Political Finance Rules

15:49:00

I beg to move, That this House recognises that loopholes in regulation allow for opaque funding of political parties; expresses concern over the prevalence of substantial financial contributions from corrupt individuals and foreign governments, which render political parties susceptible to manipulation and undue influence; acknowledges the risk these opaque funds pose to national security and the health of our democracy; further recognises the need to strengthen the powers and independence of regulators to help the regulation of political donations; and calls on the Government to tighten the law on permissible donations to make clear that political parties cannot accept money from impermissible sources or from companies that have not made enough money in the UK to fund the amount of their donation or loan. Before I start my remarks, I pay tribute to everything that was said from the Dispatch Box in the last debate by the Under-Secretary of State for the Home Department, my hon. Friend the Member for Birmingham Yardley (Jess Phillips). This House and our Government are stronger, more effective and more compassionate because of her contribution and her work. I begin by declaring an interest: I am a member of a political party. I have spent many years actively involved in party politics as a campaigner, a local councillor and now as a Member of Parliament, so I know that political parties sit at the centre of our political landscape and that they are key pillars in our elections and our broader democratic system. Of course, those parties need funding to fulfil their day-to-day functions and to contest elections. Our pluralistic democracy depends on lively and active political parties that can campaign and engage with the public. Indeed, tomorrow evening I will be back out on the doorstep, clipboard and leaflets in hand, listening to voters and campaigning with my local Labour party. Those very activities would be impossible without political donations. However, far too often the financing of political parties involves suspect donations making their way into party coffers. And the numbers are not small. Research by Transparency International found that £115 million in donations—almost £1 in every £10 of reported donations —came from unknown or questionable sources between 2021 and 2024. How has that been allowed to happen? Unfortunately, the UK’s political finance rules, designed to block foreign donations and dirty money from seeping into political parties, are ripe for abuse and riddled with loopholes. Hostile state actors, kleptocrats and international billionaires are easily able to sidestep the UK’s permissibility rules and funnel money, via UK-registered shell companies, into our political parties. As it stands, a British company is permitted to make donations using money raised overseas, even if the company has not generated sufficient funds to support that same donation. That means that foreign actors or any mystery donor could legitimately use shell companies as a conduit to channel money into political parties here in the UK. This is symbolic of a much bigger problem. It should not be that easy to pump money into British politics behind a layer of corporate secrecy. Donations that could come from anyone, anywhere pose a significant threat to the security and integrity of our democratic system. Foreign interference in British democracy and elections is a direct attack on our sovereignty, our national interest and our vital democratic institutions. We have been warned about the problem for many years. A series of independent review bodies and the security services have sounded the alarm time and again. They have made it clear that risks are posed by opaque donations coming in from overseas. In 2020, a report by Parliament’s Intelligence and Security Committee identified that multiple members of the Russian elite with links to Vladimir Putin had tried to donate or successfully donated to British political parties. Later, in 2022, MI5 warned that an alleged Chinese agent had sought to influence parliamentarians on behalf of the Chinese Communist party. In 2023, concerns were raised in Parliament about alleged links between the Chinese Communist party and party fundraising. The then Minister of State for Policing, the right hon. Member for Croydon South (Chris Philp), noted that “all political parties need to be alert to the danger of representatives of hostile states seeking to infiltrate or influence their activities.”—[Official Report, 19 April 2023; Vol. 731, c. 249.] I fear that our unhealthy dependence on a handful of large donors also poses a risk of undue influence and capture by narrow vested interests. We know that of the £85 million of private donations made in 2023 alone, two thirds came from 19 mega-donors, each giving well over £1 million. Just recently, one would-be mega-donor dominated headlines for that very reason. Elon Musk, the richest man in the world and not a British citizen, was giving “serious thought” to donating millions of pounds to a British political party—Reform UK. As a South African-born billionaire who lives in the United States, Elon Musk cannot legally make a personal donation to a British political party, but, as we know, he could easily go through the UK subsidiaries of his various companies. Although that rumour has not yet come to pass, the risk that it poses to the integrity of our democracy cannot be overstated. I repeat: it should not be this easy to pump money into British politics, especially from halfway across the world. Our democratic institutions and elections should never be the plaything of a billionaire who cannot even vote in a British election, and a UK-registered company should not be a convenient vehicle to allow them to make such a donation. Even the perception that our political parties are captured by those with deep pockets has a corrosive effect on public trust in politics and in us as politicians. At a time when that trust is regretfully at a historically low level, we need to tackle that perception head-on and show that our politics is not for sale and cannot be unduly influenced. How do we go about toughening up the rules? First, we close the loopholes I have outlined once and for all and ensure that companies are able to make donations only from profit made in the UK in the last two years, as well as introducing a requirement for political parties to identify the true source of donors’ funds. Secondly, we need to have a tough deterrent for those who break the rules, because even if Elon Musk were ever to breach election law, why would he care? The maximum fine that the Electoral Commission can impose is just £20,000—not even small change to the world’s richest man. Unfortunately, the previous Government only made matters worse when they stripped the Electoral Commission, which is tasked with regulating political finance, of its independence and further opened the floodgates to mega-donations by drastically increasing spending limits during election periods by around 80%. Strengthening the rules around donations to political parties is a manifesto commitment of this new Government. I know that the Government and Ministers are committed to restoring trust and protecting British democracy, so I hope they will act swiftly on that commitment by restoring the independence of the Electoral Commission and empowering it to impose much larger fines. The Government should also look closely at capping donations and spending, perhaps in line with recommendations put forward by the independent Committee on Standards in Public Life. Smart tweaks to existing regulations, such as increasing fining powers, lowering reporting thresholds and capping spending limits, do not require primary legislation. Those changes could be enacted quickly and still have a significant impact on cleaning up our politics and ensuring that our parties are all free from suspect donations. Finally, I sincerely hope that Ministers will look closely at the role that shell companies play in allowing opaque donations to be made here in the UK, often originating from overseas. I am proud that this Labour Government were elected on a mandate to restore integrity in politics. As the Prime Minister rightly stated in his victory speech in the early hours: “The fight for trust is the battle that defines our age.” I wholeheartedly agree with him, and I look forward to hearing from the Government and from hon. Members here today exactly how we can win this crucial battle. Only by doing so can we protect democracy, clean up our politics and rebuild trust with the public.

