Political Donations

I beg to move,

That this House has considered e-petition 707189 relating to the rules for political donations.

It is a pleasure to serve under your chairship, Mrs Harris. I begin by thanking Mr Jeremy Stone, who is here today, for starting this petition, and congratulate him on gathering more than 140,000 signatures, which is a fantastic feat. The petition, titled “Tighten the rules on political donations”, states:

“We want the government to…Remove loopholes that allow wealthy foreign individuals to make donations into UK political parties (e.g. by funnelling through UK registered companies)…Cap all donations to a reasonable amount…Review limits on the fines that can be levied for breaking the rules…We think that ultra-rich individuals or foreign state actors should not be able to use their money to give unfair advantage to a political party in order to further their own agenda.”

I think that is a principle that all of us here will agree with—that foreign interference through donations has no place in British elections or politics, and that democracy cannot be for sale.

I declare an interest: I am a member of Unite the union and I have received donations from both Unite and the Communications Workers Union, the full details of which are freely available on my MP profile on the UK Parliament website. Functions like this mean that we, as MPs, can be constantly transparent and honest to our constituents about where money is flowing in politics. As a member of a political party, I am very aware of how much parties rely on donations; however, donations can become concerning when their origins are unclear and the public cannot be sure whether some foreign interference, or any other suspicious dealings, may have slipped through the cracks in the rules.

About a month ago, my hon. Friend the Member for South Dorset (Lloyd Hatton) introduced a similar debate on political finance rules, which covered a lot of the points that I am sure will be mentioned again today. He similarly began by declaring his interest of being a member of a political party, a sentiment that many others here will echo. He used his speech to highlight Transparency International’s research on questionable sources of donations.

In particular, the group found that almost £1 in every £10 reported by political parties and their members since 2001 has come from unknown or questionable sources. Some £13 million comes from donors who are alleged, or proven, to be intermediaries for foreign funds or hidden sources; £10.9 million comes from companies that have not made sufficient profits to support the political contributions that they have made; and £4.6 million comes from foreign Governments, Parliaments and regime-linked groups.

Reported donations from private sources are growing, from £30.6 million in 2001 to £85 million in 2023. That is unsurprising, given that, in this period, former Governments increased campaign spending limits by 45% to be in line with inflation, meaning that the larger parties’ de facto fundraising targets rose to around £100 million in the major election years. The previous Government also increased the threshold for reporting donations by 50% in 2023, thus demonstrating how complex the system is.

Alongside that, the Elections Act 2022 constrained the independence of the Electoral Commission and banned it from prosecuting criminal offences under electoral law. The Electoral Commission said:

“The UK Government does not consider this to be an area of work we should undertake and considered it to duplicate the work of the Crown Prosecution Service…and Public Prosecution Service Northern Ireland”.

Ministers can now even set the Electoral Commission’s strategy and policy priorities through their own strategy and policy statements. Transparency International said:

“This is inconsistent with international good practice, unnecessary, and fetters the Commission’s independence.”

The hon. Member is making a very good speech. With her permission, I might just broaden the concept of a political donation, because, in many ways, it is not always quite as simple as a cheque hitting a given political party’s bank account. Whatever one thought of him—he was a great man in Scottish politics, and is no longer with us—it is a fact that Alex Salmond, for a number of years, hosted a show in his own name on RT, a Russian television channel, on which he, on a regular basis, put forward views that were not always particularly helpful to the concept of a United Kingdom. That seems to me to be a subtle way of foreign Governments influencing decisions and trying to interfere.

I thank the hon. Member for his contribution, and I agree with his point.

At the time of the Elections Act 2022, the House of Commons Levelling Up, Housing and Communities Committee, whose corresponding Department was responsible for introducing the Act, also concluded that there was no need for such statements and no evidence to justify their introduction. The recent Backbench Business Committee debate on political finance rules mentioned some case studies and evidence from previous elections of overseas donations. For example, the 2020 report of the Intelligence and Security Committee found that Russian oligarchs had used their business interests, donations to charities and political parties to influence UK affairs.

My hon. Friend is making an excellent speech. She talks about the considerable parliamentary interest in this issue; we know there is considerable interest among the public too, because of the number of signatures on Mr Stone’s petition. Is she also aware that survey evidence has indicated that over three quarters of those polled do not want foreign nationals not registered to vote here to be able to donate to our political parties? As a result, does she agree that we need to see legislative change?

I absolutely agree that we need to see change; my right hon. Friend makes the point very well.

More recently, as people will be aware, Elon Musk proposed to donate a large sum to Reform UK. While he could not make a personal donation, there are ways that he could get around the rules, which I will describe. The current rules on donations to political parties are defined in the Political Parties, Elections and Referendums Act 2000, which is based on the 1998 report by the Committee on Standards in Public Life, “The Funding of Political Parties in the United Kingdom”. A lot of what I have said already demonstrates how complex this area is.

