My Lords, I start by declaring an interest as a donor whose constituency donations exceed the reporting threshold and whose national donations exceed the recording threshold. I speak on the Bill mainly because I was a member of the Committee on Standards in Public Life at the time of its report on the funding of political parties, which laid down the framework for the later legislation. I pay tribute here to the noble Lord, Lord Neill of Bladen, for his effective chairing of that committee.
I was also on the Front Bench for my party during the passage of the Political Parties, Elections and Referendums Act 2000 through this House, and for that of the Electoral Administration Act 2006. In view of the history of that legislation and the gaps that have appeared, I strongly support this Bill.
Two matters are of particular importance: first, the increasing transparency, particularly by requiring unincorporated associations to disclose the source of donations made through them; and, secondly, a provision not yet in the Bill but promised by the Government, as the noble Lord, Lord Bach, has done, to bring about individual registration by electors throughout Great Britain. Electoral fraud is indeed an increasing problem and has undoubtedly affected some results, particularly in local government elections. Individual registration with identifiers would make fraud much more difficult to achieve. It needs to be brought forward more quickly than is now proposed by the Government; although I obviously recognise that it would take some time to achieve.
There are several other useful provisions in the Bill. I welcome, among others, the greater power to obtain relevant information, and the powers to impose civil penalties; on this, I am afraid that I disagree with the noble Lord, Lord Neill. The threat of criminal penalties has deterred many party members from accepting offices in their local parties that would place them in danger of acquiring a criminal record. Criminal penalties should be reserved for deliberate and conscious breaches of the law, and not for breaches caused by ignorance or incompetence, which are better dealt with by civil penalties.
I also welcome the extension of the size of the Electoral Commission by adding four members nominated by political parties. My experience over six years on the Committee for Standards in Public Life persuaded me that having members with front-line knowledge of the workings of the political system was useful to the committee, and it would also be useful to the Electoral Commission. However, we also need to clarify the method of selection of the fourth political member. By an odd coincidence, I have recently been on a mission to Sri Lanka for the International Bar Association, where we discovered that failure to spell out what was, in that case, the method of electing the sixth party nominee to their constitutional commission had stymied the whole operation. We must therefore give some greater indication in the Bill of how the fourth member will be selected.
I support some proposals in the Bill in principle but not in detail. In these, I agree to a considerable extent with the Electoral Commission. The Bill proposes in Clause 13 to increase the permissibility and recording thresholds from £200 to £500. While I accept that some increase may be desirable, that seems to me to be altogether too high. I suggest that the increase should be from £200 to £300. That would tally with the 50 per cent increase in the reporting thresholds provided for by Clause 13.
Clause 14 limits free candidacy expenses for general elections occurring more than 55 months after the previous general election. This is good in principle but, as my noble friend Lord Tyler pointed out, four of the last general elections have taken place only four years after the previous general election. Four years seems to have become the standard length of life of a Parliament if the governing party expects that it is likely to be re-elected. This suggests that a limitation on constituency spending should preferably operate throughout the life of a Parliament and, in any event, should at least come into force at a much earlier date than that proposed by the Bill; I suggest that that should be not later than 42 months after the previous general election, so that it would be there after three and a half years. Then there is the question of the withholding of the home addresses of candidates. I am not persuaded that we need it at all, except in cases of a real security threat, as the noble Lord, Lord Brooke, pointed out.
Finally, there are provisions that should be in the Bill but are not. Of these, much the most important, which has had support from a number of other speakers, is the cap on donations. This was not recommended by the Committee on Standards in Public Life's fifth report, but developments since then have made it clear that it is necessary. Indeed, it is essential that parties are to be given a reasonably level playing field. The present system enables a party with wealthy supporters to run more expensive campaigns and to be more active outside the campaign periods. More important even than that, some contributions in recent years have been so huge that party policy can be altered by the promise of more money or by the threat of withdrawing financial support in the future.
Wealth can quite legitimately be used to buy fine houses, great works of art or yachts and Rolls-Royces. However, it is contrary to the spirit of democracy to allow wealth to buy political influence, so we need to add a cap on donations to the provisions on the existing cap on spending. That should apply with or without a consensus.
Another provision that should be in the Bill, or perhaps in the forthcoming Finance Bill, is tax relief for small donations. This was proposed in the Committee on Standards of Public Life's report, but was not adopted. We have in this country for years recognised that donations to charities are a matter of public interest and should have tax relief through gift aid. However, modest donations to political parties are also very much in the public interest and should be encouraged. This has already been recognised in principle, although not many people appreciate this, by exempting bequests to political parties that have two or more members in the House of Commons from inheritance tax liability. The same principle should apply to donations by the living. The simplest method would be to use the gift aid system with some changes. In particular, there would be a cap on the size of the annual donation that could qualify for relief—I would suggest no higher than £1,000—and higher-rate taxpayers could not set off their donations against their higher-rate tax liability as they can in the case of gifts to charities.
This is an important Bill. It has many good features. There are some which could and should be improved, and a few which ought to be here and are not. I wish the Bill well.