Order. As Members will be able to tell, we have considerably more Members wishing to speak than we have time for, so perhaps we will start with an informal time limit of no more than five minutes.

15:59:00

I thank the hon. Member for South Dorset (Lloyd Hatton) for securing this debate on such a crucial topic. Public trust in politics is at an all-time low; only 12% of people trust political parties, and only 15% of the population think that political funding is transparent. There is clearly a problem at the heart of British politics. As the hon. Member said, it is particularly bad in our country, because we have an Electoral Commission with very little in the way of teeth or of limits. That leaves our democracy open to corrosion and dark money, which we have to be particularly worried about guarding against. As the hon. Member for Brent East (Dawn Butler) said in the previous debate, we must guard our democracy against those anti-democratic forces and against dark money—the influence of money in politics is a core part of that corrosion. In the UK, there is no limit on individual donations. That is not the case in Canada, in France, or even in the US. Why is there no limit on how much money an individual can donate, and on how much influence they can therefore exert on British politics? Corporate donations are allowed here, but are banned in so many other countries. Foreign donations are theoretically banned here, but loopholes mean that an individual such as Elon Musk could quite easily work within existing, very bendable rules in order to exert what would undoubtedly be a very corrosive influence on our politics. The hon. Member for South Dorset mentioned the Electoral Commission’s lack of enforcement powers: the maximum fine it can impose is £20,000, yet the influence in our politics totals tens of millions of pounds. Just over the past decade, £115 million has come from unknown sources. This is clearly a serious problem. I welcome the fact that the current Government made a manifesto commitment to strengthen the rules on donations to political parties, in order to protect our democracy from foreign influence. I very much hope that in her summing up the Minister will be able to clarify exactly what that will amount to. What actions do the Government intend to take in order to protect our democracy from foreign influence? Can she commit to taking measures such as strengthening the powers of the Electoral Commission to issue fines, reducing the reporting thresholds in order to increase transparency, and clarifying spending limits? Those measures would not require primary legislation, so can the Government set out the timetable by which they will bring forward those urgently needed measures to protect our democracy? Big money in politics is a corrosive influence. This Government have the opportunity to put a stop to it—to bring us up to the standards that other democracies have put in place. Will the Minister set out her timetable for doing so, and clarify precisely what she will do?

16:02:00

I intend to make a short contribution on one particular aspect of political funding that I believe is especially corrosive to faith in democracy in our country. Across North East Hertfordshire, from Buntingford to Thundridge, local communities have worked hard to create local neighbourhood plans that are pragmatic but full of hope for the future. However, time and again, those plans are overruled, and residents get development that could hardly be further from what they have sought to secure—poorly designed, palpably unsustainable, and outrageously overpriced. So often, the reason for this is the enormous financial and political pressure that big developers are able to bring to bear on the debates around the future of our towns and villages in their relentless pursuit of profit maximisation. Our constituents will never have faith that our planning system will deliver fair outcomes that put nature, community life and genuinely affordable homes before developer greed for as long as those same developers—and the lobbyists they employ—are pouring vast sums of money into the bank accounts of political parties. Given the constant clamour for planning deregulation and the already enormous profits that these developers are making, it is hard to escape the conclusion that those sums of money have been a very wise investment on their part. The Labour Government have inherited the Conservative party’s housing crisis; we must not inherit the same issues of influence that plagued the previous Administration. Trust in politics will return only when we make our position unimpeachable, and the future of development in our towns, villages and countryside is too important even to appear to have been subverted on behalf of private interests. If we want the public to believe that the planning guidelines that we set nationally and locally will be fairly adhered to, it is my contention that we must ban all political donations from developers, those who work for them and the lobbyists they employ.

16:04:00

I thank the hon. Member for South Dorset (Lloyd Hatton) for securing this important debate. The lack of transparency in the funding of our political parties is well documented, although I suspect not so well known among members of the public, who tend to associate the corrupting influence of money in politics with other countries, usually very far away. The reality is that it is taking place on our doorstep. According to research done by Transparency International, almost £1 in every £10 reported by political parties and their members since 2001 has come from unknown or questionable sources. Some £42 million comes from donors alleged or proved to have been involved in other corruption, fraud or money laundering, and £38.6 million comes from unincorporated associations that have not reported the source of their income, despite Parliament introducing new transparency rules in 2010. The rest of its findings highlight millions from donors alleged or proved to be intermediaries for foreign funds and/or a hidden source, and millions from companies that have not made sufficient profits to support the political contributions they have made. Other research has confirmed that successive Governments have invested trillions in the defence industry. Our new Government are also proposing to increase defence spending to 2.5% and then to 3%. The defence industry is reportedly responsible for approximately 40% of all corruption worldwide, and much of the money that we and other countries spend in defence is funnelled back through opaque channels into political parties and members. The industrial military complex needs to be investigated and dismantled. The fact is that our political finance rules are too weak on hidden money, making the system vulnerable to subordination from rich individuals and secretive vested interests. My constituents and people from our country are concerned by the malign influence on Government policy of parties, Governments and Opposition Members and other Members accepting millions from state and industry lobbies, corporations and mega-rich donors.

