act empowers the National Assembly for Wales to hold a poll for the purpose of ascertaining the views of the public about whether or how any of the Assembly's functions should be exercised.)

Clause 5 : Reviews of electoral and political matters

44.     While legislation on electoral matters will remain the responsibility of the government, clause 5 provides for the Commission to keep under review and report on matters relating to elections and referendums, the redistribution of parliamentary and local government boundaries, the regulation and funding of political parties, political advertising and the law relating to all such matters. While the Commission will be expected to exercise its own initiative in reviewing electoral law, there may also be particular issues which the government of the day considers should be examined as a matter of priority. Subsection (2) therefore provides the Secretary of State with a power to require the Electoral Commission to review and report upon any such matter within a prescribed timescale.

Clause 6 : Commission to be consulted on changes to electoral law

45.     Clause 6 identifies a number of instrument-making powers under existing electoral law which would henceforth be exercised by the Secretary of State only after consulting the Electoral Commission. These powers are generally concerned with the administration of elections - for example, powers to designate returning officers for elections and to specify arrangements for the conduct of local government elections and elections to the devolved legislatures. The extant instruments made under the statutory provisions listed in subsection (2) are:

         a)     The European Parliamentary Elections Regulations 1999 (SI 1999/1214);

         b)     The European Parliamentary Elections (Returning Officers) Order 1999 (SI 1999/948);

         c)     The Returning Officers (Parliamentary Constituencies) (England) Order 1995 (SI 1995/2061, as amended), the Returning Officers (Parliamentary Constituencies) (Wales) Order 1996 (SI 1996/897) and the Returning Officers (Parliamentary Constituencies) (Scotland) (No.2) Order 1996;

         d)     The Local Elections (Principal Areas) Rules 1986 (SI 1986/2214, as amended); the Local Elections (Parishes and Communities) Rules 1986 (SI 1986/2215, as amended); and Parish and Community Meetings (Polls) Rules 1987 (SI 1987/1, as amended);

         e)     The Representation of the People Regulations 1986 (SI 1986/1081, as amended), the Representation of the People (Scotland) Regulations 1986 (SI 1986/1111, as amended) and the Representation of the People (Northern Ireland) Regulations 1986 (SI 1986/1091, as amended);

         f)     The National Assembly for Wales (Representation of the People) Order 1999 (SI 1999/450). No order has yet been made under section 36(4) or (5) of the Government of Wales Act 1998;

         g)     The Scottish Parliament (Elections etc.) Order 1999 (SI 1999/787);

         h)     No order has yet been made under section 34 of the Northern Ireland Act 1998;

         i)     No order has yet been made under section 17A(3) of the Greater London Authority Act 1999.

Clause 7 : Powers with respect to elections exercisable only on Commission's recommendation

46.     Clause 7 specifies a number of functions of the Secretary of State which would be exercisable only upon the recommendation of the Commission. Subsection (1) provides that one such function is that of giving directions to registration officers under section 52(1) of the Representation of the People Act; hitherto this power has not been exercised. Subsection (3) identifies a number of instrument-making powers to set limitations on expenses by candidates and parties at elections. The Secretary of State is empowered, by subsection (2), to vary the monetary limits to take account of inflation, but any more substantial variation can only be made on a recommendation of the Commission.

47.     The extant instruments made under the statutory provisions listed in subsection (3) are:

         a)     Article 3 of the Greater London Authority (Election Expenses) Order 2000 sets limits on election expenses by candidates at elections to the Greater London Authority;

         b)     Articles 41 and 42 of the Scottish Parliament (Elections etc.) Order 1999 (SI 1999/787) and Articles 46 to 48 of the National Assembly for Wales (Representation of the People) Order 1999 (SI 1999/450) set limits on expenses by candidates and registered parties at elections to the Scottish Parliament and Welsh Assembly respectively;

         c)     Regulation 15 of the European Parliamentary Elections Regulation 1999 (SI 1999/1214) sets limits on election expenses by registered parties at elections to the European Parliament. Section 76 of the Representation of the People Act 1983 as applied, with modifications, by Schedule 1 to the European Parliamentary Elections Regulations 1999 sets limits on election expenses by individual candidates.

 
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