Political Party Finance and the Electoral Commission

Earl of Kinnoull Excerpts

Thursday 2nd July 2026 Lords Chamber

Moved by

[The Earl of Kinnoull]

That this House takes note of the regulatory regime for political party finance and the role of the Electoral Commission.

[The Earl of Kinnoull (CB)]

My Lords, at the core of any western liberal democracy is trust. The citizen must trust the institutions that make up their democracy and the people within those institutions. They must trust also that the oversight arrangements will work and, if someone or something breaches that trust, that there will be a mechanism to put things right. Within our democracy, and in common with other western liberal democracies, there will always be questions about political party finance. Political party finance in the UK is regulated by the Electoral Commission, which I will come back to shortly.

Trust in the ruling party in Scotland is at a very long-term low. There is the First Minister who could not see a huge and shiny motor home outside her mother-in-law’s house; the refrain in rural Perthshire is, “She should’ve gone to Specsavers”. This is the same First Minister who believes that full co-operation with the police is hours in their custody repeating “no comment”. Another First Minister is vigorously trying to stop a Scottish Parliament inquiry into something so damaging for our democracy—with no apology for the obvious and serious conflict he has—as such an inquiry would inevitably seek to look into his actions and inactions as well. Be it a Cabinet or a board of directors, members have joint responsibility for what has gone on. Indeed, a director is personally liable for their negligence.

The SNP leader claims the SNP national executive committee to be different. Members of the NEC, he feels, have no responsibility or liability for their actions and inactions over the decade of immoral mess. The judge in the case made it clear that the embezzlement was not particularly sophisticated, which only underlines how deep the NEC’s failure was, individually and collectively. The senior members of the NEC have then reached for the Pontius Pilate kit to wash away the blame. That is very wrong. The leader, former leader and long-term treasurer over the decade all owed a particular duty to their party and each year would have made the usual clear representations to their auditors. They remain the most active at trying to prevent more scrutiny that would examine their actions and inactions. This presents that horrible conflict. They do this to their great shame.

The seriousness of the situation means a lot of questions must be answered. The nation has rightful questions over the short money, the policy development grants, the money raised for the ring-fenced funds that have disappeared, and simply the money of the members of the SNP. To the extent that funds have been improperly used, restitution must be made. The Electoral Commission is the regulator of political finance and I expect it to play a public and leading role in the process, but a parliamentary investigation also is more than warranted. I ask the Minister: do the Government intend to be fully supportive of any Westminster or other parliamentary inquiry to look at this very serious matter?

The other recent situation that has been so damaging to our trust has been the saga of the £5 million and Nigel Farage. Mr Farage announced in March 2021 that he was

“stepping back from front-line politics”.

Christopher Harborne, who had been a major supporter of Reform UK Party Ltd, gave Mr Farage £5 million in early 2024. Subsequently, in mid-2024, Mr Farage stepped back into “front-line politics” in time to be elected as the MP for Clacton-on-Sea. He says that there was no need for him to report the £5 million gift to anyone. The trouble with this account of affairs is that Reform Party UK Ltd is a company, and during the relevant period there were three directors: Richard Tice, Mehrtash Azami and Nigel Farage. Nigel Farage therefore never stepped back from politics. He is a very strong personality and he sat on the small central board of his party at all the relevant times. I imagine his lawyers are fighting very hard to get him off on a technicality, but morally at least he is in the wrong.

The vital thing where any regulator is concerned is to ensure that they have the correct powers, the correct duties and the correct level of resources. The Electoral Commission is rather a new body, born in 2001 following the Political Parties, Elections and Referendums Act, or PPERA. It came to life in what was already a very large and very complicated field and canon of electoral law. In the intervening years since 2001, there have been several Acts of Parliament which have amended PPERA and several carefully thought-through reports pointing to a direction of simplifying and strengthening matters. I will briefly mention one or two of the key ones.

The Law Commission produced a 230-page report on electoral law in 2020. Although this was not so much about political funding, it picked up strongly on the theme of needing to simplify things. There were 106 recommendations. Recommendation 1 was:

“The current laws governing elections should be rationalised into a single, consistent legislative framework governing all elections”.


As we settle down to a 27th Representation of the People Bill later this year, I for one will recall this simple wisdom.

The Committee on Standards in Public Life, chaired by our own noble Lord, Lord Evans of Weardale, published Regulating Election Finance in 2021. This report, with its 47 recommendations, said at recommendation 1:

“The government should bring forward a bill to simplify and consolidate electoral law”.


That is the second respectable institution making the same powerful and obviously correct point.

Last year, in July, the Government produced a policy paper, Restoring Trust in our Democracy. The sponsoring Minister was Angela Rayner. This, essentially, was the trailing document for the Representation of the People Bill announced in the latest King’s Speech. There is, however, no mention of a consolidation Bill. I ask the Minister to comment on that.