The hon. Member is making a case. Does he agree that foreign money has no role in our democracy, and that one of the strongest ways in which we can clean up our politics and indeed strengthen our democracy is to make sure that the Electoral Commission has real teeth and has higher fining powers? Does he also agree that where we have concerns about foreign money coming into our country, we should have particular concerns about money coming from people such as Elon Musk?

I completely agree with the hon. Member. The action that the Electoral Commission should be permitted to take should not just be limited to bigger, greater fines for donors. There should be consequences for those accepting donations and potentially being influenced. My constituents and the people of this country see and feel in their daily lives the deep impacts of pro-rich, pro-war, anti-poor and anti-consumer decisions and policies. The solution lies in reforms: to tighten spending rules; to shine a light on the source of financial contributions; to lower spending limits to reduce campaign costs and reliance on large donations; to introduce donation caps of £10,000 a year for individuals and organisations, as recommended by the Committee on Standards in Public Life; to remove the corrupting influence of big money in politics; and to close loopholes to ensure that overseas trips for parliamentarians are funded only by trusted sources. The UK used to lead the way on funding transparency. The UK was a founding member of the Open Government Partnership, and placed third in the 2014 OECD open data index, but in recent years the UK has slipped. The most recent OECD rankings saw the UK fall to 24th place, with stories about dodgy dealings, personal protective equipment procurement and Ministers’ disappearing WhatsApp messages all contributing to the decline in the trust that the public place in their politicians. As has been mentioned, it should be a cause for grave concern that of the £85 million of private donations in 2023 alone, two thirds came from 19 donors giving more than £1 million each, the highest ever share of mega donations. If we do not want our politics to go the way of American politics, with British equivalents to the likes of Elon Musk and his fellow tech billionaires blatantly using money to buy influence and remake politics in their own interests, we need tighter regulation of political finance than we currently have, and full transparency for the public.

16:10:00

I thank my fellow Dorset resident, my hon. Friend the Member for South Dorset (Lloyd Hatton), for securing this important debate. It goes to the heart of the concern that the public have, namely that economic dominance leads to political influence. Money is used to influence politics, and politics is then used to enable those people to make more money through changes in laws or regulations. This is the issue that worries the public. We also know that civic participation diminishes if people feel that they have no influence compared to those with large amounts of money. Public trust in our political system is at an all-time low. That flows in part from a sense that politicians are unable properly to represent those who elect them, that money in our politics exerts undue influence that is often obscured from public view, and that those who break the rules that do exist are not adequately punished. Nearly 60% of the public think that funding of political parties is not transparent, and only 30% think that political parties that break the rules will face any action. That is why Labour’s manifesto made the welcome pledge to “establish a new independent Ethics and Integrity Commission, with its own independent Chair, to ensure probity in government.” The commission must be empowered to challenge the corrupting influence of not only the developer lobby but other big money donors, including those from the oil and gas industry. We should also close loopholes to ensure that overseas trips for parliamentarians are funded only by trusted sources, and publish clearer guidance on the acceptance of gifts and hospitality. It is worrying, too, that UK political parties are relying increasingly on a small number of extremely wealthy people to bankroll their election campaigns. The last Government increased national campaign spending limits from £19 million to £34 million, which has intensified the demand for donations across all our political parties. As the hon. Member for Dewsbury and Batley (Iqbal Mohamed) said earlier, Transparency International UK claims that between 2001 and May 2024, £42 million came from donors alleged or proved to have been involved in corruption, fraud or money laundering. Political parties should therefore be required by law to identify the true source of funds as part of a risk-based approach to donations, and a donation from a company should not be allowed to exceed its net profits generated in the UK within the preceding two years. A UK-registered company is permitted to make donations using money raised overseas, which is why political parties should be required to conduct checks on donations to assess and manage their risks. There are real concerns about unincorporated associations. Such associations are not required to check that those who donate to them are permissible, which means that they could legitimately make donations using funding from otherwise impermissible sources, including from overseas. As other Members have said, the Electoral Commission should therefore be given powers to investigate candidates’ compliance with the rules and to impose sanctions. Finally, banning companies that win public contracts from making political donations would end the potential conflict of interests that this creates and the perception that political friends have received political favours.

