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Lord Bassam of Brighton moved Amendment No. 237:

347AA.--(1) Section 347A(4) does not extend to a subscription paid to an EU trade association for membership of the association, and accordingly such a payment is not a donation to the association for the purposes of this Part.
(2) In subsection (1)--
"EU trade association" means any organisation formed for the purpose of furthering the trade interests--
(a) of its members, or
(b) of persons represented by its members,
which carries on its activities wholly or mainly in one or more of the member States;
"subscription", in relation to a trade association, does not include any payment to the association to the extent that it is made for the purpose of financing any particular activity of the association.
(3) Section 347A(6A) does not apply to any all-party parliamentary group composed of members of one or both of the Houses of Parliament (or of such members and other persons), and accordingly any such group is not an EU political organisation for the purposes of this Part.
(4) For the purposes of this Part--
(a) a company does not need to be authorised as mentioned in section 347B(1) or section 347C(2) or (3), and

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(b) a subsidiary undertaking does not need to be authorised as mentioned in section 347D(2),.

    in connection with any donation or donations to any EU political organisation or organisations made in a particular qualifying period, except to the extent (if any) that the amount or aggregate amount of any such donation or donations made in that period exceeds £5,000.

    (5) The restrictions imposed by sections 347B(1), 347C(2) and (3) and 347D(2) accordingly have effect subject to subsection (4); and, where a resolution is passed for the purposes of any of those provisions, any amount of donations in relation to which, by virtue of subsection (4), no authorisation is needed shall accordingly not count towards the sum specified in the resolution.

    (6) In subsection (4) "qualifying period" means--

(a) the period of 12 months beginning with the relevant date for the company or (in the case of a subsidiary undertaking) the parent company; and
(b) each succeeding period of twelve months.

    (7) For the purposes of subsection (6) the relevant date for a company is--

(a) if an annual general meeting of the company is held within the period of 12 months beginning with the date of the coming into force of this section, the date of that meeting; and
(b) otherwise, the date immediately following the end of that period.").

The noble Lord said: My Lords, I beg to move formally.

Lord Wedderburn of Charlton moved, as an amendment to Amendment No. 237, Amendment No. 237A:

    Line 26, leave out ("does not need to") and insert ("must").

The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 237B to 237D. I apprehend that I have done my case no good, despite the hour of the night, by going too fast. Therefore, I should like the House to pause and consider what is involved in this the latest of the Government's amendments. If I am not mistaken, it was tabled last Wednesday. It would reverse a central part of what has been the jewel in the crown of this Bill. Indeed, I referred to it when I argued that employees should have, not participation--I insist, again--but merely a voice in respect of these matters regarding political donations.

Where are we at present? We have reached the point where directors have decided that they want to propose to use part of the company's funds, which have probably been raised for commercial and similar purposes, for political donations. They will have been wise enough to have that capability put in the memorandum of association, and everywhere else that is necessary; for example, in the articles, and so on. But this is a step that the Government's Bill has surrounded with some 10 or 15 pages of print in Schedule 19.

Those pages in Schedule 19 contain checks and balances, to which I referred previously. They are, first, that the procedure must be entered into and completed and put to the shareholders at a general meeting for approval. Specific sections are added to ensure that that is done properly where there is a holding company and a subsidiary company. Moreover, as one goes through the pages, a procedure

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is invented whereby the shareholders can go to court and obtain a court order against the directors to replace the money if they have not gone through the proper process. Even I thought that that was a bit harsh. But then I came across the various defences that the schedule provides for such directors, which are probably quite reasonable.

However, as I said, this amendment was tabled only last week, after the Government had had nearly two years to consider the matter. It was put down without explanation; indeed, the only explanation that we shall have about it will be what my noble friend said tonight in his introduction. If I may say so, he did not speak at length to Amendment No. 236. This central mechanism, which is new to our law and which was so much the Government's prize in the schedule, is to be removed. Previous amendments allow for a donation to a party in this country or in the European Union. I spoke to that matter once before in these proceedings and pointed out that it would allow donations to M le Pen's party and all the other parties I rather dislike, such as Mr Haider's party in Austria. But I object just as much if a company is able to give money to the French socialist party without--as the schedule would have demanded--putting that to the shareholders at a general meeting. I appreciate, of course, that as regards a large public company, the shareholders are, in effect, the financial institutions. I do not mind that. The whole point is that those procedures would give publicity to the matter. I apprehend that if we had discussed companies making payments to defend apartheid some five or 10 years ago, there would have been solid approval of the need to put that to a shareholders' meeting.