In March this year, we had the welcome Rycroft review, which was aimed particularly at the difficult issue of foreign money. The Government’ response to this review was given in the House of Commons Chamber orally the day the review was published. It was most positive on the review and announced that there would be a ban on cryptocurrency and a donations cap of £100,000 for overseas voters. Can the Minister clarify exactly how these proposals will be brought forward? It is easy to see how the trust of the electorate can be in question when the legal environment is so complex and so unclear, and when institutions such as the Law Commission and the Committee on Standards in Public Life recommend major and logical change.

Before I close, I must set out at least some of the major areas where change would help, apart from a simple consolidation Bill. The first would be to decriminalise offences that are essentially administrative in nature. This would allow fines and enforcement notices to replace the full force of the criminal law. Regulators would no longer need to bother hard-pressed police to pursue wrongdoers, creating a much speedier and proportionate regime, as in most of the rest of regulated life.

Secondly, maximum fines are too low. The maximum fine for a breach of political finance law is £20,000 today, and that was set in 2009. For the special regime set up for the Scottish referendum, it was £500,000, which I suggest is a more proportionate number.

Thirdly, the Electoral Commission is today limited as to how it can give and receive information with other agencies and organisations. Most other regulators have statutory regimes that allow for this to happen, and the Electoral Commission needs to be put in a similar place. These things and others, I suspect, will be part of our work as a Chamber on the 27th Representation of the People Bill.

In closing, I return to the importance of trust in all of our institutions and in the people who work within them. As I survey the scene, I feel that the position is most unsatisfactory, and we owe it to ourselves and our citizens to be better here. The Electoral Commission must have greater legal clarity on its duties and powers. It must have sufficient resource to be able, as an independent body, to give confidence to us all in this difficult area of political finance. We will have an interesting debate and I look forward to every speech. In the meantime, I beg to move.

--- Later in debate ---

[The Earl of Kinnoull (CB)]

I thank all noble Lords who have taken part in the last very interesting 90 minutes. I thank particularly the Minister for answering very fully quite a lot of questions that were put to him in an encouraging way.

In summary, the first thing that was a common theme among everybody was that there is a problem with trust, and accordingly, we must do something about it. The point that I wish I had made was made by the noble Lord, Lord Blunkett, which was about education and the importance of educating people in our country about our constitution and the difficult things we have been talking about today. I do hope we will think on that all round.

I was not going to say, but I will say, that my logical deduction was that the noble Lord, Lord Johnson, does not exchange Christmas cards with Christopher Harborne when he said he had run out of friends and had stopped raising money.

I was on the Trade Union Bill committee when we sat for a very intense month and were chaired by the noble Lord, Lord Burns, in 2016. I well remember all the evidence we got and the necessity for there to be cross-party co-operation on some of these very difficult areas that were discussed by the noble Lord, Lord Maude, and the noble Baroness, Lady Finn.

The noble Baroness, Lady Finn, read out some quotes from our report. I remember those sessions, and the feeling that the noble Lord, Lord Burns, and I definitely had, being the two Cross-Benchers on that committee, was that, if you bash one of the three main parties, when the other party is in power you will get bashed back. We were very keen with our report to point that out and to try to make sure that we did not get into some sort of see-saw arrangement between the two parties. Speaking purely as a Cross-Bencher, I therefore hope that there could be some sort of starting up of cross-party consultation on this difficult area, without presupposing anything, to at least see whether there could be a landing area. The machine-gun was not being aimed at the Conservative Party; it was being aimed in a different direction, at the £5 million. I well understand that, so I am sure there is a way through that somehow.

Everybody praised the Electoral Commission. I was extremely interested in the remarks of the noble Lord, Lord Frost. From listening to them, I do not think that he was anti-Electoral Commission, but he was very keen to point out that it needed to remain independent and that it must be non-partisan and non-political. I agree with him on all those points all round, and his was a very valuable contribution. I had said that it was important that the Electoral Commission had the correct powers, duties and resources, but there is a fourth thing that is important, which is that it must remain very independent—truly Cross-Bench, as it were—and I think that has been widely agreed here.

With regard to what is going to go on, I spoke about the need for decriminalisation and I was very pleased to hear what the Minister said about that. I spoke about the necessity of raising fines and I was very pleased to hear what the Minister said about that. I spoke about the need to be able to share lots of information, and I had a very detailed briefing from the Electoral Commission about all the problems it has had with information sharing. I was very pleased with what the Minister had to say about that.

Two very interesting speeches on hostile states came from the noble Lords, Lord Kerr and Lord Jay. I must say that those are very wise points indeed and I hope that, when we come to the Bill, we will think hard about whether what is being proposed will cope with that particular threat, which is substantial. We must not miss the opportunity; as someone pointed out, even though there have been 26 of them, soon to be 27, they do not come along that often, and we must do that.

Finally, before I sit down, on the matter of consolidation, I do not think there is anyone who is anti-consolidation, and I hope that there will be a desire to move to try to consolidate at least the 26, soon to be 27, although there are also one or two other things that might go into it, such as the PPERA itself, and we must get on with it. I hope that the consolidation effort will not be tripped up by the worries about political party funding. There is lots in the consolidation that can get on with that, and that could get on. That is for another time and, in the meantime, I commend this Motion.

Motion agreed.