16:15:00

I congratulate the hon. Member for South Dorset (Lloyd Hatton) on securing this debate, and I thank the Backbench Business Committee for granting it. As the Prime Minister declared last year, and as we see so graphically on the world stage now, the “fight for trust” will be “the battle that defines our political era.”——[Official Report, 17 July 2024; Vol. 752, c. 56.] It is clear that if we MPs are to achieve the changes that people need most in their lives, we need a functioning democracy. If those we represent do not trust politicians to act in their best interest, we will not be an effective institution. Currently, it is simply not the case that they trust us. Both in the UK and across the globe, faith in politics and politicians is at an all-time low. In the UK, 76% of people have little to no trust in Members of this House—up from 54% a decade ago. I note with no great relish that this may not be surprising after years of a Conservative Government who were more concerned with their internal politics than the concerns of people around the country, but it should be a deep concern for us all. Rebuilding trust in politics is the goal, regardless of our political colour or persuasion. I am sure that all Members of the House can support that, but it will not happen overnight. Research from the Electoral Commission shows that only 15% of people agree that there is transparency around the money spent and received by parties and campaigners—down from over a third in 2011. We should be clear that political donations are not inherently wrong and are part of a vibrant democratic system. Individuals should be able to take part in the democratic process through political donations, which can help people to further the goals and ideals that they believe in. Banning any donations would entrench power, leaving new or smaller parties unable to campaign against incumbents. It would work against many of our democratic principles, but it is clear that although political donations are a good thing, we must have adequate transparency as to the source of the money. That is currently not the case. The legal framework for the political finance system is now over 25 years old, and though it was explicitly intended to ban foreign donations to UK political parties, there are clearly many loopholes. There is no doubt that foreign nations have an interest in altering our politics. Dictators such as Putin and Xi Jinping have made it perfectly clear that they do not believe in democracy and are willing to undermine our institutions, but our current system has built-in loopholes that allow foreign interests to channel money to our politics to shape it in their interest. At present, UK-registered companies are permitted to make donations using money raised overseas and, as has been said previously, unincorporated associations can legitimately make donations using funding from otherwise impermissible donors. It is not just foreign donations that should cause concern; the sheer amount of money coming from a small number of extremely wealthy donors is also worrying. Of the £85 million received in private donations in 2023 alone, two thirds came from just 19 donors. Money helps direct the political winds, and having that amount of money come from such a small number of powerful individuals risks bringing our democratic system into disrepute. We must introduce a cap on donations. No matter how noble the intention, no individual should be able to donate excessively, as large donations can at the very least give the impression that undue influence is being exercised over our democracy. This would not only be a positive step in cleaning up politics; it would be popular too. A recent YouGov poll found that more than two thirds of the British public support a limit on political donations. Personally, I also have concerns about the capacity of union barons to exercise what might appear to be undue influence via the vast amount of money accumulated through the political levy, which they can donate or withhold as they see fit. However, I acknowledge that the issue is complex. We are at a crucial juncture, and it is in everyone’s interests that the Government get a proper handle on this issue. We cannot enter the next general election with so many questions left unanswered.

I call Stella Creasy, with a four-minute time limit.

16:19:00

Thank you, Madam Deputy Speaker. Like everybody in the Chamber, I must be sure to draw the House’s attention to my entry in the Register of Members’ Financial Interests. “Follow the money” is one of those phrases we always hear, as if there is somehow a crushing inevitability that money determines outcomes in all areas of life, whether personal or political, but now in our democracy there is a clear and present danger that the loudest voices and largest wallets will dominate, and that the two are connected. Even in these difficult political climes, it is extraordinary to think that the existential threat to our country’s democracy posed by the suggestion that Elon Musk could donate £100 million to any political party here has not caused a Cobra meeting to be called, because it is a national security threat. A foreign agent, who is now part of the structures of a foreign state, is openly talking about interfering in our democracy—buying it, and boasting about doing so—and he is not the only one. I guess that, for many, the idea that politics is so infused with money is not a surprise. After all, we have been trying for over 160 years to regulate foreign donations —and indeed local donations—in this country. For the avoidance of doubt, donating to a political party is a noble thing for people to do, given the concerns and passions they may have, and we in this Chamber have all sought donations. However, we have seen scandals through the years, starting with David Lloyd George and including the cash for questions affair and the personal protective equipment issue. Time and again, Transparency International has drawn our attention to the current data on this, and that is before we even get to Taylor Swift, because she is right: “It’s me, you, hi—we are the problem”. As politicians, we have not regulated this, even though we have seen these problems time and again. In the short time available to me, I want to make a plea to the Minister to ensure she is looking at the impact at local level. When money is channelled through unincorporated organisations, many of us will have seen the impacts in our communities and our constituencies and, frankly, the failures of the Crown Prosecution Service and the police to intervene. In America, a 527 group is created primarily to influence the selection, nomination, election or appointment of candidates at local level, and many of us now have third-party organisations that are active in our local communities and trying to create disinformation to disrupt our local democracy. People may ask what the problem is in my constituency, because I have a substantial majority, but given that one in five MPs have a majority of less than 5%, these activities—fake leaflets, third-party adverts on Facebook and so on—could be critical to the outcome of local and, indeed, national elections. We have gagging laws for charities, but we have nothing to deal with the businesses that are behind this and that are funding these activities. It is a grave irony to me that many of us came here yesterday to defend aid as part of national security work, because part of our aid budget goes on tackling disinformation and disruption in the democracies of other countries, but we are not doing anything about it at local level. Just the other week, The Guardian reported that a network of Telegram channels with Russian links is encouraging UK residents to commit violent attacks on mosques and offering cryptocurrency in return. These activities are also happening online, as we have all seen. The online is now the offline threat, and vice versa. We saw that with Cambridge Analytica, and nobody really acted then. Members are right about the scale of the challenges with regulation and fines, but we need to do something about the fact that much more pressure can be brought to bear on MPs at local level because the results have been much closer. This is not some Netflix drama; this is the state of British democracy at the moment. Everybody in this Chamber has a vested interest in resolving it so that we can have free speech. I look forward to hearing what the Minister has to say.

