Election Campaign Finances: Regulation

Thursday 8th July 2021 Westminster Hall

[Ian Paisley in the Chair]

15:15

[Ian Paisley (in the Chair)]

I remind hon. Members that there have been some changes to procedures in Westminster Hall because of the hybrid arrangements. Debate times have been amended, as you will already know. I remind hon. Members participating physically and virtually that they must arrive at the start of the debate and remain until its completion, and keep their cameras on at all times—so we can keep an eye on you and make sure you are having as much fun as we are.

I also remind hon. Members to sanitise the desk they have been using before leaving the room. If those of you joining us virtually have any technical difficulties, email [e-mail] and they should be able to sort out any immediate problems.

15:16

[Damian Collins (Folkestone and Hythe) (Con)]

I beg to move,

That this House has considered the regulation of election campaign finances.

It is a pleasure to serve under your chairmanship, Mr Paisley. Before I start, I would like to say what a pleasure it is to see the Minister in her place in Westminster Hall this afternoon. The debate has come at a timely moment. The Government published the Elections Bill this week and yesterday the Committee on Standards in Public Life published its report on the regulation of election finance—a lengthy review. I myself was interviewed by the Committee on my work chairing the Select Committee on Digital, Culture, Media and Sport’s inquiry on disinformation and fake news. I thank the Minister for giving me the chance to discuss the Elections Bill with her and her officials some months ago, before it was published.

It is very important to have these periodic reviews of election law, because technology changes the way we live our lives and the way in which elections are fought, and regulations have to keep pace with changes to society. At the heart of good election regulation are two simple and fundamental things that have stood us in good stead through the ages, and it is important that they are translated into the modern world: transparency of funding and transparency in campaigning. We all know that when we deliver leaflets in our constituencies during elections, there is an imprint on those leaflets saying who paid for them and who they promote. There is no provision for online campaigning, and given that online campaigning—particularly on Facebook—now plays a much bigger part in everyone’s campaigns, it is increasingly important that there should be. That is why I welcome the fact that the Government are recommending the introduction of electronic imprints as a legal requirement in the Bill. It is a very necessary reform.

One of the big challenges that we face is not campaigning under our party banners. To an extent, we all have a bit of personal jeopardy if we put out leaflets with a party logo or our names on them: there is an assumption that they belong to us. Although, of course, as recent by-elections have shown, it is possible for people to put out leaflets without necessarily saying who they are, so this is not a purely online phenomenon, but it is one that is increasingly important in the online world. When non-party campaign organisations—not official registered party groups—campaign with increasing resources and increasing funding, not just in election periods but throughout the year, it is important that there is some understanding of where their funding comes from when they seek to campaign on a political issue.

The problem does not just affect the UK; it is a problem around the world. In 2019, I attended the International Grand Committee on Disinformation in Ottawa, Canada. That was a meeting of parliamentarians who were mainly interested in digital campaigning, disinformation and the role of elections in the online world. It was the second such meeting. The first was the meeting I chaired here in the Boothroyd Room as part of the DCMS Committee’s inquiry on disinformation and fake news. At that meeting in Ottawa, one of the witnesses we questioned was Ellen Weintraub, the commissioner for the Federal Election Commission in the United States. She set out the problem with online donations as she saw it in America, and I think people would agree that there are a lot of parallels elsewhere in the world, including here. In response to a question that I asked her about the difficulty of tracking money online, she said that

“our entire system of regulation is based on the assumption that large sums of money are what we need to worry about and that this is where we should focus our regulatory activity. On the Internet, however, sometimes very small amounts of money can be used to have vast impact, and that doesn’t even get into the possibility of Bitcoin and other technologies being used to entirely mask where the money is coming from…The problem with dark money is that you never really know who is behind it. There has been about a billion dollars in dark money spent on our elections in the last 10 years, and I cannot tell you who is behind it. That’s the nature of the darkness…We have a constant stream of complaints about dark money. The case I just described to you is one of the foremost examples we’ve seen recently. It can be money that comes in through LLCs…In this case, it came in through the domestic subsidiary of a foreign corporation.”

