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Lord Mackay of Ardbrecknish: Amendment No. 119 is a probing amendment. Amendment No. 118 was added a good deal later. I shall not move my amendment.

I understand about the different accounting periods. I should have thought that in time the same accounting period would be better. I suspect that comparisons will be made between one set of accounts and the other. The complexity of having different periods would make such comparison extremely difficult especially at times, for example, of general elections or elections of another kind.

I wish to ask the Minister one question. I think that he answered it but I want to be sure. I understand from the provisional implementation timetable sent out to the parties that the date for implementing this provision is 1st January 2002. From his example, I presume that for the Labour Party, which works on a calendar year, it will be 1st January to 31st December 2002 and it will not look back to 2001.

As the noble Lord rightly pointed out, the Conservative Party follows the government and exchequer system of the financial year. What will happen about the period between 1st January and 1st April 2002? A similar question can be asked about one of the Northern Ireland parties whose financial year would not start until 1st October 2002. The noble Lord will see where I am coming from. He may answer that the Conservative Party will have to present accounts from 1st January to 1st April. It may have to look back into 2001. I do not think that that would be right given the cumbersome and bureaucratic nature of everything in the Bill.

I accept that the noble Lord may not be able to give me an answer now; if he can do so I shall be grateful. If not, on this occasion I might even allow him to write to me. It is an interesting point.

Lord Bach: The noble Lord is right: 1st January 2002 is the provisional date. It is the date for commencement only. Part III would apply in respect of a party's financial year beginning on or after 1st January. I commend the amendment.

On Question, amendment agreed to.

[Amendment No. 119 not moved.]

Lord Bach moved Amendment No. 120:

("( ) Nothing in this Part applies in relation to a minor party.").

The noble Lord said: This amendment has already been spoken to. I beg to move.

Lord Renton: The amendment refers to "a minor party". I sought to find a definition. I have not succeeded. Is there one? What does it mean?

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Clause 36(1) states:

    "'party' includes any organisation or person".

With that definition in mind, I again ask: what is a minor party?

Lord Bach: I am extremely grateful to the noble Lord for the time he took in asking that question. The answer is that a party that contests only parish or community council elections is the definition of a "minor party" in this context.

Lord Shepherd: Is the definition in the Bill?

Lord Bach: I had hoped the noble Lord might take a little longer to ask his question!

Lord Shepherd: If the definition is not in the Bill, in order to avoid any misunderstanding it should appear. There is a considerable difference between the various parties.

Lord Bach: I bear in mind what my noble friend says.

Lord Renton: I suggest that the definition should be in Clause 36.

Lord Bach: It will be in the Bill. Amendment No. 319 deals with Clause 150. I hope my noble friend Lord Shepherd and the noble Lord, Lord Renton, will be satisfied.

On Question, amendment agreed to.

Clause 37, as amended, agreed to.

Clause 38 [Annual statements of accounts]:

Lord Bassam of Brighton moved Amendment No. 121:

    Page 22, line 44, leave out from ("hand)") to end of line 46 and insert ("parties registered in the Great Britain register and (on the other) those registered in the Northern Ireland register.").

On Question, amendment agreed to.

Clause 38, as amended, agreed to.

Clause 39 [Annual audits]:

Lord Mackay of Ardbrecknish moved Amendment No. 122:

    Page 23, line 12, leave out ("£250,000") and insert ("£1,000,000").

The noble Lord said: In moving this amendment, I speak also to Amendments Nos. 123 to 125.

Amendment No. 125 follows on from the debate on the amendment in the name of the noble Lord, Lord Beaumont of Whitley. It suggests that when we are discussing the question of audit, the compliance costs--that is, the costs of the audit which will be imposed on the political parties--could be paid for by the commission. It seems a reasonable request but I think that we know the reply we shall receive from the Government and I shall not continue for too long. The Government should consider the costs they are imposing on political parties with an audit of this

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nature. It will be hard to say to our members in the political parties, "We are looking for more money from you and this raffle is entirely in order to fund the additional expenses imposed on us by the Government". I am not sure that it would be a successful raffle. However, I do not suppose that I shall make progress on that issue.

