Transparency of Lobbying, Non Party Campaigning and Trade Union Administration Bill 2013 House of Commons Report Stage and Third Reading

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1 Transparency of Lobbying, Non Party Campaigning and Trade Union Administration Bill 2013 House of Commons Report Stage and Third Reading Amendment briefing 9 October 2013 This briefing provides our views on amendments that are due to be debated at Report Stage of the Transparency of Lobbying, Non Party Campaigning and Trade Union Administration Bill 2013 ( the Bill ) in the House of Commons on 9 October The Bill will also receive its Third Reading on 9 October before it progresses into the House of Lords. The Commission believes that, where significant non-party campaigning takes place, it is right that this is done transparently and is properly regulated. As we set out in our regulatory review of party and election finance earlier this year, although the current system works well and we have worked closely with third parties to achieve this, there is scope for improving transparency. We were also clear in our review, however, that changes in this complex area require careful consideration. The Government has tabled amendments to the definition of non-party campaigning in clause 26 and Schedule 3. These amendments take positive steps in the right direction, but they now need careful testing with campaigners. In the limited time available we have not been able to fully consider whether these amendments cover all the scenarios that should be regulated, or where they may have unintended consequences. Many of the other amendments tabled for Report stage seek to address concerns that we and others have raised about the Bill. We have not commented on all amendments tabled, and the absence of comment on an amendment does not imply that we support it. We also believe that there are other improvements that must be made to the Bill to ensure that it introduces a proportionate and workable regulatory regime, and that it improves transparency for voters. We will continue to give our view as the Bill passes through its Parliamentary stages. Our Second Reading and Committee stage briefings on the Bill can be found on the Commission website here. For further information, please contact Warren Seddon, Public Affairs Manager on or wseddon@electoralcommission.org.uk 1

2 Clause 26 and Schedule 3 Meaning of controlled expenditure Amendments 32-45, 54, 55, 56, 57 58, and 101 Clause 26 and Schedule 3 change the definition of the type of activity that is covered by the rules on third party campaigning for or against political parties and groups of candidates. We regulate those rules. We recommended in a review of the current rules published in June 2013 that the current definition of regulated non-party campaigning should be widened, but that changes should be considered carefully. In our previous briefings we set out significant concerns about interpretation of Clause 26 and Schedule 3 as drafted in the original Bill. Our view is that the clauses would give us a wide and undesirable discretion to interpret what activity would be regulated. The Government announced its intention to make amendments following the Committee stage, and we are grateful that it has discussed its approach to the amendments with us. However, we said to the Government that in the limited time available, we would not be in a position by the Bill s Commons Report stage to give a conclusive view on the overall effect of the changes. We will continue to give our view as the Bill passes through its Parliamentary stages. Changes to the meaning of controlled expenditure by non party campaigners Amendments tabled by the Government make changes to the meaning of controlled expenditure. The amendments reinstate some important aspects of the current law that determine when spending is regulated. The amendments also revise the definitions of existing and new categories of activity that can be regulated. These changes should reduce the wide discretion afforded to the Commission that the original wording in the Bill proposed. But the revised wording still needs further testing to fully consider whether these amendments cover all the scenarios that should be regulated, or where they may have unintended consequences. We await confirmation of the Government s view of the impact of the Bill on the referendum on independence for Scotland. We think the Government amendments should help to clarify the position, and will comment further in future briefings. The Government has taken steps in the right direction on these amendments, but they now need careful testing with campaigners. 2