She sets out the nature of the problem. It is easy to transfer money in small amounts anywhere in the world, but it is very difficult to trace. If that money is being donated to political campaigns, of whatever nature, it is difficult to know the original source of the funding. We need to be very mindful of that in the digital age.

Just before the last general election, I chaired a DCMS Committee session with PayPal. Interestingly, PayPal gave an answer similar to that which we often get from technology companies about the things that happen on their systems. Its view was that it was not its responsibility to know the source of funding, or indeed whether funding was permissible, when someone made a political donation through its systems. If someone overseas makes a political donation to a political party in the UK, the platform facilitating the transaction says it has no obligation to know or check, even though it is being used to facilitate what would be an offence. The liability rests entirely with the party receiving the funding, but I do not think that payment platforms should have no role in supervising what goes on. They could at least change their settings so that the country of origin of a donation is clearer. Again, I know that this is something that the Government have looked at in their Elections Bill to try to ensure that there is greater transparency on foreign donations, which is very important.

The Committee on Standards in Public Life has made some specific recommendations that merit consideration. One is that company donations should not exceed net profits after tax generated in the UK within the two preceding years, which is very helpful. Businesses make donations to political campaigns—I have had businesspeople in my constituency in Kent make donations to my political campaigns. It is a perfectly proper form of donation, but it is clear which companies are involved, as they have to declare it, just as an individual would have to declare it. We should guard against shell companies being used to make large donations when they are not turning any profit, because the question will rightly be asked whether the money was transferred to that company so that it could make a donation but not generated by it. In that case, where did it really come from? The Committee on Standards in Public Life was right to make that recommendation and it is worthy of consideration and debate.

Recommendation 10 in the Committee’s report was that all donations over £500 be donated through the banking system, which would allow greater transparency on the source of funds. People would have the option of making smaller donations through electronic payments and systems such as PayPal. Paying money through the banking system is not a guarantee of transparency, but it is a more transparent method. Again, it is worth considering what the threshold should be in that circumstance.

As I have already said, I welcome the fact that the Minister proposes in the Bill to have electronic imprints on electronic campaign materials, but there should also be common standards on the role that technology companies perform in this regard. Some companies have ad libraries where they keep a store of all the ads that a campaign has placed. Facebook does that. It also requires that anyone placing an advert has a Facebook page, and they have to demonstrate to the company that they are a real person. However, I know the Information Commissioner has spoken about the difficulty sometimes in tracking down the real source of campaign ads, particularly when that source is not a political party but a new organisation that has just been set up. We need to make sure we have high standards there, so that people placing political ads are known and are known to be permissible advertisers.

Ad libraries for political campaigns should not be based on the platform policies of the companies. It would be good practice to ask anyone advertising through online platforms, and for those platforms to require a record of ads to be kept. Ads on social media can be placed as dark ads, where they target individuals and not everyone else can see them. It is useful to the democratic process for everyone to be able see and check what a campaign organisation is saying to its voters, even if it is not targeting those adverts at anyone.

In the same way, it is important for people to know why they are being targeted. There are systems, particularly on social media, whereby people can look at why they are receiving an advert—why it has been targeted at them—but they are not necessarily standardised. It would be a good thing for people to be able to see why they were receiving a political message. Is it because they have declared an affiliation for that party and therefore they are being targeted, or is it for other reasons? People should have the right to check and there should be standardised tools in that space.

There is also the question of ads that are fraudulent, wrong or misleading during elections. This is not just about policy debate; I think it is very difficult to regulate political opinions. As we all know, politicians can give two totally different arguments on the same subject, based on different interpretations of the same facts. We cannot seem to regulate that, nor do we try in this country. The fact that we have imprints on ads creates personal jeopardy for what we say—we have to put our name to it and it can be traced back to us. However, in the near future, technology will take us to a place where deepfake films could be made of a politician saying something inflammatory on the eve of an election. In fact, it would be a synthetic creation of them on film, saying something that they had never said. If that ad was being placed online on social media, and it could be demonstrated and proven that it was fake—that it was not based on real footage—what action would be required? Would it be a required action of take-down by the social media companies? Would the content be considered illegal for electoral purposes? Would it be stopped? In the very near future, new technology will make that sort of campaigning very cheap and easy, and we have to consider our response to that.