The Committee summarised the purpose of the rules by saying that

“what happens here is the concern of those who live and work here and the political parties should not be entitled to fill their coffers with donations from abroad, made by persons and corporations who have no genuine stake in the country.”

More recently, the Elections Act 2022 changed the electoral rules, removing the 15-year limit on the voting rights of British citizens living overseas to vote in UK parliamentary elections, and allowing them to register on the electoral roll and donate to political parties without a time limit.

To be clear, under current UK electoral law, foreign donations are banned as they are not a “permissible source.” Permissible sources include individuals on the UK electoral register, UK registered companies, trade unions, unincorporated associations and limited liability partnerships, or LLPs. It is worth noting that, under the rules, parties can accept donations or loans with no upper limit, as long as they come from one of those permissible sources. Donations are defined as

“money, goods or services given to a party without charge or on non-commercial terms, with a value of over £500.”

The hon. Member made an interesting point about the role of companies, and specifically referred to Reform UK. Will she join me in putting on the record that Reform UK is not a political party like most of ours are, but in fact a limited company registered at Companies House, with the primary shareholder being the hon. Member for Clacton (Nigel Farage)? Does she agree that, where necessary, any change to legislation needs to incorporate such risk factors?

I fully agree with the statement the hon. Member has just made.

The Electoral Commission, the independent regulator for the rules, has said that, at present, donations can be made using funding from otherwise impermissible sources, including from overseas. There are variable monetary penalties from the Electoral Commission for breaking the rules, which are outlined in the Political Parties, Elections and Referendums Act. These can be between £250 and £20,000, depending on the severity of the breach, which is another area that the petition seeks to address.

There are many electoral reform recommendations from independent bodies that address some of the concerns in this petition. In relation to fines for breaking the rules, the 2021 report by the Committee on Standards in Public Life recommended reviewing the maximum fines that can be issued for breaking electoral rules, saying that the maximum fine the Electoral Commission may impose

“should be increased to 4% of a campaign’s total spend or £500,000, whichever is higher”.

The Electoral Commission supports that, saying in 2020:

“The Scottish Parliament recently raised the maximum fine to £500,000 for Scottish referendums, and we believe this would be a reasonable benchmark for the maximum fine in relation to other parts of the UK’s political finance regulations”.

Additionally, the Committee on Standards in Public Life recommends that political parties introduce caps on donations. It said:

“A cap of £10,000 should be placed on donations to a political party or regulated donee from any individual or organisation in any year.”

Similarly, Australia’s new electoral reform Act imposed caps on political donations and electoral expenditure, after recent elections where a multimillionaire donated 117 million Australian dollars to a political party.

A 2020 report from Parliament’s Intelligence and Security Committee found:

“Several members of the Russian elite who are closely linked to Putin are identified as being involved with charitable and/or political organisations in the UK, having donated to political parties”.

It is really important that we close these loopholes so that we are not at risk of Russian interference.

I agree with my hon. Friend. To further close loopholes that allow foreign interference, the Committee on Standards in Public Life added that the Government

“should legislate to ban foreign organisations or individuals from buying campaign advertising in the UK.”

As public office holders, we are all beholden to the seven principles of public life, known as the Nolan principles: selflessness, integrity, objectivity, accountability, openness, honesty and leadership. To dedicate ourselves to these principles, we must ensure that there is no question about the transparency and lawfulness of the donations that we receive. Any rules regarding electoral donations must reflect and represent those principles, which we hold dear.

The Labour manifesto promised to

“protect democracy by strengthening the rules around donations”.

In December, the Prime Minister’s spokesman confirmed that the Government are committed to

“strengthening the rules around donations to political parties.”

Regarding the commitment to reviewing the rules on political donations, he said there will be a

“relevant update in due course.”

In her response to the debate in March, the Minister agreed that foreign money has no place in the UK electoral system, and that the current rules do not provide strong safeguards. She also made clear the crucial role that the Electoral Commission has, and the possibility that its roles and responsibilities may change.

There is much evidence and many policy interventions to be considered before the Government’s approach to electoral reform is published. However, now is the time for robust legislation that works. I look forward to hearing the Minister’s response, and the contributions of hon. Members from both sides of the House.

I remind Members who wish to speak that they should bob, and they need to have been here from the beginning of the debate. Interventions—should Members take them—are meant to be just that: short and relevant to the points being made.

I point out to Members that if you mention a current Member by constituency, you need to have formally informed them beforehand, so that they will know they have been mentioned. I call Jamie Stone, Chair of the Petitions Committee.

