Baroness Scott of Bybrook (Con)
My Lords, I am grateful to the noble Lord, Lord Sikka, for bringing forward this debate but I cannot, in any way, agree with his solutions, either the ideas for all-party use of a donations pot—I am not sure how big that pot would be—or the endgame of state funding.
The statutory framework governing donations, principally the Political Parties, Elections and Referendums Act 2000 and the Representation of the People Act 1983, were designed to prevent foreign money distorting British politics. Those principles remain sound. But the landscape has evolved: new financial vehicles, shell companies, unincorporated associations and cryptocurrencies present risks that were understandably not explicitly legislated for a generation ago. This is a fact that hostile actors increasingly seek to exploit.
We recognise that the Government’s July 2025 elections strategy acknowledged that the current framework is no longer sufficient. It proposed stronger checks on donations, greater transparency for gifts and limits on company donations etc. We also note the announcement the independent review into electoral resilience following troubling allegations of foreign interference, and the Secretary of State’s commitment to examine illicit funding streams, including cryptocurrencies. We support the objective of protecting our democracy from hostile actors.
The previous Conservative Government took steps in this direction, strengthening national security legislation and committing to improved information-sharing between agencies and political parties. This was precisely because of the real and evolving threat of foreign interference at the time.
However, strategies and reviews are not substitutes for legislation. The electoral strategy was published seven months ago, and the Representation of the People Bill is only just being laid before Parliament today. There has been little consultation with political parties as these things are starting to be put forward; I do not believe that that has ever happened before. At a time when state-backed interference, opaque funding routes and emerging financial technologies present genuine risks, delays here will have consequences. How will the Government ensure, in particular through the Bill, that parties are properly supported, including through proportionate and lawful information sharing if they are to undertake enhanced checks on donors? What specific safeguards will be introduced to ensure that foreign money, whether channelled through companies or digital assets, cannot penetrate our political system?
The safety and integrity of our democracy should never be partisan; nor can reform be endlessly deferred. If the Government believe that the existing framework is no longer robust, as they say they have done for nearly two years, it is now time to move from review to action.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, I am very pleased to respond to this QSD. As many Lords have said, it is timely indeed, as we are pleased to introduce the Representation of the People Bill today; I look forward to many further discussions as that Bill works its way through our House.
I thank my noble friend Lord Sikka for opening the debate, and other noble Lords for their contributions. My noble friend always brings an interesting approach to this subject. Although I do not quite share his conspiracy theory approach to matters, I would say, as a veteran of many elections, that the power of the vote is still as strong as ever. We all need to inspire confidence that the vote is mightier than the pound; I hope that we will all strive for that.
The speeches we have heard today illustrate a shared desire to protect our democracy from those who seek to disrupt it. We all know that this is a clear and present danger, which our Government are resolutely determined to tackle. The Government committed in their manifesto to strengthening the rules around donations to political parties, including enhanced safeguards against foreign donations. The threat of foreign interference is evolving and is becoming increasingly hostile and sophisticated, while the current rules are no longer sufficient to address these risks.
The Government take a zero-tolerance approach to foreign interference, and we cannot afford to wait. That is why the reforms set out today in the Representation of the People Bill put prevention first, reducing pressure on law enforcement, protecting parties from exploitation and delivering greater transparency and stronger safeguards against malign foreign actors. These reforms implement a number of recommendations made by stakeholders, including the Ethics and Integrity Commission, formerly the Committee on Standards in Public Life; the Electoral Commission; and the National Crime Agency.
I turn to the specific measures set out in the Bill. Current electoral law sets out who may donate and the basic checks that campaigners must make, but these rules no longer reflect modern anti-money laundering standards. So, we are strengthening the system by introducing new “know your donor” checks for donations over £11,180. I know that is a random amount: I did raise that. Recipients will now have to carry out a risk assessment, checking for signs of foreign or unlawful funding, before deciding whether to accept or return a donation.
Key stakeholders have warned that the current eligibility criteria for companies to donate are far too weak and expose political parties and other recipients to the risk of accepting foreign donations and proceeds of crime. This means that shell companies—companies that are registered today, owned by anyone and funded from anywhere, without a single day of trade—could donate to our political parties. That is why we are introducing new stringent eligibility criteria for companies wishing to make political donations. Companies will have to show sufficient revenue to cover their donation, be headquartered in the UK and be majority-owned or controlled by UK electors or citizens in order to be eligible to make a donation.