There is also the question of foreign placement of advertising, such as the much talked about case in America during the 2016 presidential election of the Russians buying ads on Facebook to target voters. It was an offence there, and indeed, foreign buying of ads to target voters in the UK would be an offence too. There are different countries around the world—not just the Russians, but the Iranian Government and other Governments—that engage in the process of electoral interference in other countries. We should regard that as an offence having been committed. If it is an offence that has been committed, and those ads have been identified as being run to target British voters, then it is legitimate to ask whether that activity is illegal. If it is illegal, there are two things we should consider: it is not just an offence committed by the person who has placed the ads, but an offence committed by the platform for running those ads in breach of the law.

The Government’s draft Online Safety Bill will require social media and other technology companies to have policies in place to remove illegal content. We need to consider whether an illegal ad, placed on social media by a foreign agent, targeting UK voters, would require the social media company to remove it as a form of illegal content, as it will be required to do under the Bill. In that situation, should that be a requirement of the regulator? The Bill recommends that Ofcom be the regulator—we can question whether for political ads it should be Ofcom or the Electoral Commission, whichever is most appropriate. If we regard such ads as being illegal, should the regulator’s task under the Bill be to say to the social media company that they must demonstrate to us that they would not only remove those ads when identified, but have systems in place to try and stop this happening—to check when someone places an ad whether it is illegal, to identify it and to stop it? Good practice should be that social media companies take an interest in where in the world people are buying ads from, and, when they do it, whether they are doing so in breach of electoral law.

I labour that point because I think it is important. I remember questioning Facebook about the case in 2016; about whether they had identified Russian ads that had run in America, and whether they had ever identified anything like that in previous elections in the UK. They said that if we had intelligence that that had happened, we could give it to them and they would check. However, there was no obligation for them to have those systems in place to pre-emptively stop it. If this was another form of fraud, such as banking fraud, banks are required to proactively look for, and identify, likely sources of fraud, and to notify the authorities of something suspicious. That does not exist in law around the placements of ads during elections. The combination of the Elections Bill and the draft Online Safety Bill that the Government are bringing in poses this natural question as to whether some forms of campaigning are illegal and, in that case, whether the regulator should take a view on not just acting against them, but ensuring that the companies have policies in place to make sure that this sort of campaigning does not happen in the first place.

These are all incredibly serious and important issues. I have spoken to the Electoral Commission about this, and it finds it quite frustrating, when dealing with technology companies to pursue lines of inquiry about suspicious activity, that unless it has launched a formal investigation, the company will not co-operate, because it is under no obligation to do so. Again, we need to consider the powers of the Electoral Commission in this regard both to make preliminary inquiries of a technology company about likely offences relating to digital adverts and to share information that it has discovered that could be relevant to the work of the police or the Information Commissioner. It is important that we consider those points.

These are important issues, and this debate is timely given the welcome introduction of the Government’s Elections Bill, the soon-to-start parliamentary scrutiny of the draft Online Safety Bill, and the report by the Committee on Standards in Public Life. That report is the first of its kind for 20 years, which shows that these things come along only periodically, so it is important that we get this right.

15:31

[Anum Qaisar-Javed (Airdrie and Shotts) (SNP) [V]]

It is a pleasure to serve under your chairmanship this afternoon, Mr Paisley. I welcome the opportunity to speak in this incredibly important debate, which was secured by the hon. Member for Folkestone and Hythe (Damian Collins)—I think I have pronounced his constituency correctly; apologies if I have not.

Free and fair elections are one of the cornerstones of our democracy. Elections place power in the hands of the people to choose the politicians they wish to stand in this House to represent their needs and interests. However, a true democracy is not defined by the holding of elections alone. It is essential that our elections our competitive, inclusive and free from corruption and undue influence.

In this digital age, our democracy faces new challenges as our elections are increasingly fought on the battlegrounds of social media. As we continue to adapt to this new media age, so must our electoral regulations. It is vital that these regulations are updated to ensure political parties do not use the digital landscape to abuse voter data and undercut electoral finance laws.

