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Lord Bach moved Amendments Nos. 130 to 130B:

    Page 110, line 43, at end insert--

("(2) In sub-paragraph (1) any reference to a treasurer or other officer includes a former treasurer or other officer.").
Page 111, line 41, leave out paragraph 9 and insert--

("9.--(1) Subject to sub-paragraph (2), section 44 shall apply in relation to any accounting unit and the treasurer of any such unit as it applies in relation to the party and the treasurer of the party.
(2) In its application in relation to any such unit--
(a) section 44(7) shall have effect with the omission of the reference to the registered leader of the party; and
(b) section 44(8) shall accordingly have effect with the omission of paragraphs (a) and (b) and all references to the registered leader of the party.").

On Question, amendments agreed to.

Schedule 4, as amended, agreed to.

Clause 46 [Donations for purposes of Part IV]:

5 p.m.

Lord Bassam of Brighton moved Amendment No. 130C:

    Page 27, line 25, at end insert--

("(aa) any sponsorship provided in relation to the party (as defined by section (Sponsorship));").

The noble Lord said: Perhaps I may apologise for the number of amendments in this group. It is, however, less daunting than it may appear at first sight. The size of the group is largely a product of the fact that a change to the controls on donations to political parties in Part IV requires a whole range of consequential changes to the parallel provisions in Schedules 6, 10, 14 and 15, which set out the detail of the controls on donations to individuals and member associations, recognised third parties, permitted participants in a referendum, and parliamentary and local government candidates.

I turn to the substance of the amendments, which seek to do three things. First, they clarify what constitutes sponsorship. Secondly, they clarify how

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sponsorship and other forms of donation are to be valued. Thirdly, they make clear the position of a reasonable payment for the hire of an exhibition stand at a party conference in terms of constituting a donation.

Before I come to the detail of the key amendments, it may help if I set out the background to the treatment of sponsorship in the Bill. The Neill committee expressly recommended that the term "donation" should include sponsorship and donations in kind. The committee recognised (in paragraph 4.45) that, looking at the matter from the point of view of a company, sponsorship constituted a commercial activity. The same may be true, at least to some extent, if the matter is looked at from the point of view of the party which benefits from it. Nevertheless, the committee observed that the effect is to release for other purposes funds which the party would otherwise have to spend on the activity in question, and concluded that the arguments in favour of disclosure apply with equal force to both donations and sponsorship.

That said, the Government fully accept that the rather stark reference to "sponsorship" in Clause 46(2)(f) is unhelpful to political parties and companies alike. But simply removing that paragraph and the associated provision in Clause 48, as Amendments Nos. 131 and 133 seek to do, is not the answer. As it happens, the Government are ready to accept those two amendments, but only because we propose to replace them with equivalent provisions elsewhere in the Bill.

The way to deal with the uncertainty surrounding the meaning of "sponsorship" is to set out on the face of the Bill what the term is intended to cover. The new clause to be inserted by Amendment No. 132A is the core provision. The new clause defines "sponsorship" by reference to the transfer of money to help a party in meeting any of the "defined expenses" set out in subsection (2). The "defined expenses" are expenses in connection with any conference, meeting or event organised by the party; the preparation, production or distribution of any publication, or any study or research.

Subsection (3) of the new clause sets out a number of exclusions, including admission charges to a conference and any payment at a commercial rate for placing an advert in a party publication. We have included in subsection (4) a power to amend by order the list of defined expenses or exclusions in subsections (2) and (3). Such an order-making power will enable the clause to be kept up to date with current practice. I should add that the exercise of the power is subject to two safeguards. First, any order may be made only on the recommendation of the electoral commission. Secondly, by virtue of Amendment No. 315A to Clause 146, the power is subject to the affirmative resolution procedure.

The new clause is not complete as it stands. As I indicated at Second Reading, there is consensus among the main parties that it would be unduly restrictive to require the cost of exhibition stands at

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party conferences to be regarded as sponsorship or other form of donation. The Neill committee has similarly accepted that the hire of exhibition stands at or below a commercial rate should more properly be treated as a commercial transaction and not as a donation. Accordingly, Amendment No. 133B to Clause 47 provides that the payment for a stand at a party conference shall not constitute a donation or sponsorship for the purposes of the Bill, provided that the payment did not exceed such reasonable rate determined by the electoral commission. The role given to the electoral commission as arbiter of a reasonable rate will ensure that the cost of an exhibition stand is not inflated in order to disguise a cash donation.

When we consulted the Neill committee earlier this year about exhibition stands, it made the helpful suggestion that the definition of a "donation" should also include payments made to a political party in return for property or services provided by the party but at a rate that exceeds the commercial rate. Amendments Nos. 131A and 133E are directed to that end. One effect of the amendments would be to place transactions that are plainly of a purely commercial character, such as a company leasing property from a party at the market rate, outside the ambit of the controls. The amendments would also make it clear that funds raised by making a disproportionate charge for goods or services would fall within the definition of a "donation". A case in point would be a fundraising dinner where the party supplied a dinner worth £30 but charged £300 a plate. The value of the donation to a party in such circumstances would be £270.

We have adopted a different approach in Amendment No. 133D when valuing sponsorship. There is no direct commercial equivalent to sponsoring the stair treads or nursery at a party conference. Consequently, it would be difficult to put a price on any benefit conferred on the sponsor. In any event, as we have seen, the view of the Neill committee was that any consideration received by the sponsor was irrelevant. The value of the donation should, in the case of sponsorship, be taken to be the full value of the payment made by the sponsor.

Amendment No. 132B adds to the exclusions in Clause 47(1). Under Section 9 of the Local Government and Housing Act 1989, groups of councillors may receive assistance in the form of a seconded officer to help them to discharge their functions on the council. The amendment would make it clear that the provision of such assistance did not constitute a donation.

As I indicated at the start, the amendments to Schedules 6, 10, 14 and 15 simply repeat the substance of the amendments made to Clauses 46 to 48. In addition, Amendments Nos. 218J, 221A, 239H, 242A and 248J to Schedules 10, 14 and 15 address a number of minor drafting changes to ensure consistency across the equivalent provisions.

Finally, the new clause to be inserted by Amendment No. 319B ties up a number of loose ends in relation to donations. In particular, the new clause

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would ensure that references to donations for meeting a particular kind of expenditure include donations designed to save the donor incurring that kind of expenditure. An example of that might be a donation to a pressure group to pay the salaries of the members of staff for a year with the explicit intention of freeing up the group's funds in order that it can campaign as a third party in an election.

I turn to the amendments in the name of the noble Lord, Lord Mackay. I have already indicated that I am prepared to accept Amendments Nos. 131 and 134, although for rather different reasons from those the noble Lord may have in mind. As regards Amendment No. 133, I understand that the noble Lord's concern may be to ensure that the ban on foreign donations does not prevent United Kingdom political parties developing links with their counterparts overseas. The amendment would achieve that by adding payments made in respect of the provision of educational activity by the party for the benefit of its members to the list of payments which are not to be regarded as constituting a donation.

The Opposition also voiced those concerns in Committee in another place. The Government indicated then that it was not their intention to prevent members of political parties in this country receiving reasonable travel and subsistence payments in order to participate in, for example, conferences organised by their sister parties overseas. Clause 50(3), inserted by government amendments on Report, provides that payments received by a registered party to cover reasonable costs associated with an overseas visit shall be regarded as a donation from a permissible source. I think that that provision should meet the noble Lord's concern. The Opposition certainly welcomed that approach when it was floated in response to the similar amendment proposed in Committee in another place. I trust, therefore, that the noble Lord can be persuaded to withdraw Amendment No. 133.

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