3 Our initial views of the Government s amendments are: There is a revised definition of controlled spending which is based on whether spending on an activity can reasonably be regarded as intended to promote electoral success (amendment 32). This means that spending on an activity can be regulated even if it can also be regarded as intended to have another purpose as well (amendment 35). These two aspects of the revised definition are features of the current law. (When introduced, the Bill originally used a wider definition that covered spending for the purpose of or in connection with promoting electoral success.) o In our view, the new wording is clearer than the wording in the Bill as introduced, and we think this change is helpful. Part of the definition of regulated spending is removed by amendment 34. It deals with spending that cannot be seen as promoting electoral success, but can reasonably be seen as otherwise enhancing the standing of parties or candidates. We have not been able to find clear examples of spending that would fall into this category. (This removed wording features in the current law and was also in the original Bill.) o In our view, this change does not materially reduce the scope of what is covered by the Bill. The activities that can count towards controlled spending have been redefined by the Government s amendments 39 to 45. Firstly, the categories of advertising, unsolicited material (such as leaflets) and policy documents have been replaced by a definition of material made available to the public, which is similar to the current rules. Secondly, the proposed definitions of activities that the Bill regulates for the first time, such as events and media work, have also been amended. For instance, the changes helpfully make it clear that, responding to press enquiries or organising private events will not be regulated. The amendments also clarify the position in respect of some kinds of activity relating to policy issues. For instance, it is now clear that spending on policy documents will only be regulated if they are made available to the public and can reasonably be regarded as intended to promote electoral success. o In our view, the aim of these changes is helpful, but they need to be considered carefully and tested with campaigners to ensure that they are fit for purpose. Because some of these types of activities have not previously been regulated, we will continue to test the wording to check that it catches all the scenarios that should be covered, whilst avoiding unintended consequences. 3

4 Spending on campaigning on policy issues As noted above, amendments 32 and 35 tabled by the Government mean that spending on an activity will be regulated if it can reasonably be regarded as intended to promote electoral success. Where this test is met, the activity will be regulated, even if it can also be regarded as intended to have another purpose as well. These two changes re-instate aspects of the current law into the Bill. The law uses an objective test to determine the intent of the spending. An objective test requires a balanced decision based on the facts, whereas a subjective test would require knowledge of the thoughts and views of the campaigner. Amendment 101 tabled by Graham Allen MP introduces an alternative rewording of clause 26 that would require that the primary purpose of the expenditure should reasonably be regarded as intended to promote or procure electoral success. This seeks to address questions about whether the current law and the Bill regulate spending on campaigning on public policy issues that are closely associated with political parties or candidates. We do not support the approach implicit in amendment 101, because it inserts a subjective test into the Bill and therefore would require knowledge of the thoughts and views of the campaigner. Some campaigning on policy issues is regulated under the current rules, and will be under the Government s amendment. This will depend on the facts of each case: spending on activity will be regulated if it can reasonably be seen as intended to promote the electoral success of parties or candidates, whether or not it involves naming any party or candidates. This includes promoting some by prejudicing the prospects of others. an activity does not have to be party political for its costs to be regulated. Spending will be regulated if it can reasonably be seen as intended to promote the electoral success of parties or candidates who support or oppose particular policies, or who hold particular opinions. This also applies where candidates are from different parties. We think that using an objective test in the definition is a necessary part of the regime. Without this, it would be easy to evade the rules on non-party campaigning by framing party political campaigns in policy terms. However, this definition also inevitably affects organisations whose primary intentions are clearly not party political, because it means that the facts of the case will determine whether their spending is regulated or not. In future, the Bill proposes that this definition will apply to a wider range of activities and a reduced spending threshold. One simple solution to address campaigners concerns is to set the spending thresholds, above which campaigners have to register with the Electoral Commission, at a level that Parliament thinks is proportionate to the risk of undue influence. (See pages 5-6 below on registration thresholds.) 4

5 Considering the overall impact of the Bill in relation to the new definition of controlled spending If Parliament agrees to the amendments tabled by the Bill, we expect that it will want to consider the overall impact of the Bill on campaigning in the run-up to UK Parliamentary general elections and other elections to which the new definition of regulated activity applies, including elections to the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly (see page 6). For instance, Parliament may wish to consider whether the new thresholds and spending limits in the Bill are appropriate when applied to activity such as: a public rally on a policy issue, that could reasonably be seen as intended to promote the electoral success of parties that share a view on that issue a pledge card campaign on a policy issue that publicly highlights the support of a range of candidates from different parties Clause 27 Changes to existing limits Amendments 59, 60, 102 Clause 27 significantly reduces both the spending thresholds above which campaigners have to register with the Electoral Commission, and the limits that constrain what registered campaigners can spend at Westminster general elections. Amendment 102, tabled by Graham Allen and others, deletes the Bill s changes to the registration thresholds and the spending limits. Amendment 59, tabled by Wayne David and Angela Smith, also deletes the changes to the thresholds. Amendment 60 provides that the changes made by clause 27 will not come into force until the Electoral Commission has reported to Parliament on the impact that the changes have on relative levels of spending by political parties and non-party campaigners. We think it is appropriate that the regulatory controls on non-party campaigning imposed by the Bill should be proportionate to the scale and impact of campaigning. In summary: in principle we support restoring the current thresholds for registration, unless the Government can show the need for the reductions imposed by the Bill we recommend that once the definition of controlled spending is confirmed, the Government and Parliament should consider what spending limits will provide the appropriate balance between freedom of expression and controls on undue influence 5