Thank you, Mrs Harris. I do not want to add much to what I said in my intervention. This is a very dangerous principle. I have people saying to me in the street, “It’s getting like America—you can buy political results, politicians and policies.” This strikes me as fundamentally dangerous. We call ourselves the mother of Parliaments, and we pride ourselves on the way we do democracy in this country. Every time such things are said to me, I feel that another little brick has been taken out of the edifice of what we do.

As the Chair of the Petitions Committee, I thank the petitioners for bringing forward the petition, which expresses what an awful lot of people out there think. The very fact that the Committee, which I have the honour of chairing, gets the honour of a Government reply each time we have a petitions debate strikes me as a very good thing indeed.

I will leave my comments there. As I said in my intervention, there are more subtle ways of influencing politics in any country than a cheque or cash in the bank. We need to be constantly vigilant.

I thank my hon. Friend the Member for North Ayrshire and Arran (Irene Campbell) for leading the debate.

The Labour manifesto pledged to

“protect democracy by strengthening the rules around donations to political parties.”

I am pleased that these important proposals are being developed. Both today’s debate and the 2021 recommendations of the Committee on Standards in Public Life focus on foreign money entering the UK via companies and unincorporated associations, but I urge the Government, when they develop their proposals, to go further than that.

In 2009, Lord Campbell-Savours of Allerdale, who also happens to be my father, was involved in the tortuous debates in the other place before the passing of the Political Parties and Elections Act 2009. He and other Members worked to secure an amendment to the Government’s proposals. That amendment meant that individuals giving or loaning more than £7,500 to a political party must be resident or ordinarily resident and domiciled in the UK for the tax year in which the relevant donation or loan is made.

The Bill and the amendment were later given Royal Assent, but that clause, as with many other provisions of primary legislation, was subject to the development of commencement regulations. At the time, the Minister of State envisaged that secondary legislation would be completed not long after the summer of 2010. A general election interrupted that process. However, primary legislation is still in place, ready to be enacted—a quick win, one might say.

As has been said, the Conservatives enormously expanded the number of foreign residents eligible to donate to political parties in our country by removing the 15-year limit on British citizens overseas being able to vote and donate to a political party. Now, up to 3.5 million overseas residents can influence elections.

The hon. Member may not be aware that nearly $20,000 was donated from the United States to Sinn Féin’s 2017 Assembly election campaign—representing nearly one third of Sinn Féin’s spending in that election. Those who have been so exercised by political donations here have often done nothing to close the loophole that allows huge amounts of foreign money to influence politics in Northern Ireland. Nowhere else in the world would it happen that someone would be paying the bills of a foreign political party, yet that is what seems to happen with Sinn Féin. Does he agree that this loophole must be closed very quickly?

The hon. Member is quite right: I was unaware of that.

Under the rules set out the amendment, and made into law, these people would still be able to vote, and could even stand for election—arguably, that would be legitimate participation—but they could not spend money to disproportionately influence the outcome of elections in a country where they do not pay tax. Who runs this place should be a matter decided by those who live and pay their way here; it is they who live with the consequences of those electoral outcomes.

It is an honour to serve under your chairship, Mrs Harris. Conservative Friends of Russia, later renamed the Westminster Russia Forum, was founded in 2012 as a lobby group, posing as a think-tank, with absolutely no research published. It was founded at the Russian embassy in London by, among others, Vladimir Putin’s man in London, Sergey Nalobin, and Matthew Elliott, chief executive of the official Vote Leave campaign. The opening was attended by Boris Johnson and his wife, Carrie. To date, the public has never had access to the group’s activities or fundraising records, but, through this group, Putin’s regime had access to Conservative MPs and, according to one of Britain’s top spies, Kremlin money changed hands to influence the Brexit campaign.

We know that the hon. Member for Clacton (Nigel Farage), whom I will shortly email to notify of this mention, then leader of the UK Independence party, met the former Russian ambassador to London, Alexander Yakovenko, which the hon. Member initially denied. We know that Arron Banks, who donated millions to the leave campaign, met the Russian ambassador at least three times. We know that event organisers for the forum were largely London-based businesses but with an interest in Russia, and that, at its peak, events drew 170 attendees. We also know that the Conservative party took millions of pounds in donations from Russian oligarchs, and accepted such donations at least as recently as March 2022, after Russia’s full invasion of Ukraine and several years after its occupation of the Donbas and Crimean peninsula. The Westminster Russia Forum was disbanded shortly after the full invasion.

I consider it a matter of public interest that the full extent of the group’s activities and fundraising is published unredacted. The Liberal Democrats further call for the full, unredacted release of the Russia report to pierce the veil of secrecy of Russian influence in UK politics. We call for greater independence for the Intelligence and Security Committee to investigate Russian interference. The Conservative party declined to do so, and it is easy to imagine why. No longer should the PM have control over its membership, nor the authority to prevent publication of its reports, as Boris Johnson did with the Russia report. This is both a matter of national security and of public confidence in our politics.