Control of Donations and Regulation of Loans etc. (Extension of the Prescribed Period) (Northern Ireland) Order 2011

Lord Shutt of Greetland Excerpts

Monday 7th February 2011 Grand Committee

Moved By

[Lord Shutt of Greetland]

That the Grand Committee do report to the House that it has considered the Control of Donations and Regulation of Loans etc. (Extension of the Prescribed Period) (Northern Ireland) Order 2011.

Relevant documents: 13th Report from the Joint Committee on Statutory Instruments

[Lord Shutt of Greetland]

My Lords, the order before the Committee today will extend the period in which donations and loans to political parties and others in Northern Ireland must be held confidentially by the Electoral Commission. Noble Lords will be aware that political parties across the United Kingdom must report donations and loans received above certain thresholds to the Electoral Commission.

In Great Britain, the Electoral Commission is under a duty to publish details of these donations. However, due to ongoing concerns about intimidation in Northern Ireland, the Northern Ireland (Miscellaneous Provisions) Act 2006 made provision for details of any donations reported by Northern Ireland political parties to be held confidentially by the commission.

The 2006 Act provided that confidentiality should apply for only a temporary period—referred to in the Act as “the prescribed period”—and would expire on 31 October 2010, unless an order was made by the Secretary of State to extend that. Noble Lords may recall that this House approved a short extension of the prescribed period shortly after the election so that the provisions would expire on 1 March 2011. This was to allow for full consultation to take place on whether the time was right to move to full transparency.

A full 12-week consultation commenced shortly after this extension was approved and concluded on 25 October 2010. A total of 26 responses were received, mainly from members of the public, political parties and the media. Overall, the consultation demonstrated strong support from members of the public and journalists for full and immediate transparency. This was also supported by some political parties, including Sinn Fein, the Alliance Party and the Green Party. The Ulster Unionist Party and Democratic Unionist Party supported the extension of the current arrangements due to ongoing security concerns. The SDLP agreed that donor identities should be kept confidential, but believed that work should be undertaken to bring more transparency to the existing process.

The Electoral Commission also believed that identities should continue to be kept confidential if the Government concluded that the time was not yet right to move to full transparency, but agreed that there was room for greater transparency in the existing arrangements.

The consultation demonstrated that there is strong public support for full and immediate transparency, but also that concerns remain about the possible intimidation of donors. Noble Lords will be aware that, by its very nature, it is difficult properly to quantify levels of intimidation. Nevertheless, there has been a deterioration in recent years in the overall security situation in Northern Ireland. In particular, recent reports of the Independent Monitoring Commission have indicated an increase in paramilitary beatings and shootings.

It is very likely that this rise in violent activity has been accompanied by an increased risk of intimidation and that there would be a threat to the safety of those making donations to Northern Ireland parties if their identities were made known. The Government have therefore reluctantly concluded that the time is not yet right to move to full transparency and that it is necessary to bring forward the order to extend the prescribed period before us this evening.

However, I wish to reassure noble Lords that we have listened carefully to the expressions of support by the general public for more transparency in Northern Ireland. Since the consultation ended, officials have examined the possibility of bringing more transparency to the current process within the existing legislative framework. The Government are particularly concerned that the 2006 Act does not just protect donor identities, but prohibits the release by the commission of any details at all relating to a donation.

We had hoped that the order-making powers in the 2006 Act might allow for secondary legislation to be made to relax the current strict requirements, so that some details of donations and loans might be released—for example, details of the recipient, the amount received and when the donation was made. However, following closer examination, questions have arisen about the extent to which the 2006 Act would permit that. Nevertheless, officials will continue to explore the possibility of further secondary legislation being made to provide for increased transparency. If that is not possible, we will seek to make such provision through primary legislation when a suitable legislative vehicle can be found.

Noble Lords may also be aware that the consultation paper sought views on whether donations and loans made during the prescribed period should be kept confidential when the prescribed period ends. Currently, the 2006 Act provides that details of such donations and loans will be released when the prescribed period expires. Again, the majority of respondents advocated full and immediate transparency, including the release of details of past donations and loans when the prescribed period ends. However, the UUP, DUP, SDLP and Electoral Commission strongly opposed the release of that information. They believe that many donors and recipients did not properly appreciate that the 2006 Act provided for the eventual release of the information and donated in the belief that their identities would not be released, even after the prescribed period had ended. In light of those concerns, the Government will seek a suitable legislative vehicle to make provision to ensure that the information is not released when the prescribed period expires.