6 Registration thresholds The registration thresholds determine how many campaigners have to register with us and comply with controls and reporting requirements. The amendments restore the thresholds to 10,000 rather than 5,000 in England and to 5,000 rather than 2,000 in the other parts of the UK. This responds to a recommendation of the PCR Committee in its report on the Bill (paragraph 78) that in the absence of evidence of a need to lower the current thresholds, they should revert to the existing levels. We agree with the PCR Committee that on the evidence currently available, there is no clear argument for the lower thresholds imposed by the Bill. Changing the thresholds would address some campaigners anxiety about their work on public policy issues being caught by the controls, especially small scale organisations (see page 4 above). Indeed, the wider scope of controlled spending introduced by the Bill may justify increasing the current thresholds in order to ensure that only significant campaigning is regulated. In principle we therefore support restoring the current thresholds, unless the Government can show the need for the reductions imposed by the Bill. It is of course for the Government and Parliament to determine at what point spending is significant enough to justify the need to register as a campaigner. We said in our previous briefings that we think the Bill s Impact Assessment underestimates both the regulatory burden that the Bill would impose on registered campaigners, and the number of non-party campaigners that may need to register with us as a result of the Bill s provisions (including reduced spending thresholds and a wider scope of regulated activity). The PCR Committee report has recommended (paragraph 85) that the Impact Assessment should be revisited, and revised if necessary. Parliament will want to consider the particular impact of the reduced registration thresholds in the Bill in the context of Scotland, Wales and Northern Ireland. Parliament will also want to consider the implications that reverting to the current registration thresholds would have for the new constituency limits. As noted in our briefing on clause 28 below, the constituency limits are lower than the current 10,000 registration threshold for England. Spending limits The spending limits set a maximum amount that a campaigner can spend on regulated activity during the 1 year regulated period before the UK parliamentary general election. Amendment 102 restores the current spending limits for registered campaigners in the run-up to these elections, and responds to a recommendation in the PCR Committee s report (paragraph 82) that the current 6

7 spending limits should remain in place unless and until a case has been made for them to change. Setting the limits that should apply to registered campaigners is a core policy decision, which is for the Government to propose and Parliament to consider. However, the effect of any given spending limit can only be properly understood when the scope of controlled spending is clear. When we recommended in our June 2013 review that the scope of non-party campaigning activity that is regulated should be widened, we also recommended that the spending limits would need to be reviewed as a consequence, and noted that the resulting limits should be sufficient to enable freedom of expression. Our review recommendation did not propose or imply that the spending limits should be reduced. As set out in our briefing on clause 26 and Schedule 3 (above), the Government has tabled amendments to the Bill s definition of controlled spending. The amendments also revise the definitions of activities that are currently regulated, and those that will become regulated for the first time. We recommend that once the revised definition of controlled spending is confirmed, the Government and Parliament should consider again what spending limits will provide the appropriate balance between freedom of expression and controls on undue influence. Parliament will also want to consider the impact of the reduced spending limits on Scotland, Wales and Northern Ireland. The new spending limits in clause 27 apply only to regulated periods that include a UK Parliamentary general election. The existing limits for elections to the Scottish Parliament, the National Assembly for Wales, the Northern Ireland Assembly and the European Parliament will continue to apply. However, the wider scope of regulated activity under clause 26 and Schedule 3 will in practice reduce the spending power of campaigners at those elections in comparison to the current position. Amendment 60 requires us to report on the impact of the new limits on the relative spending of political parties and non-party campaigners, before the new limits can come into effect, but after the Bill has finished its Parliamentary scrutiny. We do not support this amendment because we expect Parliament will want to consider the issue of relative spending power whilst the Bill passes through the House, as part of its wider consideration of the spending limits. The change in clause 27 will clearly reduce substantially the amount that non-party campaigners can spend relative to the limits that apply to political parties. 7

