Foreign Interference in UK Politics

As previously announced, we will introduce a moratorium on all political donations of any amount made via cryptocurrency. Until the regulatory environment is robust enough, donations in cryptocurrency should not be a route for money to be channelled into British politics.

Mr Rycroft outlined clearly the ways in which he believes the corporate donations provisions in the Representation of the People Bill can be tightened. Having carefully considered his reasoning, we will amend the corporate donation test so that it is based on post-tax profits, rather than revenue measured over five years. No corporate donor should be able to put more into UK politics than it has made in post-tax profits. That makes it clear that corporate political donations must be rooted in genuine UK-based economic activity, closing a potential loophole that our adversaries might exploit.

To ensure that our reforms to the political finance framework are robust and enforceable, we will introduce a new donor declaration to be made by anyone donating above a specified threshold. We will engage with the Electoral Commission and political parties as we develop the declaration, including an appropriate threshold.

Mr Rycroft sets out the positive impact that the new “know your donor” rules will have in helping to ensure that parties act in the public interest. He also sets out his concerns about the rigour of those rules. We will strengthen the “know your donor” requirements in the Bill, adding location as a risk factor in parties’ due diligence around donations.

We will also strengthen rules and transparency on donations to candidates. Mr Rycroft highlights significant risks in the current rules around these donations, as well as a lack of

“transparency around what is spent, or around the donations being used to fund this spending”.

We will therefore require candidates to declare that donations used to fund campaigning prior to formally becoming a candidate are from permissible sources. Donations made during that period above £2,230 will need to be declared.

We will give the Electoral Commission stronger tools to do its job. Mr Rycroft reports that

“basic transparency requirements are essential to sustaining public trust”,

and that there is currently

“unnecessary inhibition on the enforcement powers of the Commission.”

We agree. We will therefore provide a clear statutory basis for standardised political finance reporting that will make the data easier to compare, scrutinise and enforce. We will create a broad, reciprocal information-sharing gateway, allowing the commission to work more effectively with relevant public authorities. We will extend the commission’s powers to require information outside a formal investigation, which means earlier scrutiny, faster action and stronger enforcement where risks emerge. These reforms will give the regulator the powers needed to protect the integrity of political finance.

We will strengthen enforcement. The most serious breaches of electoral law, especially involving foreign interference, must be met with the right expertise and capacity. Mr Rycroft concludes that the “robustness” of the current enforcement arrangements require

“the police apparatus…to hold the requisite expertise and to be adequately resourced…to deal with the complex instances of criminal breach of electoral law”.

We will therefore work across Government and with policing partners to strengthen and formalise national capability in this area. We also accept that criminal thresholds and sentencing must provide a credible deterrent. We will work at pace with law enforcement, the Electoral Commission, prosecuting authorities, devolved Governments and political parties to develop proposals.

We will also strengthen our response to the wider influencing environment, including hostile state activity online. Mr Rycroft makes important points concerning the dramatic change in recent years to the context in which our democratic process functions, and how this has

“created new opportunities for malign foreign influence”,

regardless of whether money is changing hands in the UK. We will never stop working to counter interference in our democracy. As information threats continue to evolve, we are taking robust action to tackle misinformation and disinformation, improving transparency in online political campaigning, building resilience to information manipulation, and supporting those at the very heart of our democratic system to identify and respond to emerging threats. We will also consider further reforms relating to online political advertising, digital imprints, lobbying transparency, and other routes through which foreign money may seek to influence our politics. That will include looking at the adequacy of the current regulated period, and taking forward work on artificial intelligence and algorithms.

Finally, we accept the need for clear leadership and stronger co-ordination across Whitehall. Following Mr Rycroft’s recommendation, the Cabinet Secretary has given the permanent secretary of the Home Office lead responsibility for sustaining our democracy.

This is a serious and substantial package of reforms that will bring more transparency to political finance, tighten donation rules and strengthen enforcement. This response shows the Government acting now where action is needed. This is a Government who are prepared to do the long-term work to keep our system secure. I thank Philip Rycroft for his important work. The Government will now move swiftly to implement his recommendations. The people of the UK must know that their elections are free, fair, and protected from foreign interference. I commend this statement to the House.

Parliamentary questions have shown that there has been no engagement with the House of Commons—with the Committee on Standards, the registrar, or the Parliamentary Commissioner for Standards—despite changes directly relating to the registration of donations by Members, and despite this House’s code of conduct. Yet again, the Government are making announcements, such as changing the policy on a cap on donations and changing the rules on candidate donations, with zero consultation. Without stepping into matters that are the remit of the Parliamentary Commissioner for Standards, I note that it is already the case that newly elected MPs are supposed to declare gifts and donations that they received in the past 12 months.

There also appears to be uncertainty about the scope of the new requirements relating to candidate donations. It is not yet clear which categories of elected officials the provisions will cover, and I would be grateful if the Minister could clarify that. What assessment has been made of the impact of the new profit test on the ability of all political parties to undertake sponsorship and advertising at their party conferences? Have the Government properly considered with the Electoral Commission the interaction of the new requirements with the proposed draft guidance on sponsorship? Does the Minister think that a company sponsoring a lounge or a lanyard is foreign interference? Had the Government engaged fully with political parties, electoral administrators, compliance professionals and other stakeholders before announcing their response, many of these practical difficulties and unintended consequences could have been identified and addressed at an earlier stage.

To be clear, we support measures that genuinely strengthen the resilience of our democratic system. We recognise the risks associated with cryptocurrency donations and agree that safeguards are necessary. We also support tighter rules governing donations in the period immediately before elections. However, good policy requires more than good intentions; it requires engagement and a willingness to listen to those responsible for implementing the rules. The protection of our democracy is too important to be pursued through retrospective legislation and measures whose practical consequences have not been fully thought through.

Unfortunately, this is a Government who talk about defending democracy while trying to cancel local elections for two years in a row; who amended the electoral system for mayors for partisan advantage; and who changed the laws on election pilots in complete secrecy. They are now gerrymandering local government boundaries. The official Opposition will work constructively with the Government to defend the national interest from foreign interference, but Ministers would be wise to step back from US-style, hyper-partisan legislation, and actually learn to consult.

We need a much more transparent system to ensure that the British people have faith in politicians. What the Minister has announced today will close loopholes, but too many will remain. Will she consider exploring the benefits of a cap on donations from UK donors, and year-round spending caps by political parties and candidates? That is the way in which loopholes are truly closed.

Finally, can the Minister gives us some insights into how this important work will be handled across the multiple ministerial Departments and agencies? It involves the Foreign, Commonwealth and Development Office, the Home Office, the Department for Science, Innovation and Technology, the Ministry of Housing, Communities and Local Government, and the Cabinet Office. The Minister is very able, but she is the Minister for Building Safety, Fire and Democracy. Does she agree that a more streamlined portfolio is what our democracy deserves?