The other amendments came to my mind when I came across a Department of Trade and Industry press release dated 4th April. It announced that Mr Stephen Byers--although I notice that he is called Steve Byers; that seems to be a habit of the Government--had told the British Chambers of Commerce annual conference that he intended to raise the turnover threshold from £350,000 to £1 million before companies are required to obtain a professional audit, thus saving them approximately £1,200 a year. The press release, which I shall not read out, made a virtue of the fact that the Government were reducing some of the costs on smaller businesses by raising that threshold. Indeed, in the light of the proposals of the company law review, the Government are considering raising it further to £4.8 million.

I am trying to ensure consistency in government and to ensure that they appreciate the importance of political parties in the political system, as they have not always done during the creation of this cumbersome and bureaucratic Bill. If the Minister doubts me, I suggest that he talks to his friend, the Secretary of State for Trade and Industry, who will explain why he made that announcement on 4th April to the British Chambers of Commerce. Why should not political parties be given the same treatment?

The amendment would not be of great help to major parties, but it would help minor parties. I shall not rehearse my argument about minor parties, but we ought to consider them, even if they are sometimes an irritant, particularly the one that I mentioned earlier, to great parties such as the Labour Party. I beg to move.

4.30 p.m.

Baroness Fookes: I support my noble friend in the reasonable amendment that he has put forward. Why have the Government introduced uncertainty further on in the clause by giving the commission the power to require an audit of parties that come under the threshold if it thinks it desirable? In what circumstances would that apply?

Lord Bach: Clause 39 requires that a party's annual accounts be audited if the party's income or expenditure exceeds £250,000 in a financial year. The amendments would raise the threshold to £1 million and require that it be kept in line with that applying under the relevant section of the Companies Act. As I suspected, the noble Lord, Lord Mackay of Ardbrecknish, pointed out the press release of 4th April this year, in which we announced that the audit threshold for small companies would be raised from £350,000 to £1 million.

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It does not follow that the audit threshold for political parties should also be raised. In fixing on the figure of £250,000, we took our lead from the Charities Act, not the Companies Act. That properly reflects the fact that political parties have much more in common with charities than with companies, not least because both rely to a significant extent on voluntary donations from the public. For that reason there is a public interest in providing an assurance by means of an audit of the financial probity of parties at a lower threshold than that applicable to companies.

That leads me on to the point made by the noble Baroness, Lady Fookes. Members of a political party may complain to the electoral commission about alleged fraud within the party. The power to require an audit will enable the commission to investigate such circumstances.

In any event, there seems little reason to believe that the £250,000 threshold will place an unwarranted additional burden on parties and their accounting units. I hope that the noble Lord, Lord Mackay of Ardbrecknish, will forgive me if I mention that in another place, speaking from the Conservative Front Bench, the honourable Member for North Dorset pointed out that even small branch units of the Conservative Party with a turnover of less than £1,000 per year had their accounts audited by a chartered accountant. He went on to suggest that the electoral commission might in due course consider whether the threshold might be reduced. There may have been a shift in point of view among the Conservatives in the corridor between one House and another.

I am sure that the commission will want to keep the threshold under review. Clause 145 enables this and other monetary limits in the Bill to be varied by order, on the recommendation of the commission.

The noble Lord, Lord Mackay, is right; I am afraid that I am not going to accept his Amendment No. 125, which would require the commission to meet the costs itself if a party failed to appoint an auditor to audit its accounts. It would clearly be wrong in principle for costs arising from a party's failure to carry out its obligations under the Bill to be met from the public purse. The party might end up being rewarded for failing to comply with the audit requirement. I am sure that that is not intended and I invite the noble Lord to withdraw the amendment.

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