Social media is playing an increasingly important role in modern politics. It has become the stage on which free debate and the sharing of ideas flow, and while we have all experienced the negative side of social media, it has undoubtedly made politics more accessible. I have personal and recent experience of this. In the recent Airdrie and Shotts by-election, whereby I was elected to this House, I made use of social media. I regularly created TikTok videos explaining a day in the life of a candidate-if you have not attempted a TikTok dance, Mr Paisley, I highly suggest it. The comments from viewers were positive, and many noted that these videos actually helped them engage with politics and made politics more accessible to them as voters.

However, as with all advances in technology, with each positive development comes a challenge that we must adapt to and overcome. In recent elections, we have seen political parties and sides exploiting technology to abuse voter data and undercut electoral finance laws. Electoral regulations are essential to ensuring that elections remain free and fair. However, social media has created a loophole that certain political sides have been all too happy to take advantage of.

For example, during the Brexit campaign, Vote Leave utilised data acquired from football sweepstakes to build its voter harvesting base and target voters unsuspectedly with political campaigns. It utilised these illicit tactics to boost its campaign while subverting regulations. The Tories—we can begin to see a pattern here—illegally collected the ethnicity and nationality data of 10 million voters to target them in the 2019 general election. It appears that some in the Conservative party believe that there is one rule for them and another for everyone else. However, such illegality cannot be allowed to go unchecked, and if political parties cannot be trusted to follow the rules, it is essential that we strengthen our electoral regulations to prevent them from compromising our democracy.

The Tories are also launching an attack on our democracy by scrapping the electoral checks and balances of the Electoral Commission and the Fixed-term Parliaments Act 2011, which are essential to upholding the standards of our democracy. As the Tories attempt to gut the Electoral Commission, I must ask where the Labour party stands on defending our electoral democracy. By abstaining in the vote to remove the Act, it is failing to be an Opposition—to stand up to the Conservatives’ attacks on democracy and their blatant attempts to grab power while polls are in their favour.

The Tories’ attempts to weaken the checks and balances of the Electoral Commission have very real consequences for our democracy. Electoral finance laws will continue to become entirely redundant, creating a system in which the party with the biggest cheques has the greatest advantage. That will undoubtedly impact the ability of smaller parties to compete in elections and will continue to uphold Westminster’s two-party system, which is becoming increasingly less reflective of the range of political beliefs held by the electorate.

This attack on our electoral system is just the latest of the Tory Government’s sustained attempts to chip away at our democracy. In recent years we have seen this Government attack the judiciary, disregard parliamentary convention and even attempt to suspend our democracy completely through the unlawful Prorogation of Parliament. Just this week we have seen the Third Reading of the Police, Crime, Sentencing and Courts Bill, which is nothing less than an attempt by this Government to clamp down on the democratic right to protest. It is no surprise that they are going after the institutions that hold them accountable: they do not want to strengthen our Electoral Commission, because the commission’s weaknesses allows them to benefit. It is not democracy that matters to this Government: it is the ability to use their money and influence to gain power that is of most importance.

For centuries, the United Kingdom has regarded itself as a leader of democracy—an example for nations around the world to follow. I say, as someone whose ancestors were part of the British empire, that there has been this regard for the UK as a leader of democracy. However, under this Government there have been continuous attempts to chip away at that democratic system, moving power from the ballot to the wallet. It is vital that we stand up against this attack on our democracy and reject any attempts to weaken the power of the Electoral Commission. Instead, we should seek to extend its powers to ensure that the cornerstone of our democracy is protected from any attempt by the Government to utilise technology and finances to improve their outcomes in future elections.

15:38

[Stephen Kinnock (Aberavon) (Lab) [V]]

It is a pleasure to serve under your chairmanship, Mr Paisley. My thanks go to the hon. Member for Folkestone and Hythe (Damian Collins) for having secured this important debate and for all the excellent work he has done on this issue over the years in various roles.

I welcome the report of the Committee on Standards in Public Life on the regulation of election finance, and this chance to debate it alongside the Elections Bill, which is making its way through Parliament. That Bill includes five core measures to improve and tighten up the important components of the political finance framework, namely fairness, transparency and controls against foreign spending. The five new measures it introduces are third-party campaigner registration; restriction of third-party campaigning; a ban on simultaneously registering as a political party and a third party; restrictions on co-ordinated spending between political parties and third parties; and the requirement for new political parties to declare assets and liabilities.