Stakeholders are also concerned that unincorporated associations could be used to funnel illegitimate foreign funding into our political system. Unincorporated associations can currently give large sums with limited transparency. This leaves clear vulnerability to foreign or illegitimate money, so we are tightening the rules. We are reducing the thresholds for when unincorporated associations must register with the Electoral Commission and for when unincorporated associations must report gifts to the Electoral Commission. We are also requiring unincorporated associations intending to make significant donations to check the permissibility of the political gifts they receive to ensure that they come from permitted UK sources. We are also reinforcing the principle that only permissible donors may fund UK politics.
Where illicit funds enter the system via impermissible donors, such as individuals not on the electoral register, they will be subject to full forfeiture, providing a clear deterrent and supporting compliance by political parties and campaigners. Beyond these measures, we will commence existing provisions in law, which will require anyone making contributions of more than £11,180 to declare any benefits linked to their donation. This will ensure that we can identify the true donor and prevent people acting as fronts for others. Forced declarations will be a criminal offence, supporting enforcement authorities to take action against illegal donations.
Robust regulation and enforcement of political finance rules are crucial for combating the threat of foreign interference. That is why we are addressing enforcement gaps by extending the Electoral Commission’s enforcement role and civil sanctioning powers. This will enable police resources to be directed towards the most serious criminal offences. We will also increase, via secondary legislation, the Electoral Commission’s maximum fine from £20,000 to £500,000 per offence, with safeguards to protect against disproportionate burdens on campaigners with fewer resources. This will create a more meaningful deterrent against serious breaches of the rules.
Finally, to ensure that we are leaving no stone unturned, we have launched an independent review into foreign financial interference in UK politics, which will make recommendations to government by the end of March. The Rycroft review will focus on the effectiveness of the UK’s political finance laws, as well as the safeguards in place to protect our democracy from illicit money from abroad, including crypto assets. The Government will carefully consider all recommendations made in that report.
I want to respond to a few of the points made. If I do not get to them all, I will reply in writing. The noble Lord, Lord Hayward, asked about polls. Transparency requirements under electoral law exist for third-party campaign spending, including market research and canvassing. They are all in scope of the spending rules. The imprint rules also apply to those market research issues. On leadership elections, I am afraid they are a matter for political parties.
The noble Lord, Lord Pack, asked about donations and registers of interest. Parliament sets the rules around registers of interest, so that is a matter of parliamentary rule-making. I thank my noble friend Lady Shah for her points about voting for 16 year-olds. She hit on a crucial point. Extending the franchise to 16 and 17 year-olds means that we must make sure that they have trust in the system, and we are increasing civic education to provide that background to their voting.
On the question from my noble friend Lord Watson, I am sure the Rycroft review will be looking at international models to make sure we learn from them.
In reply to the noble Lord, Lord Rogan, Irish citizens remain permissible donors in Northern Ireland, and political parties there can also accept donations from Irish sources, such as Irish companies, that meet the prescribed conditions. That is consistent with the Good Friday agreement.
In reply to the noble Lord, Lord Leigh, the issue about China is a Home Office question. I will revert to colleagues in the Home Office and get back to him on that one.
In reply to my noble friend Lord Sahota, there is no intention from the Government to cap donations at the moment. The new Bill is all about transparency, so I hope I have covered some of those issues.
In reply to the noble Lord, Lord Mott, political parties and other campaigners will remain able to raise sufficient funds to communicate their views to the electorate, while protecting our democracy against those who seek to covertly undermine it. We do not consider tax relief on political donations to be part of the solution, I am afraid.
In reply to the noble Lord, Lord Wallace, I think I covered overseas interference in my speech. Overseas electors are subject to the same counter-fraud measures as domestic electors, including having their identity confirmed as part of the registration process.
I hope that I covered most of the comments of the noble Baroness, Lady Scott, in my speech. I will check Hansard, though, and respond further if I missed anything.
In closing, I thank my noble friend Lord Sikka for raising such an important debate and Members across the Committee for some very key contributions. I am sure we will have more of those as the Bill makes its way through the House.
The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
My Lords, the Grand Committee stands adjourned until at least 2 pm, in the hope that we can get the clocks fixed.