Foreign Financial Influence and Interference: UK Politics

12.43 pm

I would like to make a statement on foreign influence and interference.

The responsibility of protecting our democracy is a duty that every single Member of this House shares. As a Government, we are clear-eyed about the evolving threats we must contend with from those who wish to disrupt our democracy for their own gain and their own twisted purposes. We already have a strong toolkit to detect, disrupt and deter interference, and we are strengthening it through our Representation of the People Bill and counter political interference and espionage action plan. But as threats evolve, so too must our protections. For this reason, I announced in December an independent review led by the former permanent secretary, Philip Rycroft, into foreign financial interference in UK politics. I would like to place on the record my thanks to Mr Rycroft for his thorough, diligent and swift work in rigorously assessing our political finance framework and identifying where further safeguards are needed. The full report from his review has today been laid before the House, and the findings are stark. Mr Rycroft concludes that this country faces a persistent problem of foreign interests seeking to exert influence on, and to interfere in, our politics, and that the threat has become arguably more acute. While he welcomes the measures in our Bill, the report is clear that we need to go further, and I agree.

We welcome Mr Rycroft’s assessment and his wide-ranging recommendations, which cover the regulation of corporate and overseas donations, the need to close loopholes used by some non-party campaign groups, the approach to combating online threats, the importance of ensuring that enforcement agencies have the information and powers they need, and the organisation of Whitehall to ensure that we are best placed to tackle these threats.

In advance of the Commons Report stage of the Representation of the People Bill, we will provide a comprehensive, line-by-line response to all the report’s recommendations. I am clear that, wherever necessary, we will amend the Bill to ensure that our defences against foreign interference are robust. Given the gravity of the threats we face and their level of seriousness, I reassure the House that we will take immediate action on the most serious loopholes set out in the report that allow illicit foreign money into our democracy.

British citizens living overseas have the right to participate in UK parliamentary elections, and that gives them the right to donate to parties or candidates they support. However, the report raises two fundamental concerns about such donations from overseas. First, the report is clear:

“Inevitably, tracing the source of funds offered by individuals living abroad is more complex than for domestic donations.”

Secondly, it raises concerns about the “democratic fairness” of allowing people

“who have chosen to live abroad in order to have their wealth taxed abroad”

none the less to

“have the opportunity to make potentially game-changing donations into British politics.”

I will therefore take immediate steps to implement the report’s recommendation on donations from overseas electors. We will introduce an amendment to the Representation of the People Bill to place an annual cap on the total political donations that an overseas elector can make. The cap will be set at £100,000 a year. In the light of the gravity of the issues raised in the report, I am not prepared to allow any window of opportunity in which malign actors based overseas can funnel dark money into our politics. The cap will therefore apply retrospectively, so it will include all donations from overseas electors received from today and all regulated transactions entered into from today.

Once the provisions are in force, any donations by an overseas elector to any political party or regulated entity that exceed the cap for that overseas elector will be an unlawful donation. Subject to parliamentary approval of the amendment that I will table, the recipient of any unlawful donation will have 30 days to return that donation once the legislation comes into force, after which enforcement action can be taken and criminal penalties will apply.

The cap will apply to relevant donations from today in all elections in the UK, including for parties at the upcoming English local elections, Scottish Parliament elections and Senedd elections. In Scotland and Wales, donations to candidates rather than parties are devolved matters, but my intention is to seek a legislative consent motion for our amendments to ensure that there are no gaps in our safeguards. I will speak to my counterparts in the Scottish and Welsh Governments to emphasise my commitment to work together to protect our electoral system right across the United Kingdom.

The second recommendation on which I will take immediate action relates to donations made in cryptocurrencies. Following extensive consultation, Mr Rycroft sets out clearly the deep reservations that many people have about such donations, and his conclusions are clear that

“there is a risk that cryptoassets are used as the vehicle to channel foreign money into the political system in the UK…we should pause the use of cryptoassets for political donations for the time being.”

I accept Mr Rycroft’s assessment that the anonymity inherent in cryptocurrency transactions could make it easier to mask the origin of donations and to evade robust checks on the true source of funds. The clear route that that creates for illicit channelling of money into our politics is unacceptable and undermines public confidence in our electoral system.

In the light of that, I can confirm that the Government will take immediate steps to implement the recommendation made in the report, and we will introduce an amendment to the Representation of the People Bill to place a moratorium on all political donations made through cryptocurrency. I want to be crystal clear: as the report recommends, I mean crypto in any amount, including donations of a value that would ordinarily fall below the threshold for control on donations. There are specific risks posed by cryptocurrency donations, such as the risk of rapid multiple small donations being made just below our current thresholds.

