Tuesday, October 30, 2007

Full Market Value: Claw Back from Con Air Tories?

The Electoral Commission website is hard work, but it does have this summary of what PPERA says on 'notional expenditure', that is where permissible donors provide premises, good and services at less than the full cost:

The PPERA specifies that 'notional expenditure' must also be treated as campaign expenditure (Legislation and Donations). Notional expenditure is incurred when a party receives benefits in kind, i.e. when someone else bears the costs that a party would otherwise have been liable for; for example, a party supporter might pay half the costs towards a party's advertising campaign. The amount paid by the supporter would be treated as notional expenditure and would be counted as campaign expenditure incurred by the party.

The nitty gritty of how such expenditures should be valued appears to be in section 53 of PPERA which I cannot find online just now. But the following is section 5 of schedule 16 of PPERA and has the title I'm looking for at least. Looks like it has the answers too. The emphasis in bold is mine:

Value of donations

5(1)The value of any donation falling within paragraph 2(1)(a) above (other than money) shall be taken to be the market value of the property in question.
(2)Where, however, paragraph 2(1)(a) above applies by virtue of paragraph 2(2) above, the value of the donation shall be taken to be the difference between
(a)the value of the money, or the market value of the property, in question, and
(b)the total value in monetary terms of the consideration provided by or on behalf of the candidate or his election agent.
(3)The value of any donation falling within paragraph 2(1)(b) above shall be taken to be the value of the money, or (as the case may be) the market value of the property, transferred as mentioned in paragraph 3(1) above; and accordingly any value in monetary terms of any benefit conferred on the person providing the sponsorship in question shall be disregarded.
(4)The value of any donation falling within paragraph 2(1)(d) or (e) above shall be taken to be the amount representing the difference between
(a)the total value in monetary terms of the consideration that would have had to be provided by or on behalf of the candidate or his election agent in respect of the loan or the provision of the property, services or facilities if
(i)the loan had been made, or
(ii)the property, services or facilities had been provided,
on commercial terms
, and
(b)the total value in monetary terms of the consideration (if any) actually so provided by or on behalf of the candidate or his election agent.
(5)Where a donation such as is mentioned in sub-paragraph (4) above confers an enduring benefit on the donee over a particular period, the value of the donation—
(a)shall be determined at the time when it is made, but
(b)shall be so determined by reference to the total benefit accruing to the donee over that period.
(6)In this paragraph “market value” in relation to any property, means the price which might reasonably be expected to be paid for the property on a sale in the open market.

Clearly, patently, I am no expert in these matters. But it does seem obvious to me that Ashcroft's donations of travel services in his jet are (a) not permissible as the company is offshore and this has not been travel on a trip to meet the donor; and (b) must be recorded in any case at FULL MARKET VALUE.

Again obviously, this is not the same as marginal cost or substitute or alternate cost. Full market value means "the price which might reasonably be expected to be paid for the property on a sale in the open market".

This is the amount that should have been recorded even if the donations had been from a permissible source and this is the amount which should now be clawed back from the Conservatives for each and every non permissible donation of air travel from Flying Lion. Not the pootling amounts actually recorded.

Presumably the same kind of Market Value assessment is required also in the register of members interests? Let's throw the book at the Tories for this, and at Ashcroft and Flying Lion in so far as they knew about this under reporting.

UPDATE: Dizzy is still spewing flames from his tale in a dark death spiral in comments here. Is anyone saying that the donor's actual cost of aviation fuel and wages and airport dues must be declared? These are just the tip of the iceberg running one of these things anyway. I'm certainly not saying that. The actual test as specified above is the open market value for the service actually received.

Let me provide a practical example for hard of thinking Tories everywhere. If someone buys the Conservatives 100 proper luxury commercial poster sites for political material and they are used for dog whistles and disgraceful lies and then it comes to registering the donation you cannot say:

"But we could have done this with flyposting/fliers/word of mouth/freesheet ads/pirate hoardings for one tenth of this cost so we'll register that amount instead".


Anonymous said...

Unfortunately, you're looking at a Schedule that doesn't apply save once an election is called - see paragraph 1 (1) of the Schedule you refer to (Schedule 16).

Schedule 7 is the appropriate schedule to apply and when dealing with overseas trips, the Electoral Commission website provides quidance in the document at http://www.electoralcommission.org.uk/files/dms/DontionsandloansMPFinalV2_23780-8606__E__N__S__W__.pdf ... see para 4(2).

Now I entirely accept that a different interpretation can be placed on the rules than that applied to them by the Electoral Commission, but where the electoral commission provides such express guidance, I doubt that the PSB would decide that someone who has followed the Electoral Commission's guidance should be punished for a breach of the rules in the Schedule.

The difficulty with these sorts of investigation is that the rules are, inevitably, complex; and there is a tendancy to think that you have stumbled on something major, when in fact, you haven't.

If you want to take the complaint further, contact the PSB and the Electoral Commission and put your interpretation to them and say that they ought to amend the guidance ...

Chris Paul said...

Thanks Evan, I will take a look, but as I began in this post the Electoral Commission web site is hard work. I might add that it has lots of circular arguments and in the event of a dispute I'd be relying on the Act and the Schedules not the EC site. Why would there be a completely different basis to cost donations in kind once a campaign is underway than otherwise?

Chris Paul said...

That link seems to be broken "sorry this page no longer exists".

Tim J said...

Just use opsi


There you are - the Act in question

Chris Paul said...

Thanks very much Tim, I have been on and off that page all day without realising that the whole thing is there and not just the parts hotlinked from the index. Her's a clicky link for other readers.

And thanks Evan that link seems to have repaired itself somehow ... perhaps blogger was playing up. Although I can see several interpretations of the text - which as you say could be improved - it is interesting that the example given of an overseas donor covering the cost of a trip is where that donor is hosting the trip, rather like my suggested examples. Not just footing the bill for all sorts of travel unrelated to their own interests. I still think this latter case is beyond what was envisaged and could be considered to be "chancer" behaviour - what Ashcroft/Flying Lion is doing is far more like giving cash, and the costs are disproportionate.

And here's a clicky link to that one.