In summary, it is with great reluctance that the Government bring forward this order to extend the existing arrangements. We remain committed to achieving complete consistency between Northern Ireland and the rest of the UK when it comes to transparency in party funding. However, we cannot ignore the security risks that might arise if donor identities are made known at this time and the implications that it would have on the funding of political parties in Northern Ireland and the political process there more generally. Nevertheless, I hope that noble Lords are reassured that work will continue on doing everything possible to bring greater transparency to the existing arrangements.

[Baroness Royall of Blaisdon]

My Lords, I am grateful for the clear explanation from the Minister in what is rather a complex area. We note the strong support for lifting the exemption in place in Northern Ireland; I think that 77 per cent of respondents suggested that they were in favour of that. However, despite the enormous progress in Northern Ireland over recent years, we appreciate that the political situation there continues to be sensitive and that caution is required.

It is interesting that 12 per cent of respondents—the same number who supported the Government’s position of no change—supported option 3. As noble Lords know, that option is the current exemption with some modifications—for example, publishing the amounts received, the recipient, and whether the donor was an individual or a company. In principle we support greater transparency in the Northern Ireland political and electoral system but, given the serious and difficult security situation, we understand that a responsible Government need to exercise caution. We consider that option 3, which was canvassed in the Northern Ireland order consultation paper, struck a good balance between protecting the security of the people participating in the political process by providing donations and loans, and the expectation of the public to have transparency in the electoral system.

This is an important order so, as the Committee would expect, I have several questions to put to the Minister. He gave various reasons for continuing the current exemption unamended, but I wondered why the Government happened on two years. What is the rationale for that? He rightly mentioned the intimidation that is taking place. What are the Government planning to do to reduce the risk of intimidation that currently prevents the details being released? Will the Government use the two years’ extension to develop and implement a more transparent system for political donations and loans of the kind considered under option 3?

Paragraph 12 of the Government’s response to the consultation document said that the department would examine the possibilities of making option 3 transparency changes through secondary legislation. It would be helpful to have further clarification on that point. What options and types of transparency changes is the department looking at? What is the originating primary legislation power that would enable such secondary legislation to be made? What is the timeframe for this work? Finally, will the public be consulted on the possible options?

I hope that noble Lords will forgive this raft of questions, but they are very important. I look forward to the Minister’s response.

[Lord Bew]

I, too, thank the noble Lord, Lord Shutt, for introducing this order. Like the noble Lord, Lord Smith, I have listened to his words with a degree of disappointment. It is right to say that the limits on the progress that has been made in Northern Ireland—remarkable though that progress has been—are shown in that we are still talking about these exemptions and derogations from broader UK electoral law and the transparency of such law.

I am not surprised by the words of the Minister and the proposal put today because the balance of opinion, to my surprise, in Northern Ireland over the past year has been very cautious about changing existing regulations. It has become clear for some time that the Government, if they were to respond to what they were hearing, would have to be relatively cautious in their response. But, having plagued the noble Lord, Lord Rooker, when he was at the Dispatch Box as long ago as 2007 on this matter and having, I think, plagued the noble Baroness, Lady Royall, on this matter, it would be hypocritical of me not to record a note of disappointment. I know why the Government have reached this conclusion. I know that they may have been slightly surprised by the degree of concern on the part of the political parties. But having received that, any responsible Government have to pay attention to it.

I simply make the point that Northern Ireland last year was convulsed by public scandals. One of the issues that lay in the background was that of the relationship of certain businessmen to certain political parties. In the rest of the United Kingdom, such matters would be easily sorted out and put into the public domain, but in Northern Ireland we do not know where we stand. That is a difficulty and the step that the Minister is taking is regrettable, if understandable.

The noble Lord, Lord Smith, says that he hopes that there is a two-year limit and that the provision might just lapse in two years. However, having been at this now for four years, I am not quite so secure in that assumption. I hope that he is right. Therefore, I would like to be reassured that the Minister is as clear as he appears to be that the department is looking carefully at work to deal with this by secondary legislation and, if it cannot be done by that method, that primary legislation will be introduced that at least loosens some of the provisions and gives greater openness. I have an uneasy feeling that, in the short term, that will be the best that we can do; I very much hope that I am wrong. Therefore, it is important that the Northern Ireland Office looks carefully at what can be done in certain areas, because I have a feeling that—even two years from now—we will not be looking at the simple lapsing of this legislation.