The moratorium will remain in place until the Electoral Commission and this Parliament are satisfied that there is sufficient regulation in place to ensure full confidence and transparency in donations that are made in that way. Subject to parliamentary approval, the moratorium will be applied retrospectively to any crypto donations received from today by any political parties and regulated entities. Once the provisions are in force, if a political party or regulated entity has received a donation in the interim, they will have 30 days to return it, after which enforcement action can be taken and criminal penalties will apply. That will again apply to all elections in the United Kingdom. As I have set out, we will work with devolved Governments to secure legislative consent where that is required.

I would like again to express my thanks to Philip Rycroft for his comprehensive, thoughtful and well-reasoned report. It is, and always will be, an absolute priority for this Government to protect our democratic and electoral processes. The swift and decisive action being taken by this Government sends a clear message: we will do everything necessary to protect the UK’s democracy. I commend this statement to the House.

Order. Those Members who have come into the Chamber extremely late will not be called to participate in the statement. Members have to be here for the beginning of a statement, not for the last minute of it.

I call the shadow Secretary of State.

I thank the Secretary of State for advance sight of his statement. I echo his thanks to Mr Rycroft for the work that he has done on a very important report. We began work in this area through the defending democracy taskforce, and I am glad to see the Minister for Security in his place to highlight the important link between the work of this report and the work that he does.

There should be no party political divide when it comes to protecting the integrity of our democracy, and there is a great deal in the report that my party instinctively agrees with. However, the process falls far short of what this House should expect. The 50-page Rycroft review was published just 20 minutes before Prime Ministers questions, and only five minutes before one of the Secretary of State’s Ministers was hosting a meeting to which I was invited about local government reorganisation, making it very difficult for me to read the detail of the report—[Interruption.] That made it very difficult for me to read the detail of an incredibly important report which, as I said, contains much with which we instinctively agree. This is not just poor procedure; it means that it is harder for the Opposition to scrutinise the actions of the Government properly, particularly in light of the fact that many of the proposals in the report are being initiated immediately.

Sadly, this follows a pattern of behaviour by this Government. The Representation of the People Bill has already been through Second Reading and is in Committee, yet today is the first time we are seeing important elements of a report that goes to the heart of that legislation. Foreign interference is growing and it demands a coherent response—a cross-party response—and yet this Government choose to legislate first and make announcements later. They brought forward the Representation of the People Bill before the Rycroft review had reported; they asked the House to scrutinise legislation that was full of holes, as the Secretary of State is now announcing from the Dispatch Box. This is not good process.

May I thank the shadow Secretary of State for his support for the purpose and intent of this legislation, and, indeed, for his and his party’s engagement with Philip Rycroft and his review? He lists the reasons that this is important to all of us and I agree with him. Certainly, I want to see both proper engagement with the Opposition and the opportunity for proper scrutiny, because that will strengthen the legislation. It is important that the legislation has cross-party support given the nature of the issue.

We had to act quickly to bring forward the provisions, because we could not allow a window of opportunity to open that would enable evasion by malign and hostile actors. Beyond that, the proposals will proceed in the usual way through the parliamentary processes and Members from all parts of the House will have the opportunity to comment and be engaged. It was necessary to act at speed because of the gravity of the threat that Philip Rycroft’s review outlined very clearly.

None of wants to allow foreign interference to continue. All of us believe that it is the right of the British people—and the British people alone—to freely choose their own Government. We will engage with Governments across the United Kingdom and parties across this Parliament to ensure that is the outcome.

I call the Chair of the Housing, Communities and Local Government Committee.

May I start by echoing the comments of the Secretary of State and the shadow Secretary of State, paying tribute to Sir Philip Rycroft for his tireless work? I also thank the Joint Committee on the National Security Strategy for its work on cryptocurrency?

We have to be honest and say that there is a lot of mistrust in our politics and democracy. I am proud to stand here as someone who was supported by two trade unions and local members in the funding of my campaign. We cannot say in one breath that we want to defend this country from foreign threats and then allow fundamentally opaque payment methods into our democracy. That is not on. It is therefore right that the Government put in place this moratorium on cryptocurrency donations. I welcome the Secretary of State’s pledge, as well as the cap on donations by overseas electors following the extension of their enfranchisement in the Elections Act 2022.

As is stated in the Rycroft review, one problem is the fact that no less than five Departments cover the responsibility for protecting our democracy. If we want to get this right, we need to continue with leadership at the heart of Government, so will the Secretary of State accept recommendation 17 and allocate a permanent secretary with lead responsibility for sustaining our democracy and co-ordinating the response to the threats at the heart of Government?

