Political Parties, Elections and Referendums Bill — Tax relief for donations to political parties — 13 Mar 2000

As amended in the Committee and the Standing Committee, considered.

Ordered,

That the Political Parties, Elections and Referendums Bill, as amended, be considered in the following order, namely: New Clauses, amendments relating to Clause 1, Schedule 1, Clause 2, Schedule 2, Clauses 3 to 28, Schedule 3, Clauses 29 to 44, Schedule 4, Clauses 45 to 56, Schedule 5, Clauses 57 to 64, Schedule 6, Clause 65, Schedule 7, Clauses 66 to 72, Schedule 8, Clauses 73 to 87, Schedule 9, Clause 88, Schedule 10, Clauses 89 to 103, Schedule 11, Clause 104, Schedule 12, Clauses 105 to 111, Schedule 13, Clause 112, Schedule 14, Clause 113 to 123, Schedule 15, Clauses 124 to 128, Schedule 16, Clause 129, Schedule 17, Clause 130, Schedule 18, Clauses 131 to 138, Schedule 19, Clauses 139 to 149, Schedules 20 and 21, New Schedules.--[ Mr. Mike O'Brien. ]

(a) may participate with any relevant local authority in the joint submission of proposals falling within section 10(1) of the Representation of the People Act 2000 (pilot schemes); and

(b) shall have such other functions in relation to--

(i) orders and schemes under section 10 of that Act, and

(ii) orders under section 11 of that Act (revision of procedures in the light of pilot schemes),

as are conferred on the Commission by those sections.

(2) Where any scheme under section 10 of that Act falls to be implemented following the approval by the Secretary of State of proposals jointly submitted by the Commission and a relevant local authority as mentioned in subsection (1)(a) above, the Commission may, in connection with the implementation of the scheme, provide that authority with such assistance (except financial assistance) as the Commission think fit.

(3) In this section "relevant local authority" has the same meaning as in section 10 of that Act.'.-- [Mr. Mike O'Brien.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

Madam Speaker:

With this, it will be convenient to discuss Government amendments Nos. 6, 7 and 131.

the Government should consult the Commission before making or proposing any changes relating to electoral law and administration.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

(2) Any payment out of public funds received by a registered party shall (subject to section 46(1)(a) and (b)) be regarded as a donation received by the party from a permissible donor.

(3) Any donation received by a registered party shall (if it would not otherwise fall to be so regarded) be regarded as a donation received by the party from a permissible donor if and to the extent that--

(a) the purpose of the donation is to meet qualifying costs incurred or to be incurred in connection with a visit by any member or officer of the party to a country or territory outside the United Kingdom, and

(b) the amount of the donation does not exceed a reasonable amount in respect of such costs.

(4) In subsection (3) "qualifying costs", in relation to any member or officer of the party, means costs relating to that person in respect of--

(a) travelling between the United Kingdom and the country or territory in question, or

(b) travelling, accommodation or subsistence while within that country or territory.

(5) Any donation received by a registered party from a trustee of any property (in his capacity as such) which does not constitute a donation transmitted by the trustee to the party--

(a) on behalf of a person who, at the time of its receipt by the party, is a permissible donor, or

(b) in pursuance of a bequest made by such a person as is mentioned in section 48(3),

shall be regarded as a donation received by the party from a person who is not a permissible donor.'.-- [Mr. Mike O'Brien.]

Brought up, and read the First time.

Motion made, and Question proposed, That the clause be read a Second time.--[ Mr. Mike O'Brien .]

any donation received by a registered party by way of a donation by a trustee, in his capacity as such, shall be regarded as a donation received by the party from a person who is not a permissible donor.

In recommendations 22 and 23 of their report, the Neill committee addressed the wider issue of donations to individual members of political parties or to unofficial groups within a party, as distinct from donations to political parties as such. The Government sympathises with the view that the principles of openness and accountability should apply equally to such donations.

from a person who is not a permissible donor.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

(2) The Commission shall make arrangements for functions transferred to them by an order under subsection (1) to be exercised by the Boundary Commission for Scotland.

(3) Where each of the functions of the Scottish Commission is transferred by an order under subsection (1), the Scottish Parliament may by order make provision for the abolition of the Scottish Commission.

(4) An order under subsection (1) or (3) may include provision for the transfer to the Commission.

(a) of the staff of the Scottish Commission, and

(b) of any property, rights and liabilities to which the Scottish Commission are entitled or subject;

and an order which contains provision such as is mentioned in paragraph (b) may in particular provide for the order to have effect despite any provision (of whatever nature) which would prevent or restrict the transfer of the property, rights or liabilities otherwise than by the order.

(5) An order under subsection (3) may include provision for the abolition of any duty in compliance with which the Scottish Commission was established or constituted.

(6) An order under this section may contain any appropriate consequential, incidental, supplementary or transitional provisions or savings (including provisions amending, repealing or revoking enactments).

(7) Any power of the Scottish Parliament to make an order under this section shall be exercisable by statutory instrument.

(8) The expenditure of the Commission, so far as attributable to the exercise of any functions transferred by an order under subsection (1), shall be met by the Scottish Parliament.'.-- [Mr. Grieve.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker:

With this, it will be convenient to discuss the following amendments: No. 140, in schedule 1, page 99, line 21, at end insert--

Motion and clause, by leave, withdrawn .