These are the right measures in terms of their focus, and they are broadly a step in the right direction, but they are simply not robust enough and do not go far enough. They do not reflect the seriousness of the challenges our democracy faces from dark and dirty money, which has the potential to fundamentally corrupt our democratic system. I will come back to what the recommendations should be and what changes need to be made to the Bill—although we in the all-party parliamentary group on electoral campaigning transparency broadly support the Bill, there are a number of areas where it really needs to be strengthened.

Let me give some extra context as to why we think the debate is so important. For far too long, we have taken our democracy for granted. We have been complacent, and our complacency has allowed malign forces to subvert our rules and undermine our institutions. It is not just a British phenomenon, of course. Dark money and dirty data are a real and present threat right across the west.

The work that I have been doing over the past few years in my role as chair of the all-party parliamentary group, in partnership with FairVote, has been to focus on British democracy and on how we can ensure that we have our own house in order, with a system of election finance regulation that is resilient to hostile threats and fit for the 21st century. We launched our report “Democracy in the Digital Age” in January 2020. It was the first real attempt to step up and meet the challenges around finance and transparency, and we hope that the Elections Bill is a sign that Parliament is finally waking up and realising that our democracy is under threat and that we must do something about it.

Many of the revelations about just how flimsy our defences are were brought to public attention following the EU referendum campaign and through the prosecutions in some of our general elections in the past five years. Our APPG has always been clear that we are about looking to the future rather than back at the past. We are about protecting the soul of our democracy for generations to come, learning the lessons of the past but recognising that we have to be resilient for the future.

Let us be absolutely clear: there is a real problem with election finance. The Electoral Commission was established at a time when political campaigning centred around door-knocking and leafleting. It is an analogue regulator in a digital age. Digital campaigning and online political engagement have revolutionised politics, so it is critical that the commission is given the tools and resources it needs to make it fit for purpose in the 21st century.

Crucially, the Electoral Commission actually recognises that. Its leadership has openly acknowledged that the commission lacks resources and bite. Paltry maximum fines of £20,000 are really just the cost of doing business for some of the very wealthy funders we are dealing with, while a lack of prosecuting power means there is little deterrence for those who are all too ready to break the law.

It gives us confidence to hear from the Committee on Standards in Public Life report that

“The majority of contributors expressed confidence in the Commission as an independent, non-partisan regulator, including those who see room for improvement in how the Commission carries out its role.”

The committee is right to say that. Although some have called for the abolition of the Electoral Commission, and draft legislation has called for taking away its independence and prosecutorial powers, the aim of the forthcoming electoral integrity Bill should be to give the Electoral Commission the resources and power it needs to tackle the threats to our democracy, as outlined in the CSPL’s report.

It is deeply concerning that, for the first time, a majority of the members of the Speaker’s Committee on the Electoral Commission are from the governing party. That is deeply unfortunate, as independence can be ensured only if cross-party consensus is maintained. We urge changes to be made to return confidence in the Speaker’s Committee and its governance role in this context. As the CSPL’s report makes clear,

“An electoral system needs to be demonstrably fair and to command the confidence of political parties and the public and must be overseen by a strong independent regulator.”

Our all-parliamentary group’s report makes 20 recommendations across three specific areas, based on evidence from 70 different organisations and experts. There were three clusters of areas. The first cluster was around transparency: how we make sure that citizens have access to information about online and offline aspects of election and referendum campaigns. Secondly, there was deterrence: how we offer the Electoral Commission the tools it needs to deter and, if necessary, penalise. Thirdly, there was monitoring: how we ensure there is a process to review whether campaign laws are up to date and can be reformed when needed. We believe those are the three key ingredients needed to ensure that the public feel confident that the system works.

Focusing specifically on campaign finance regulation, we said that the Elections Bill needs to be amended according to the following recommendations. All donations should be regulated

“by reducing permissibility check requirements from £500 to 1p for all non-cash donations”.