[Lord Shutt of Greetland]

My Lords, I thank the three noble Lords for their contributions and will endeavour to respond accordingly. In terms of the Government’s position, the noble Baroness, Lady Royall, made the helpful point that she understands where we are at present. She spoke very much about what she referred to as option 3 of what was put forward in the consultation. She asked why we had said two years. The legislation envisaged extensions of the prescribed period for up to two years, so that is the figure that one can go to and no further without another order. She asked what the Government were doing to reduce intimidation. The Government remain committed to doing everything possible to reduce violent activity in Northern Ireland. We continue to work with the Executive and security agencies to reduce overall paramilitary activity, which should lead to a corresponding decrease in intimidation.

The third point that the noble Baroness raised was about the use of the two years. Clearly, work has to be done—this reverts to the point made by the noble Lord, Lord Bew—on either a new order or primary legislation before too long, because of the issues that noble Lords agreed on, I think, about not releasing past information on the basis that people made donations in the belief that the information about them as donors was not to be released. That would have to be dealt with. Similarly, there could be a system whereby it was not exposed if—for example—the noble Lord, Lord Bew, gave £10,000 to a party today, but the facts that there were £10,000, a recipient and a date could be given. As we understand it, that cannot be done under present legislation.

The noble Baroness, Lady Royall, referred to the originating power, which is in the Northern Ireland (Miscellaneous Provisions Act) 2006. I have not got a note about whether there will be a fresh period of consultation. That would be in the spirit of what happens in these matters but there is a sense in which what is planned is clear without further consultation, in that it would be about numbers, dates and the recipient party but not the name of the donor. Perhaps this could be done without a further consultation period, but I do not want to close the door on consultation. That copes with the points.

My noble friend Lord Smith of Clifton found it depressing, which I understand, and I wish I was not moving this order. I wish it were rather different, but this is the way it is. This is advice which is given about the security situation in Northern Ireland and what it is right to do. Like him, I would sooner be looking forward.

Over the weekend, I dug out what is on the public record as regards what the parties publish because the parties still have to produce their accounts to be registered with the Electoral Commission. I give this information, which is in the public domain, with one or two health warnings. This relates to the calendar year. All the parties that I shall mention have year ends in December 2009 and, therefore, that does not include what might have been a different year in 2010, when there was a general election.

Five of the parties—the DUP, Sinn Fein, the UUP, the SDLP and the Alliance Party—have between them 186 accounting units, no doubt constituency associations and so forth. Having looked at what is on record with the Electoral Commission, in the accounting units, there do not appear to be hefty figures labelled as donations. Looking at what is shown by the Northern Ireland-wide parties one sees that the DUP’s income was £348,000 with donations of £126,000; Sinn Fein’s income was £1.177 million and its donations £462,000; the UUP’s income was £392,000 and its donations £21,000; the SDLP’s income was £398,000 and its donations £83,000; the Alliance Party’s income was £151,000 and its donations £16,000; the PUP’s income was £107,000 and its donations £150; the Green’s income was £47,000 and its donations £7,000; the income of the Conservatives in Northern Ireland was £215,000 and its donations £204,000; the Labour Party’s income was £1,450 and it had no donations.

Those figures are available for anyone to look at on the website of the Electoral Commission. However, I cannot vouch that each party has put a donation in its own accounts as a donation which has been seen as recordable on the other side of the book with the Electoral Commission. Many of us might see a heavy subscription as a donation, but it might be called a subscription. There are certain health warnings on that, but it gives an idea of the fact that the Northern Ireland-wide income of the parties in that year was just over £2.8 million and the amount that is listed as donations is just over £900,000. Those are the figures and they give one a feel for the sort of numbers we are talking about.

I think I have covered the points made by noble Lords and I hope that the order will be accepted.

[Baroness Royall of Blaisdon]

Before the Minister sits down, I want to press him on one question on the option 3 transparency changes that might or might not be brought forward in secondary legislation. What sort of timeframe are we talking about for such secondary legislation?

[Lord Shutt of Greetland]

I cannot be absolute about this. All I can say is that because the extension ends on 1 March, clearly, moves have to be made now to move that further forward. As I understand it, people are working on this within the Northern Ireland Office because there is a general view that at least there will be an element of greater transparency. I certainly hope that we do not have to wait long to see if this can be done without primary legislation. It might be rather more difficult if we have to look at primary legislation.

Motion agreed.