16:23:00

I thank my hon. Friend the Member for South Dorset (Lloyd Hatton), who plays an instrumental role in the all-party parliamentary group on anti-corruption and responsible tax, for securing this important debate. I was really proud to stand on a manifesto commitment to strengthen the rules on donations to political parties, and I welcome the Government’s commitment to bring forward an elections Bill in due course. I hope today’s debate will help inform what is in that future Bill, because as others have said, restoring trust in our political system and ensuring that everyone has a voice in the decisions that affect their lives is absolutely crucial to British democracy. We know from international evidence the risk of allowing ever increasing amounts of money to dominate politics. I lived in Washington DC for almost 10 years and saw at first hand the impact of that system, including the world’s richest man spending a quarter of a billion dollars to bankroll the last election. When billionaires and corporate interests drown out the voices of everyone else, we should not be surprised that people lose faith in democracy working for them. It continues to amaze me that representatives of Reform, who unsurprisingly have not turned up for this debate, seem eager to take that approach to politics. They preach populism on the one hand, while courting foreign billionaires and their policy agendas on the other. That is not in keeping with British values. But this is also about places such as Moldova and other countries where we have seen Russian operatives shipping money in to buy elections. We should not be complacent. Other Members have covered the threat to the UK, and I would like to pay tribute to Transparency International UK, Spotlight on Corruption and all the other great organisations helping to shine a light on the issue. I will move on swiftly to some areas on which I hope the Minister will consider reforms: transparency, company donations, the Electoral Commission and a cap. On transparency, unincorporated associations, as we have heard, are particularly vulnerable to abuse. Since 2010, over £40 million has come through unincorporated associations and we have no idea where 95% of that money came from. As it stands, they are not required to check that those who donate to them are permissible, so they could be foreign donors. They are easy to set up, we do not know who are behind them and there are no transparency requirements in law for donations to candidates, as opposed to political parties or campaigners. I hope that in a future elections Bill, the Government will introduce reforms to clamp down on those loopholes, including provisions on identifying people responsible for unincorporated associations, permissibility checks for political donations and lower reporting thresholds. We have already heard that company donations are a big issue. I fully endorse the proposals made on the issue by my hon. Friend the Member for South Dorset. Thirdly, we need robust independent oversight and to restore the independence of the Electoral Commission. We need an urgent review of the requirement for the commission to submit a strategy and policy statement to the Government. I believe that was part of an entirely confected agenda on voter fraud in the Elections Act 2022. I hope we will repeal that as soon as possible. Finally, I believe it is now time to consider caps on political donations. The previous Government’s massive increase in spending limits and the increasing reliance on major donors has convinced me that a well-enforced cap would be healthy for our democracy. This is an issue that should unite us as a House. It is about the health of our democracy. There is a lot more we need to do: votes at 16, automatic voter registration, improving citizenship education, and ensuring citizens have a voice between elections and not just at them. But on this particular issue, with trust so low, it is vital that we act urgently.

16:27:00

Last week gave me two really clear reminders about why this issue matters. First, I spoke with my hon. Friend the Member for Kensington and Bayswater (Joe Powell) at a rally to mark the illegal invasion of Ukraine. We saw a frank reminder of authoritarianism right on our doorstep. Then, on Thursday, the Labour party lost a by-election in Vincent Square. While I do not like that result one bit, I am very proud to live in a country where a community can come together and make a decision about who represents them. We currently see more of that sort of politics in this country, with people able to go out to the polling station, but sadly we are at real risk of seeing it decline. We cannot ignore the fact that there are forces intent on weakening our voice, our vote and our rights in the media, in business and in politics, and that they are co-ordinating to replace democratically elected regimes with those that would do their bidding. These forces are spreading conspiracy theories, which have driven division and violence in our communities. They give a platform to those who would question fundamental British values, and they undermine the democratic process as they question free and fair elections around the world. This is not a question of competition within our democracy, but of democracy itself. We need to preserve a system where the voters are the ones choosing their leaders, not billionaire autocrats. Keeping their money out of our politics is becoming a difficult task. Our finance flows are becoming more elusive, with cryptocurrency enabling money laundering at scale, and our politics has a growing demand for more cash, with ever-growing competition for voters’ attention. What Member has not had to struggle with an inscrutable Ring doorbell or security gates? Understandable changes to home security and design have real impacts on our political finance, as we spend more and more money trying to reach voters through online ads and direct mail. However, getting this money out of our politics is more important than ever at a time when trust in politics is at an all-time low. Politicians must be effective natural communicators as well as thoughtful legislators, and even the suspicion that we might not be acting in our constituents’ interests will further erode the trust that voters do have in their representatives. Fixing political finance is, therefore, an essential part of restoring faith in democracy. We have already heard that a tenth of the money in our politics comes from unknown or questionable sources and is donated through loopholes in existing law. Now, we have to come to the solutions. Enforcement is made more difficult by loopholes and a weak enforcement system: Companies House reporting rules are too loose, while the Electoral Commission lacks the independence to investigate potential breaches swiftly and thoroughly. Reporting obligations for parties, elected officials and candidates require tightening up, as they allow some individual candidates to accept money without reporting. Meanwhile, the disincentives for bad behaviour, such as fines, are set well below the level that would impact bad actors. We need to close the loopholes around unincorporated associations, open up political parties to greater transparency and give more power to enforcement entities. We cannot take for granted that voters will always be able to speak truth to power, and we need to fight to preserve a system where British elections are decided only by British voters. The forces of foreign interference are knocking at our door, and we need our Ring doorbell more than ever.