Will the Secretary of State also commit to ensuring that any amendments to the Representation of the People Bill as a result of the recommendations are tabled before Commons Report stage, so that Parliament can have adequate time to scrutinise the proposals?

I thank the Chair of the Select Committee for her questions and for her support for this work. The intention is to bring the amendments forward on Report. In advance of those amendments being laid, we will provide a detailed response to each of the 17 recommendations, including the one to which she has just referred.

I call the Liberal Democrat spokesperson.

I thank the Secretary of State for advance sight of his statement. I was grateful to meet Philip Rycroft as part of this important and urgent work.

The threat that we face is not new. Back in 2020, the Intelligence and Security Committee said that Russian influence in the UK is the “new normal” and that the Government then were not doing enough. Since then, we have seen Reform’s former leader in Wales being convicted for accepting pro-Russian bribes.

We have said before that the Representation of the People Bill is not nearly ambitious enough, so I very much look forward to working as part of the Bill Committee to incorporate the recommendations. Will the Secretary of State clarify whether the Government intend to accept just the two recommendations that he has focused on in his statement, or all of them?

On overseas donations, a cap is welcome, but does the Secretary of State accept that if this reform is made without wider changes, a malign actor could get around it simply by donating via a UK company? We strongly support the moratorium on all political donations made through cryptocurrency, but much more is needed to really seize this opportunity to clean up our politics. We should ban anyone who has served a foreign Administration from donating to UK political parties, think-tanks or campaign groups A significant opportunity remains for those who have been political appointees in hostile Governments to funnel donations into the UK.

We should also ban politicians from receiving payment for participating in the propaganda of foreign adversaries, on broadcasters like Russia Today and Iran’s PressTV. Will he also address why calls from the Liberal Democrats for Donald Trump’s Administration, and their explicit policy of interference in our democracy, to be included in this review were ignored? Will he order a stand-alone probe into that?

Let me thank the hon. Member for her and her party’s engagement with Philip Rycroft’s review. She is right to point to the growing threat; it has been evolving over recent years. She mentions the case of Nathan Gill, which underscores the nature and the gravity of that risk. Today I am accepting the report in general. We are bringing forward two provisions now, because had I not done so, a window for evasion would have been left open. We will provide a detailed response to all 17 recommendations. The amendments that we table will be open for parliamentary scrutiny and debate in the usual way. I look forward to her and her party making their views clear as we go through the process.

I welcome the Rycroft review and I very much enjoyed speaking to Philip Rycroft during the process. Beyond crypto and other financial donations, he says we need to tackle deepfakes, bots and disinformation; create a political ad library; and put in place greater investigatory powers for the Electoral Commission and an incident protocol should there be a major election incident. My amendments deal with all those points. Will the Secretary of State undertake to urgently meet me to see how we can take my currently named amendments and make them Government amendments at the Bill’s next stage?

I thank my hon. Friend for her support and her active interest in making sure that the legislation that follows is as robust as possible. I would be more than happy to make sure that she has a meeting with me or the relevant Minister to discuss her amendments. The report and its recommendations cover some of her concerns, and it is our intention to amend the legislation to deal with those concerns.

I call the Chair of the Public Administration and Constitutional Affairs Committee.

As a former elections policy Minister and member of the defending democracy taskforce, may I thank the Secretary of State for launching this inquiry? I also thank Philip Rycroft for his work; it was a pleasure to give evidence to him during that process.

I welcome the spirit in which the Secretary of State has brought forward with urgency the changes that are so demonstrably required. May I ask him two direct questions? If amendments to reflect the Rycroft report are not to be tabled at Committee stage but on Report, will he ensure through the usual channels that the length of time devoted to Report stage reflects the fact that the House will be debating for the first time amendments to the legislation, which were not included on Second Reading? That speaks to the process point made by the shadow Secretary of State, my right hon. Friend the Member for Braintree (Sir James Cleverly).

If these important new rules are to be policed effectively and properly, there will clearly be additional demands on the Electoral Commission both in terms of power and resource. What assessment has the Secretary of State made of those needs and how will they be delivered in speedy time to mirror the urgency that is required?

I thank the hon. Member for his support, for his work with the defending democracy taskforce and for contributing to Sir Philip Rycroft’s review. He is quite right that we want to make sure that there is adequate time on Report for Members to make their points, and I am sure that the business managers will ensure that that happens. Regarding resources for the Electoral Commission, we will need to ensure that the resources are adequate to meet any new demands placed on them or other regulators. That will be part of the process of ensuring that the legislation goes through and can be followed through on.