HL Deb 10 January 2000 vol 608 cc75-6WA
Lord Shore of Stepney

asked Her Majesty's Government:

What articles in the European Treaties and what regulations, directives or decisions made with the authority of those Treaties, and what judgments made by the European Court of Justice require the United Kingdom to permit companies in the European Union, not incorporated in the United Kingdom, to donate funds in support of one or other side in a United Kingdom referendum campaign; and what they will do to mitigate or limit the effects of such foreign donations on domestic electoral affairs. [HL415]

The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton)

Article 43 of the Treaty establishing the European Community (TEC) prohibits restrictions on the freedom of establishment of nationals of a member state in the territory of another member state. This right of establishment includes the right to choose the appropriate legal form of establishment. The European Court of Justice has held (inEuropean Community Commission v France {case 270/83}) that any recourse by a national authority to the concept of public policy, under Article 46 of the TEC, in order to justify legislation departing from the principles of free movement would have to presuppose the existence of a genuine and sufficiently serious threat to the requirements of public policy affecting one of the fundamental interests of the society in question. The Government do not believe that donations by a business to political parties or to other organisations campaigning in a referendum fall into this category.

Under the provisions of the Political Parties, Elections and Referendums Bill, incorporation in the European Union will not be sufficient on its own to bring a company within the list of permissible donors. In order to qualify as a permissible donor a company so incorporated must also carry on business in the United Kingdom. Such a company may be directly affected by the outcome of a referendum in this country and accordingly has a legitimate role to play in the conduct of the referendum.