16:31:00

As colleagues have done already, I congratulate my hon. Friend the Member for South Dorset (Lloyd Hatton) on securing this debate. I rise to speak as someone who dedicated almost 15 years of my working life before coming to this place to being an anti-corruption professional. It is an issue that goes to the heart of our politics, so it is somewhat disappointing to see that no Back-Bench Members from the official Opposition are present to speak in this debate. This is a vital issue on which we need to build consensus across party lines. We have heard about low turnout at elections, which, as I think we all know, tears at the very fabric of our society, corroding democracy and the social contract between the citizen and the state. Foreign political donations might well be banned in the UK, but the current restrictions are far too easy for determined actors to circumvent. In response, we must be bold in reforming our outdated oversight of political donations. The risk posed by foreign interference plagues all our parties. Although it is not just about one person, individual or party, I have taken the liberty of raking back through donations of years past to illustrate my argument. Indeed, just before the election, the Bureau of Investigative Journalism made what should have been impermissible donations to all six major parties. All but one—Labour—failed to correctly identify that the donation could not be accepted under current rules and return the money. Elsewhere, the Intelligence and Security Committee’s 2020 report on Russian interference made it clear that Russian money has been used not just to buy up sprawling mansions, but to attempt to buy influence in our politics. We have seen Lubov Chernukhin, the wife of a former Putin Minister, donating more than £2 million to the Conservative party. One might ask, what does £2 million buy? Well, in return, Lubov was awarded with a tennis match with Boris Johnson and dinner with Liz Truss and Theresa May—they picked up the bill, presumably. Let us also take the case of oligarch Alexander Temerko, who ran a Russian state arms company and has coughed up more than £700,000. Separately, we know that the Russian state and its proxies have a well-documented history of interfering in the politics of other countries and subverting hard-won democracy, whether that is in the United States, France or Moldova, as my hon. Friend the Member for Kensington and Bayswater (Joe Powell) mentioned. We should not be so arrogant as to assume that Britain is immune to this interference. So what can we do? First, I hope that we will see an elections Bill in the next Session, which would provide a golden opportunity to close the loopholes we have heard about today, give the regulator real powers and safeguard our democracy against foreign influence. If the Minister is looking for inspiration, she need only look to organisations such as Spotlight on Corruption, Transparency International UK, as well as the Electoral Commission itself. We should include proposals around making sure that we introduce “Know your Donor rules”—or KYD. Introducing such rules would require parties themselves to conduct proper checks on the sources of a donation. Where that cannot be established, the parties themselves will be required to reject that money. Secondly, we should close the current loophole in our donation system that allows donations from shell companies that have never even turned a profit in the UK. Thirdly, we must crack down on unincorporated associations, such as the Carlton Club, which can channel donations to political candidates. Some unincorporated associations have become opaque slush funds to channel money into politics, allowing money from undisclosed foreign sources to trickle into our election campaigns. If we fail to act and send a clear message, we undermine democracy and trust in our politics. We must not allow that to happen, and I urge the Minister to be bold.

I call the Liberal Democrat spokesperson.

16:35:00

I thank the hon. Member for South Dorset (Lloyd Hatton) for his work in securing this important debate, and Members from across the House for their contributions this afternoon. The Liberal Democrats support this motion, which aligns with our long-standing stance on political finance reform and protecting democracy from foreign influence. We have long called for reforms to prevent foreign interference and increase the transparency in political donations. We support strengthening the Electoral Commission by restoring its independence and increasing its enforcement powers, including higher fines for breaches of political finance laws. Our democracy should never be up for sale to foreign billionaires, oligarchs, or hostile states and, as such, we support this motion, which acknowledges some of those risks. The Liberal Democrats will continue to push for strong measures to protect our political and electoral system. We want to take big money out of politics by capping donations to political parties. I am proud that my hon. Friend the Member for Stratford-on-Avon (Manuela Perteghella) presented a Bill in this House to do just that. And we want to enhance regulatory powers to protect British democracy from the unprecedented threat posed by foreign interference and attacks on our democracy. Liberal Democrats will make protecting our democracy a national security priority. We are seeing record levels of disillusionment with the political process, with citizens becoming increasingly disengaged. Research from the Electoral Commission highlights a significant drop in the rate of public confidence in political finance transparency, falling from 37% in 2011 to about 15% today. It has also recently pointed out the threat of foreign influence on social media, highlighting the rise in misinformation and artificial intelligence deepfakes in the run-up to the general election in July last year, as well as new issues arising from the changes to fact checking on popular websites. Public trust in our electoral process was not helped by the disastrous record of the former Conservative Government. It was not just their successive sleaze scandals, which created a crisis of democracy in this country, or their exorbitant voter ID scheme, which disproportionately disenfranchises the young and those from ethnic minority communities, but their shameful decision to weaken the independence of the Electoral Commission, and that is a decision that will go down in ignominy. If we are to strengthen our democratic safeguards, and correspondingly strengthen public trust in our democracy, that has to start with empowering the Electoral Commission. That is why we need to reverse the Conservatives’ changes. We want to strengthen the Electoral Commission by repealing the Government’s power to designate a strategy and policy statement for the commission. The former Conservative Government also failed to take the threat posed by Russia seriously. They were content to allow Russian money to flood into the UK and also to allow Russian money to flow into the coffers of their own party. And the manner in which Boris Johnson let the Russia report sit on his desk was shocking. When that report was finally published, it laid bare the extent to which Russia is a threat, including to our democratic institutions. The report said: “The UK is clearly a target for Russia’s disinformation campaigns and political influence operations and must therefore equip itself to counter such efforts.” It called Russian influence in the UK “the new normal” and said that the Government had underestimated the response required to the Russian threat. We continue to call for the full publication of the unredacted report. The Russian Government have been accused of orchestrating a widespread campaign of interference and disinformation that seeks to undermine the global order. In September 2024, the heads of MI6 and the CIA jointly warned that the international order is under threat in a way not seen since the end of the cold war, accusing Russia of a “reckless campaign of sabotage across Europe”. I hope that the Minister shares my concern that this week United States Defence Secretary Hegseth has announced the stepping back of US counter-cyber measures against Russia. That is an incredibly concerning decision by the Americans, which threatens not only their cyber-security but our own. Will she update the House on what measures the UK is taking to step up our defence of our democratic institutions? We will continue to urge the Government to designate protecting our democracy as a national security priority. Turning to foreign oligarchs, it would be remiss of me not to mention Elon Musk. Let us recall that just weeks before Musk became a US Government official, he suggested that America should liberate the people of Britain and overthrow the UK Government. I hope that other parties will join the Liberal Democrats in unequivocally condemning such remarks. That incident further proves that we urgently need to tighten up political funding. That includes a cap on big donations. We must prevent foreign oligarchs from being able to interfere in our democracy. The Liberal Democrats want to take big money out of politics by capping donations to political parties, and we support the motion. A fair cap will ensure that politics serves our constituents and not big money. Over two thirds of the British public support a cap on political donations. We must deliver the reforms that people are demanding.

