I wish to make the following statement to the House regarding the commencement of party funding provisions of the Political Parties and Elections Act 2009. The Act received Royal Assent on 21 July 2009 and represents a significant step towards a system of party funding which is more transparent, better regulated and, most importantly, better able to win the confidence of the public.

The following provision will commence on 25 November 2009:

Section 21-Limitation of pre-candidacy election expenses for certain general elections. This provision introduces a new spending limit for candidates at certain general elections, to run from the date after 55 months of a Parliament have elapsed until the date an individual formally becomes a candidate (this is, in most cases, the date of dissolution of Parliament). Commencement on 25 November means that, in the case of the present Parliament, the new spending limit will apply to election expenses incurred on or after 25 November which are used on or after 1 January 2010.

The following provisions will commence on 1 January 2010:

Section 12-Defence to charge of failing to return donation from impermissible donor. This provision seeks to add clarity to the existing position in the 2000 Act, namely, that if a party treasurer is charged with an offence of accepting an impermissible donation, the party or party treasurer will not be guilty if they can show that they took all reasonable steps to verify that the donor was a permissible donor, and having done so, believed that was the case.

Section 13-"Reasonable excuse" in relation to certain offences under the 2000 Act. This provision recasts certain offences in the 2000 Act (mainly relating to requirements imposed by that Act to report various matters to the Electoral Commission) so that they may be committed only if something is done or not done "without reasonable excuse". The provision also removes existing defences to the offences in question, in consequence of this new qualification to the acts or omissions that may constitute an offence.

Section 14-Control of donations to members associations: responsible persons. These provisions require that members associations in receipt of a reportable permissible donation (a transaction in excess of £7,500) or an impermissible recordable donation (above £500), appoint a responsible person where they do not have a treasurer.

Section 15-Control of donations to holders of elective office-compliance officers. These provisions are intended to alleviate some of the burden of complying with reporting procedures by allowing (but not requiring) holders of elective office⁽¹⁾ to appoint a compliance officer to assist with the duties of reporting and verifying donations and loans. The provisions do not absolve an office holder who chooses to appoint such an officer of guilt for a failure to comply.

⁽¹⁾ For the purposes of Schedule 7 (reporting of donations), the relevant elective offices are: Member of the House of Commons; Member of the European Parliament elected in the United Kingdom; Member of the Scottish Parliament; Member of the National Assembly for Wales; Member of the Northern Ireland Assembly, member of any local authority in the United Kingdom (including the Common Council of the City of London but excluding a parish or community council); a member of the Greater London Assembly; and the Mayor of London or other elected mayor. For the purposes of Schedule 7A (reporting of loans) the list of relevant elective offices is the same, with the exception of independent Members of the Scottish Parliament and independent members of Scottish local authorities.

Section 16-Control of loans to members associations: responsible persons. This provision achieves the same effect as section 14, in relation to loans and related transactions.

Section 17-Control of loans to holders of elective office-compliance officers. This provision achieves the same effect as section 15, in relation to loans and related transactions.

Section 18-Person may not be "responsible person" for more than one recognised third party. A recognised third party is an organisation that spends more than £10,000 on campaigning at an election and registers with the Electoral Commission as a result. This Section provides that persons responsible for ensuring compliance with the reporting requirements for expenditure to which recognised third parties are subject, as set out in the 2000 Act, may not discharge these responsibilities with respect to more than one recognised third party.

Section 20-Increased thresholds in relation to donations etc.. This Section increases to more than £500 the threshold above which donations received and loans entered into must be recorded under the 2000 Act. Additionally the thresholds above which donations and loans must be reported to the Electoral Commission are increased to more than £1,500 (for individuals and accounting units) and to more than £7,500 (for registered parties, members associations, recognised third parties and permitted participants).

We are committed to implementing the Act in a timely and appropriate manner, taking account of good regulatory practice and the desirability of early commencement. We have been engaging with the political parties, the Electoral Commission and other Government Departments to ensure that the commencement programme for the Act is timely and effective.

Subject to approval by both Houses where necessary, the following provisions will commence on 1 July:

Section 1(2)-Compliance with controls imposed by the 2000 Act etc. This provision amends Section 145 of the Political Parties, Elections and Referendums Act 2000 by clarifying that the function of the Electoral Commission is to regulate, as well as monitor, compliance with that Act. In its capacity as regulator, the Commission shall take such steps as they consider appropriate to secure compliance with those requirements. The Commission will publish guidance as to what conduct will satisfy the requirements of the 2000 Act.

Section 2 (and Schedule 1)-Investigatory powers of the Commission. These provisions give effect to new Schedule 19B to the Political Parties, Elections and Referendums Act 2000 which provides the Commission with powers to enable them to require access to information for certain purposes and to fulfil their function as an effective regulator.

Section 3 (and Schedule 2)-Civil Sanctions. These provisions insert new Schedule 19C to the Political Parties, Elections and Referendums Act 2000. They give the Electoral Commission new powers to apply a range of civil sanctions to offences and contraventions under the Political Parties, Elections and Referendums Act 2000 (as amended by the Political Parties and Elections Act and the Electoral Administration Act 2006). The new flexible civil sanctions provide alternatives to referral for criminal prosecution under the 2000 Act, allowing the Electoral Commission to apply sanctions that are appropriate to the nature of each contravention. The Commission will also be able to use new approaches to secure compliance with the law where appropriate, rather than imposing a traditional penalty such as a fine, or referring a case for criminal investigation.

Section 8-Education about systems of government and EU institutions. This provision restricts the Electoral Commission's educational role to promoting awareness of current and pending electoral systems in the UK.

The following provisions will not be commenced before the summer of 2010:

Section 9-Declaration as to source of donation;

Section 10-Non-resident donors;

Section 11-Non-resident lenders.

Officials have begun preliminary work on the prerequisites to implementation of these provisions. However, as stated during consideration of Lords Amendments to the Bill, we are practically unable to commence Sections 10 and 11 before the summer of 2010 due to their complex nature. Section 9, which requires donors to provide declarations as to the true origins of all donations of over £7,500, will be commenced alongside Sections 10 and 11 to ensure consistency in approach, which will be welcomed by those who make political donations, as well as parties and other recipients who will have to ensure that they comply with the additional declaration requirement.