This measure constitutes a major change in government policy. The sum of £4,999 every year is not a small amount of money. I recall that my noble friend Lady Gould talked of the difficulty that local parties have in raising small sums. We all know that that is true.

I do not understand how my noble friend can ask us to approve Amendment No. 237, which introduces a whole new section 347AA. I suggest leaving out the provision about not needing to get approval and introducing the word "must" in relation to getting approval. I am grateful to officials in the Public Bill Office for their help but I suspect that the amendment I am discussing is a wrecking amendment and that I should vote against it. However, it is on the Marshalled List and therefore I am home and dry.

There should be shareholders' approval for the measure we are discussing. The Government have always believed that there should be shareholders' approval. That leads me to ask how my noble friend can put this measure to us now. On what grounds does he do that? Who thought of the idea? Who put it to the Government that one should remove this major mechanism for greater publicity, which is the whole point of shareholders' meetings? Who thought it up? Was it thought up by the Government? Amendment No. 237D would reduce the amount that could be used

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in this way by the directors at their whim, without it being subject to any control whatever, down to £50 as opposed to £5,000.

I stop there although there is much more to say about this venture of the Government's. Why was it not tabled in another place? What was wrong with the idea then? The matter was carefully considered in another place. This is not a case of this House not having the opportunity to consider the most careful debates that took place in Standing Committee G. There was not a murmur of this proposal. Indeed, in those debates the Government were proud--as well they should have been--to introduce the new mechanism. I do not understand--and many members of our party will not understand--why the Government have suddenly decided to remove this mechanism (which has gained some publicity and support for the party) and impose a cut-off point of £5,000. I wonder why they chose the sum of £5,000. Are shareholders not interested in anything less or more? Of course, that is absurd. I am amazed at this proposal, which was tabled only last week. I ask my noble friend the direct question: who thought it up and what are the grounds for it? I beg to move.

Lord Bassam of Brighton: My Lords, I refer to one of the important principles and approaches that we have attempted to embrace during the course of the development of the Bill. I think that one has to accept that the Bill has developed. That charge has been levelled rather more sharply against the Government on occasion, and from time to time by the noble Lord, Lord Mackay. One of the important ways we should approach the Bill is to try to be as consensual as we can because we need a system of regulation that we can in the main all sign up to.

The £5,000 de minimis limit is a response to representations that we have received from both sides of the House. The limit is an aggregate figure covering all political donations made in any year. The de minimis limit reflects the fact that companies may make innocent donations, for example, to think tanks. We do not want these provisions inadvertently to affect adversely such activities. The noble Lord, Lord Mackay, tabled a similar amendment in Committee.

We believe that our amendment provides a small measure of flexibility so that companies do not have to call extraordinary general meetings for what one might describe as fairly modest donations. My suspicion is that most donations will probably be larger than £5,000 and attract some attendant publicity. There is an organisation which regularly monitors party political or similar donations. The Labour Research Department produces an excellent publication which does exactly that. I do not think that political donations will be without publicity, interest or disclosure.

We have approached the issue on a consensual basis. I am sorry that the noble Lord was not aware of earlier similar amendments. Yes, we have had representations from a range of organisations and political parties. That is the cause underlying the amendment. We do not seek to undermine the general principle behind

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disclosure; far from it. We have been frank about that. It is a matter of practicality. If we were to go down to the level of the £50 suggested by the noble Lord in one of his amendments it would be the sledgehammer to crack a nut syndrome.

I understand the logic of the noble Lord's argument. However, I respectfully ask him to withdraw the amendment.

9.15 p.m.

Lord Goodhart: My Lords, before the Minister sits down, the £5,000 figure is the same as the figure which has to be disclosed for donations to a national political party. I assume that that is no coincidence. But there is also a requirement that donations of more than £1,000 in relation to a single constituency organisation should be disclosed. Therefore would not it be appropriate to reduce the £5,000 level to £1,000 to make sure that anything which has to be disclosed under this Bill also has to be approved by the shareholders?

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