I call the shadow Minister.

16:40:00

I will start with a confession: I am one of the readers of The Guardian on the Conservative Benches, and I pay tribute to the helpful article it published today with the latest update of what has been happening in the world of political donations. It illustrates that, despite the increase in spending limits set out in the previous Parliament, the spend at the last general election reduced as political parties on all sides reined in their spending. The article also sets out in some detail the fundraising efforts of the parties in the Chamber and helps to put some of the figures quoted in public debates into context. While there may be those promising to donate $100 million to British political parties, the party in question managed to raise £280,000 over that quarter, which is approximately an eighth of the funds raised by my party and a bit less than a quarter of the funds raised by the Labour party over the same period. As a dedicated fan of Private Eye, it is clear to me that the transparency brought by the reporting of these donations is enormously helpful; indeed, it has led to many of the contributions to the debate. On the whole, the debate has been positive, by and large avoiding much of the casting of aspersions we often see and focusing on the practicalities. I have some brief points to make and then some questions to put to the Minister that are very much about the practicalities of taking forward the work that is under way. First, there is the need to respond as political parties and a state to the evolving roster of challenges that we face. We know that practices are being imported from the United States, such as the funding of issue-based campaigns, which have enormous political impact, including on the election of politicians, but are not donations to specific political parties. The Opposition would clearly be keen to work with the Government to ensure that donations for a political purpose—without being to a political party—are open to the appropriate level of scrutiny. A loophole has recently been created by the decision of Labour in Wales and the SNP in Scotland to extend the franchise to a greater proportion of foreign citizens, allowing them to vote in British elections, because the principle that underpins reporting is that people can donate to a political party only in an election where they are also able to vote. The fact that two areas of our country have different rules on that enables such citizens to donate to those parties, because the political parties there operate nationally. That is a loophole and an issue that I hope the Government will be addressing. Political finance is seen not just in the form of donation to political parties but in the lobbying, to which a number of hon. Members referred, the trips and the research input. In the last Parliament, there was the lobbying scandal that revolved around a Chinese spy donating about £700,000 to Labour party organisations. That is reflected in the challenge that has come from Opposition Members to the Government’s position on the Chinese embassy. While the Government may feel that it is a legitimate foreign policy objective to cosy up to China, many members across parties express the view that the influence of China in British politics is a significant concern. Let me put some questions to the Minister. First, why have the Government chosen to abandon the commitment made by Parliament and the last Government in the National Security Act 2023 to enhance the powers so that regulators, law enforcement and security services could share information with political parties? That process would have specifically helped to avoid the kind of situation that occurred with Labour’s Chinese spy problem, by enabling parties to be more informed about who the individuals are who are coming forward. Will the Government take steps to close the loophole created by the Labour Welsh Government and the SNP Scottish Government that, for the first time, allowed Russian, Chinese and Iranian citizens resident in those countries to donate to UK-wide politicians and political parties? Why has the Minister chosen not to include China in the enhanced tier of the foreign influence registration scheme? While we recognise that the Government are pursuing greater trade with China, which is a legitimate political expectation, is that not a green light to the Chinese Communist party to enhance the degree of influence it seeks to transact in British politics? Does the Minister and do the Government accept that UK politicians themselves are low risk? It is important that we are here having this debate and seeking the highest possible standards. In the past, we saw gold-plating, with the politically exposed persons rules that saw parliamentarians on all sides of the Chamber being deprived of access to basic financial services. Does the Minister believe that we need to remove the risk of genuine, legitimate UK politicians being debanked because of their political views? Finally, and perhaps most importantly, in the context of the need to maintain consensus, why are the Government failing to consult the political parties on their plans for changes to political finance law, contrary to the precedent set by past Administrations of all parties? Does the Minister accept the long-standing convention that the Government of the day do not unilaterally seek to impose measures affecting political finance to their own partisan advantage? Will she undertake that there will be discussions with the Parliamentary Parties Panel and that there will be formal consultation with the parties? Will there be discussions through the so-called usual channels or on Privy Council terms? That way, we can ensure that in the context of electoral law that is complex—and for good reason: to protect the integrity of our democracy—we can retain cross-party confidence that those rules are not being used by the Government in pursuit of their own political advantage.