We should also

“Increase transparency and regulation of local candidate financial reports by shifting oversight to the Electoral Commission…Streamline national versus local spending limits with a per-seat cap on total spending…Modernise spending regulations by instituting per-annum spending limits…Standardise financial reporting”

and

“Require corporate donations to come from profits reported in the UK”.

We also say:

“Third Party Political Organisations and political parties should complete an ‘Exit’ audit after an election period”.

Finally, we should include valuation of the dataset costs in spending regulations. Those recommendations must be taken seriously by the Minister, and I hope she will be open to amendments accordingly.

Over the past year, we have sought to gain support in Parliament, and we are looking to lobby the Government, as well as those in Cardiff and Holyrood. We continue to make progress on those fronts. However, I want to finish by saying this: all around the world, democracy is in retreat. Authoritarian regimes outnumber democracies for the first time since 2001 and they are on the rise. Britain must be at the forefront of the fight to defend democracy and to stand up for human rights and international law. If we are to be effective and credible in working with our allies to do that, we must start by defending democracy at home—we must get our own house in order. It is our job to build processes, systems and institutions that inspire trust. It is our job to clear away the fake news, the dodgy data and the dirty money that is polluting our system. It is our job to save our precious democracy and to safeguard it for future generations. Our most dangerous enemy is complacency, and I will continue to work with colleagues across the House to make sure that Parliament is complacent no longer.

15:47

[Deidre Brock (Edinburgh North and Leith) (SNP) [V]]

It is a great pleasure to serve under your chairship, Mr Paisley. I commend the hon. Member for Folkestone and Hythe (Damian Collins) for securing a debate on such an important topic. He has long been a campaigner for transparent electoral campaigning and finances, particularly through his time as Chair of the DCMS Committee. It was good to hear his reflections on non-party campaigning groups, which I will return to; campaigning and spending outwith principal election periods; and the sizeable impact of social media campaigns on citizens, even with relatively little spend. I found his warnings on the need to future-proof our responses to hitherto undreamt-of technological and digital advances particularly important.

I also want to mention the comments of my hon. Friend the Member for Airdrie and Shotts (Anum Qaisar-Javed) on her personal experience of campaigning in a recent by-election. Of course, social media can be used as a force for good and to enable our electorate to hear more about their candidates and the parties they would be voting for, but she also referenced recent examples of illegality in the 2019 general election and other actions taken by the Government in what certainly appear to many of us to be blatant attempts to circumvent democracy.

The hon. Member for Aberavon (Stephen Kinnock) called for a strengthening of our democratic system to fight what he describes as blatant corruption. He says, and I agree with him, that we have taken democracy for granted for too long and we have been complacent while shadowy groups have undermined that precious thing. He also ably outlined a few of the recommendations that our all-party parliamentary group on electoral campaigning transparency made in our report. I am sure the Minister, who I welcome to her place, is aware of those recommendations. It will be interesting to hear her reflections. This debate is vital. We need to restore confidence in the electoral process, and I hope today’s debate goes some way towards raising issues that need to be examined properly by the Government and by all of us..

I welcome the report from the Committee on Standards. It is good to see an official body still committed to supporting higher standards in public life. Heaven knows this Government certainly do not. The view once held of a Westminster system with checks and balances sufficient to outweigh the lack of a written constitution has gone, stripped away by a group of self-interested and unreconstructed politicians. Scotland has bitter memories of Thatcher and the destruction that she and her party wrought on the communities of our country, but I think even she would blanch at this Government’s approach to governance: ineptitude and slavering greed, shot through with a staggering sense of entitlement and a callous disregard for the difficulties of ordinary folk, and now further attacks on the democracy that underpins public life throughout these islands. Who cares for lost voting rights?

I am very proud to be a member of the all-party group on electoral campaigning transparency and of the report that we produced in January 2020 after a lengthy inquiry, with its 20 recommendations for improving the electoral system. I commend the many expert witnesses to the inquiry, as well as colleagues, and particularly Fair Vote UK, for all their efforts.

We cannot have a debate on campaign finance regulation without discussing the ways in which that regulation is so regularly circumvented, particularly through the use of social media and digital platforms in political campaigning. Electoral legislation more than 20 years old does not encompass the massive shift that there has been to digital campaigning, so it certainly needs updating and strengthening—a point that journalists such as Carole Cadwalladr have been making, and something that we on the APPG have been arguing for.