(b) one member of that party was elected to the House of Commons and not less than 150,000 votes were given to candidates who were members of that party.

(4) If an individual makes a qualifying donation he shall be entitled, on making the payment, to deduct and retain out of it a sum equal to basic rate tax thereon.

(5) Where a sum is deducted under subsection (4) above the sum deducted shall be treated as income tax paid by the person to whom the payment is made.

(6) Any person by whom a qualifying donation is received shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (5) above is treated as income tax paid by him; and any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the qualifying political donation to which it relates.

(7) The following provisions of the Management Act, namely--

(a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act,

(b) section 30 (tax repaid in error, etc) apart from subsection (1B),

(c) section 86 (interest), and

(d) section 95 (incorrect return or accounts),

shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.

(8) In the application of section 86 of the Management Act by virtue of section (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment ('the relevant year of assessment') under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date--

(a) is 1 January in the relevant year of assessment in a case where the person falling within subsection (5) above has made a relevant interim claim; and

(b) in any other case is the later of the following dates, that is to say--

(i) 1 January in the relevant year of assessment; or

(ii) the date of the making of the payment by the Board which gives rise to the assessment.

(9) The Board may by regulations make provision--

(a) for the purposes of any provision of this section which relates to any matter or thing to be specified by or done in accordance with regulations;

(b) with respect to the furnishing of information by donors or recipients, including, in the case of recipients, the inspection of books, documents and other records on behalf of the Board; and

(c) generally for giving effect to this section.

(10) In this section--

'financial year' in relation to any person means a financial year of that person for the purposes of the relevant regulations;

'interim claim' means an interim claim within the meaning of the relevant regulations;

'relevant interim claim' means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person's financial year, an interim claim made for a period falling wholly or partly within that financial year; and

'the relevant regulations' means regulations made under subsection (9) above.

(11) Section 839 of this Act shall apply for the purposes of this section to determine whether one person is connected with another".'.-- [Mr. Walter.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

We consider this proposal important, because it goes to the heart of our democratic process and the party system. It would introduce a tax relief at the basic rate of tax on political donations up to £500 a year. The wording is based on the mortgage interest relief at source--MIRAS--scheme and the charities gift aid schemes, so it has some tax precedents.

Opposition Members have never believed that we should cherry-pick the Neill recommendations. We think that, as far as possible, they should be implemented in full, and that is what the new clause would bring about. We must make what is, perhaps, a philosophical choice about whether we want our political parties to be directly funded by taxpayers--I know some hon. Members would sympathise with that view--or whether we want to implement a procedure to encourage more voluntary donations to political parties. The new clause would encourage voluntary donations.

In evidence to the Neill committee, the Conservative party said:

Rather than call for state funding we would welcome the Committee's views about how more individuals could be encouraged to donate. We note that in some countries individuals are offered tax relief for political donations, elsewhere tax credits or matching grants are provided. We believe that the Committee should give serious consideration to the practicalities of these approaches in the context of the United Kingdom's voluntary system.

Tax relief by deduction at source should be introduced, limited to the basic rate, on donations of up to £500 a year to eligible registered political parties.

Political parties should be eligible to claim under the tax relief scheme if at the last general election two members of the party were elected to the House of Commons or one member was elected and the party won at least 150,000 votes.

The Government do not believe that that is the appropriate way to respond to the Neill committee, which proposed a package of recommendations that should be considered together. That is why I shall ask the Committee to reject the new clause.

The question of whether there should be tax relief for donations to political parties--and, if so, how it should operate--must be considered alongside all the proposed measures that we intend to publish in the draft Bill before the summer.

We should not try to deal with this one aspect in isolation.

It is also necessary to consider the issue of tax relief for donations to political parties alongside the review of tax relief for charitable donations--something that we are already working on with the charitable sector. It would be most unfortunate if the system appeared to be more generous in relation to smaller donations to political parties than in relation to smaller donations to charities.

I urge hon. Members to await publication of our draft Bill on donations to political parties and campaign expenditure. I hope that, in the spirit of fraternity . . . the hon. Member for Bognor Regis and Littlehampton will agree to withdraw the new clause.--[ Official Report, Standing Committee B , 22 June 1999; c.778.]

I think that as a weapon for the political parties to build up their membership base in particular . . . as part of that armoury as long as it was structured in a way that was designed to benefit the small donations, I wouldn't be against it.

I think that this is a very attractive idea. I think anything that encourages people to participate in a political process, to get involved in political parties, to broaden the base of their membership is to be welcomed because I think politics is a very honourable profession and supporting a political party is a very worthwhile way of spending one's time and money.

Tax relief is of value only to people who pay tax--

and where the donations given are of significant size. It would be of little value to the Labour Party, which has 400,000 members who are paying an average of £20 each to the Labour Party's coffers. It would be of enormous value to our opponents.

Tax relief by deduction at source should be introduced, limited to the basic rate, on donations of up to £500 a year to eligible registered political parties.

Political parties should be eligible to claim under the tax relief scheme if at the last general election two members of the party were elected to the House of Commons or one member was elected and the party won at least 150,000 votes.

Question put, That the clause be read a Second time:--

The House divided: Ayes 150, Noes 272.

Historical Hansard | Online Hansard |