8 Clause 28 Constituency limits Amendments 61, 103 Amendment 61, tabled by Wayne David and others, deletes clause 28 which places new limits on spending by non-party campaigners that is focused in particular constituencies in the run-up to a UK Parliamentary general election. Amendment 103, tabled by Graham Allen, replaces the new constituency limits with a power for the Secretary of State to impose limits by Order. These new constituency limits apply to spending that has an effect in one or more constituencies, but no significant effect in others. As with the other clauses discussed above, the controls apply to spending relating to parties or groups of candidates, but not to spending relating to individual candidates. Where such spending has an effect in several constituencies, it must be divided equally between them. A campaigner s total spending in any constituency must not exceed 9,750 in the year before the election or 5,850 in the period between the dissolution of Parliament and polling day. New challenges of enforcing the new constituency controls These new controls will require us to respond to allegations about campaign activity in 650 constituencies during the 12 month election regulated period. We anticipate that it will be challenging to obtain robust evidence to determine and sanction breaches in specific geographical areas, for example, regarding the effects of a Billboard campaign on the surrounding constituencies to where it is displayed. We expect a high level of allegations due to the low level of the spending limits. We are also concerned that the constituency controls in the Bill may be unenforceable within the timescales of an election, particularly if potential breaches occur in the last few weeks of the campaign. We have asked the Government to clarify how it expects us to enforce the new limits and we will comment further in future briefings. We do not support the approach implicit in amendment 103 of allowing the Secretary of State to set the new constituency limits by Order, without the opportunity for debate during the passage of this Bill. These are entirely new controls, and Parliament will want to consider the level of the limits when deciding on a fundamental new area of the regime. Parliament may wish to note that if the registration thresholds are restored to their current level of 10,000 in England and 5,000 in other parts of the UK (as discussed in our briefing on clause 27,above), this will have implications for the constituency spending limits currently imposed by clause 28, since they are lower than 10,000. 8

9 Clause 32 Reporting of donations to recognised third parties Amendments 63, 108 Amendment 108, tabled by Graham Allen and others, deletes clause 32 of the Bill which requires non-party campaigners to report donations before rather than after polling day. Amendment 63, tabled by Wayne David, removes the requirement for non-party campaigners to submit weekly donation reports after Parliament has been dissolved. The weekly reporting requirement is modelled on the current rules for political parties, but those rules only apply to party headquarters, and do not cover accounting units responsible for their own finances. The new rules for non-party campaigners do not contain an equivalent exclusion. We said in our previous briefings that the requirement for weekly reporting is likely to be particularly onerous and potentially impracticable for large organisations with branches or other complex structures. If Parliament wishes to introduce pre-poll donation reporting by non-party campaigners, we recommend that it considers how to minimise the regulatory burdens associated with this. For instance, our June 2013 regulatory review recommended that in order to reduce reporting burdens on political parties: those that have no reportable donations in a quarterly donation report should then be exempt from providing further reports until they receive a reportable donation weekly donation reports after the dissolution of Parliament should be replaced by a single report, which would only be required if a reportable donation is received These changes could be adopted in the equivalent rules for non-party campaigners. 9