16:47:00

I thank my hon. Friend the Member for South Dorset (Lloyd Hatton) for opening this debate and congratulate the Backbench Business Committee and its key members on granting this debate. I am extremely grateful to hon. Members for their insights and excellent contributions, all of which are incredibly valuable as we make progress on such an important agenda. I have heard real passion and conviction in today’s speeches. In those powerful speeches in defence of our democracy, our desire to protect it from those who would distort and disrupt it was clear. The UK’s democratic system has evolved over time to create a stable and adaptable political ecosystem, with strong institutions that are rightly held as exemplars the world over. We can be proud of our historic commitments to expanding democratic rights and making our system more representative and inclusive. We must not be complacent, however. Democracy is hard-won and fragile. The price of our democracy is eternal vigilance, and nowhere is that truer than in campaign finance and political funding. This Government are committed to strengthening our democracy and ensuring full participation in our elections. We will set out the Government’s approach to elections and electoral reform for this Parliament in a published document before the summer recess. Effective regulation of political finance is crucial in maintaining public trust in our electoral systems, and that point was well made today in the speeches by hon. Members. The UK has a strong political finance framework that makes it clear that only those with legitimate interests in UK elections can make political donations. Foreign money has no place in the UK’s political system, which is why the law is clear that foreign donations are not permitted, with the exception of donations from certain Irish sources to Northern Ireland political parties. That recognises the special place of Ireland in the political life and culture of Northern Ireland and is consistent with the principles set out in the Belfast/Good Friday agreement. Accepting or facilitating an illegitimate foreign donation is rightly a criminal offence. Political parties are required by law to take reasonable steps to verify the identity of a donor and whether they are permissible, and there are rules that safeguard against impermissible donations through the back door. While it is clear that foreign donations to political parties and other campaigners are illegal, the Government recognise the continued risks posed by actors who seek to interfere with and undermine our democratic process—a point well made by a number of hon. Members. We do not think that the current rules provide strong enough safeguards. That is why the Government committed in their manifesto to “protect democracy by strengthening the rules around donations to political parties”, including enhanced safeguards against foreign donations. We are considering a series of policy interventions, such as enhanced checks by recipients of donations and tighter controls on donors, including more restrictions around company donations. Hon. Members have mentioned the important role that the Electoral Commission plays in the UK’s democratic system as the regulator of political finance. Robust regulation and enforcement of political finance rules are crucial for promoting public confidence and trust in democratic processes, ensuring integrity and combating the threat of foreign interference. As part of delivering on our commitment to strengthen the rules around political donations, we are reviewing whether any changes are required to the role and powers of the regulator to ensure that enforcement provides a clear deterrent against breaking the law while remaining proportionate. The Government are developing proposals to give effect to those commitments. In the meantime, I assure hon. Members that we are carefully considering evidence from a wide range of stakeholders, including recommendations from the Public Administration and Constitutional Affairs Committee, the Committee on Standards in Public Life and the Electoral Commission. At its core, that work is about protecting the integrity of our democratic process. It is therefore vital that we remain responsive to the full range of threats to our democracy and continue our efforts on the related issues of election security and preparedness. Working across government with the intelligence agencies, the devolved Governments, the police and external partners, the Government will continue to monitor and respond to emerging issues, such as protective security cyber-threats, as well as misinformation and disinformation.

I am pleased to hear the Minister say that the Government are awake to the evolving nature of the threat, especially in cyber and on social media platforms. One of the things that I hope they look at is the various ways that social media can be used to directly or indirectly benefit political parties.

The defending democracy taskforce, chaired by the Home Secretary alongside the Deputy Prime Minister, is very much looking at those issues.

My hon. Friend talked about the evolving nature of the threat. Members on both sides of the House have spoken of Elon Musk, and I feel compelled to do so, too. This is a man who, when our country was going through riots, said that we were on the verge of civil war. This is a man who said that one of our own Ministers should be put in jail. Is she able to say for the record that that is exactly the type of person who we need to investigate, and that his money has no place in our politics?

It is crucial that we focus on ensuring that our democracy and its integrity are protected from interference and that we have public confidence, and that is our focus. Instead of going into specific individual cases, my focus is on ensuring that we build trust in our system and protect our democracy against interference, and political finance is a key part of that. In closing, I thank hon. Members from across the House for their contributions to this important debate, which was rich with suggestions and ideas. As we make progress in the coming months, I very much look forward to working with colleagues, across parties, to ensure that we take the necessary action. We want a robust, vibrant and representative democracy, and that means fighting foreign interference and unfair funding. I look forward to bringing forward further details, before the summer recess, on how we intend to strengthen our democracy and uphold the integrity of elections.

16:55:00

I thank all Members for a thoughtful and constructive debate. I thank the hon. Member for North Herefordshire (Ellie Chowns) and my hon. Friend the Member for North East Hertfordshire (Chris Hinchliff) for their particularly thoughtful contributions, my hon. Friend the Member for Poole (Neil Duncan-Jordan) for his powerful remarks about the relationship between donations and public trust, and the hon. Member for Wimbledon (Mr Kohler) for his consensus-driven contribution. I thank my hon. Friend the Member for Walthamstow (Ms Creasy) for outlining the urgent need for change—we cannot keep waiting for reform to materialise—and my hon. Friend the Member for Kensington and Bayswater (Joe Powell) for setting out the important context of our global responsibility to fight dirty money and clean up politics. I thank my hon. Friend the Member for Cities of London and Westminster (Rachel Blake), who is no longer in the Chamber—[Hon. Members: “Yes she is!”] Oh, she is. Apologies—she has been playing musical chairs. I thank her for highlighting what is at stake if we fail to defend our vibrant democracy. I thank my hon. Friend the Member for Bolton West (Phil Brickell) for outlining robustly the risks posed by Russian oligarchs and their dirty money. We must stand up against it. Before I bring my remarks to a close, I gently say to the hon. Member for Dewsbury and Batley (Iqbal Mohamed) that this is an important discussion—I think we all agree on that—but we must always be driven by facts and evidence. Oversimplifying the arguments means that we will not get the right outcomes. I believe that one can support a policy such as increasing defence spending to 2.5% without somehow being in hock to or in the pocket of the military industrial complex, as he put it. That is a gross oversimplification, and I gently remind him of that. Finally, I thank the Minister for her contribution. I welcome the Government’s commitment to setting out their thinking on this important issue later this year. I thank her for reconfirming that foreign donations have no place in British politics and for making it clear that the Government agree about the need for stronger safeguards. The Electoral Commission will play a crucial role in this. We must ensure that it is fully independent. Question put and agreed to. Resolved, That this House recognises that loopholes in regulation allow for opaque funding of political parties; expresses concern over the prevalence of substantial financial contributions from corrupt individuals and foreign governments, which render political parties susceptible to manipulation and undue influence; acknowledges the risk these opaque funds pose to national security and the health of democracy; further recognises the need to strengthen the powers and independence of regulators to help the regulation of political donations; and calls on the Government to tighten the law on permissible donations to make clear that political parties cannot accept money from impermissible sources or from companies that have not made enough money in the UK to fund the amount of their donation or loan.