10 Clause 33 Statements of accounts by recognised third parties Amendments 64, 109 Amendment 109, tabled by Graham Allen and others, removes clause 33 which imposes new requirements for campaigners to submit a statement of accounts alongside its post-election spending return. Amendment 64, tabled by Wayne David, removes the requirement to provide a statement of accounts if the campaigner has spent less than the registration threshold. In our previous briefings we said that the requirement to produce statement of accounts appear onerous, because they will need to be produced within a few months of polling day and cover a period of time that is not a standard accounting period. If Parliament wishes to introduce a requirement for non-party campaigners to produce statement of accounts, we support the principle behind amendment 64. This is because it removes the burden of submitting a statement of accounts from campaigners that register with us on a precautionary basis, but do not then incur spending at a level that would have required them to register. Our June 2013 regulatory review made similar recommendations in respect of campaigners spending returns. Clause 34 Third party expenditure in respect of candidates Amendment 110 This amendment, tabled by Graham Allen, Sheila Gilmore and Fabian Hamilton, removes clause 34. The clause creates a new power for the Commission and Returning Officers to request a spending return from local non-party campaigners who campaign for or against individual candidates at UK Parliamentary general elections. The clause also increases the spending limit for these local non-party campaigners from 500 to 700. We do not regulate the rules on non-party campaigning for or against individual candidates, which are dealt with by the police. We said to the Government shortly after the Bill was published that we see no value in either us or Returning Officers being given a power to request a spending return from local non-party campaigners. We already have appropriate powers to require information from those we regulate and others. Since neither we nor Returning Officers have a regulatory role in respect of local third party campaigners, the new power has no practical use, and may raise unfounded expectations that we are able to take action in the event of an alleged breach of the rules. We therefore support the policy intention of this amendment insofar as it removes the unnecessary power to request a spending return. 10

11 Clause 35 Functions of Electoral Commission with respect to compliance Amendment 111 This amendment, tabled by Graham Allen and others, deletes clause 35 which amends the Commission s regulatory remit. The clause makes two changes: it changes our function to take steps to monitor and secure compliance with the rules on party and election finance into a duty to take all reasonable steps. As we said in our previous briefings, we were not consulted on this change and are concerned that it will increase the risk of challenge to any of our regulatory decisions, including those involving political parties. This in turn will affect our ability to deal promptly with spurious or politically motivated allegations. it formally extends our regulatory remit to cover provisions relating to the registration of political parties and to imprints, in respect of which we can already impose civil sanctions. We recommended this change in our June 2013 regulatory review. The PCR Committee s report on the Bill (paragraph 89) recommended that the Government should remove clause 35 from the Bill and consult with us on the proposed changes and the rationale behind them. We think the concerns raised by the shift from a function to a duty clearly outweigh the benefits of the clause as drafted, and we therefore support the amendment. New Clause 2 Impact of Part 2 on elections and referendums in Scotland, Wales and Northern Ireland These new clauses, tabled by Wayne David and Angela Smith, require postlegislative reports on the impact of Part 2 of the Bill on electoral events in different parts of the UK. New Clause 2 requires us to provide a joint report with Ministers. We await confirmation of the Government s view of the impact of the Bill on the referendum on independence for Scotland. We think the Government amendments should help to clarify the position, and will comment further in future briefings. We have a statutory function of reporting on the conduct of elections under current legislation, and would expect to examine the impact of changes to the rules on nonparty campaigning at future elections as part of that function. The wider post- 11

12 implementation review process envisaged by this new Clause may well be a helpful supplement to our reporting. However, we expect that as far as possible Parliament will wish the Government to set out a thorough assessment of the likely impact of the provisions in Part 2 before the Bill is passed. As noted above, the PCR Committee has recommended that the Government should revisit the current Impact Assessment for the Bill. New Clause 3 Financial impact of the Bill Amendment 73 This new clause, tabled by Wayne David and Angela Smith, requires the Electoral Commission to provide Parliament with estimates of the financial impact of Part 2 of the Bill on the Commission, and of its administrative impact on non-party campaigners, within a month of Royal Assent. We do not support this amendment since there are more appropriate vehicles for consideration of these issues. We said in our Second Reading briefing (paragraph 40) that we think the estimate of the Bill s financial consequences for us in the Impact Assessment is significantly understated, and that we would raise the Bill s financial implications for us with the Speaker s Committee which is responsible for our funding. We will provide the Speaker s Committee with our views as soon as practicable, but will only be able to estimate the Bill s impact on our costs with any confidence when the Government clarifies its expectations of how some of the new requirements introduced by the Bill should be enforced. In respect of the Bill s administrative implications for campaigners, as noted above we support the PCR Committee s recommendation that the Government should revisit the estimates of this in its Impact Assessment. 12