The Elections Bill, hastily released to provide governmental cover before the Committee’s report was launched, contained little more than a few scraps thrown to the campaigners, which is perhaps why the Government have decided to remove the word “integrity” from the Bill’s title. Even Ministers cannot swallow it. Now that that report has been published, I look forward to the Minister indicating how the Government will incorporate the more than 40 recommendations that it makes for the Elections Bill. I would particularly like to see the Government address the long-standing dark money issues that hover around so-called non-party campaigners.

The infamous Brexit donation that came via a former Scottish Conservative chair and Tory candidate, routed through the Democratic Unionist party to take advantage of the less strict reporting regime in Northern Ireland, springs to mind. It came from a secretive body based in Scotland called the Constitutional Research Council. We still do not know who supplied the DUP with that record £435,000 donation, which it used to pay for a wraparound advert in a newspaper that does not even appear in Northern Ireland days before the EU referendum.

That is not the only example. Unincorporated associations are regularly used to funnel money into UK politics without revealing the sources of the money. The Scottish Unionist Association Trust provided 54% of the income for the Scottish Conservatives from December 2019 to December last year. Another 25% came from the Stalbury Trustees. What those organisations have in common is that no one knows where they get their funds from. We could also mention the Midlands Industrial Council, the United and Cecil Club, the political committee of the Carlton Club, the Leamington Fund, the Scottish Conservative Prize Draw Society, the spring lunch and so on.

Money with no proper sources declared is funnelled into party politics. It stinks. It reeks of corruption. The letter of the law was not broken, we are told, but the spirit of the law is bent beyond recognition. How can the recipients of the cash be sure that it satisfies the requirements of the legislation when they cannot know where it originated? We need a robust body, independent of Government, to monitor and have the powers to enforce when they find error, deliberate or otherwise.

I am delighted that the Committee on Standards gives the commission such strong support in its report. The commission’s current powers are insufficient. I agree with the Committee that the commission’s powers should be strengthened, not weakened or removed, and that non-party campaigners should disclose more information, such as, for example, the basics of a website address, and should register at each election in which they intend to campaign. Various campaign groups sprang up just before the last Scottish election, using Facebook adverts in particular to push political messages. It was impossible to establish who paid for the ads and the groups’ political links. That is currently legal, but it cannot be right that non-party campaigning groups do not have to outline to the public who funds them. It cannot be right that we do not know what links they might have to political parties or to political lobby groups, which are themselves funded secretively and might even present themselves as, say, educational charities.

I note that those calling the loudest for the weakening or even removal of the Electoral Commission’s powers have clearly benefited in the past from the largesse of undeclared donors—people who do not want the slosh of cash in public life to be monitored. It is worth noting, as was made clear in the evidence of witnesses before the Public Administration and Constitutional Affairs Committee recently, that the quality and clarity of Electoral Commission advice depends largely on the quality of the legislation. These are not Electoral Commission rules; these are rules set by Parliament. If problems come about during elections and appear in Electoral Commission ambiguities reports, it is up to Parliament to address that. One could therefore argue that the Government and their supporters are taking issue with Electoral Commission methods while ignoring the part successive Governments have played in creating those methods before now.

Another important point is about oversight of the commission, which is in part conducted through the Speaker’s Committee on the Electoral Commission. I believe now is the first time ever that one party has a majority on that Committee, and it is the party of Government. That cannot be healthy. I urge the Government and the Speaker to look at how that undemocratic and unfortunate situation might be reversed. Will the Government also look at incorporating anti-money laundering regulations, including such features as risk assessments, enhanced due diligence and setting out specific procedures for record keeping, monitoring and the management of compliance with the policies? “Know your donor” needs to be integral to our campaigning culture.

What people are looking for in the regulation of election or referendum campaign finances is transparency; a level playing field; confidence and trust in the electoral processes, and for those to be simple and clear; strong accountability and enforcement action; and for the regulator to be independent of political or other influences. Our legislation needs to reflect that.

15:57

[Fleur Anderson (Putney) (Lab)]

It is an honour to serve under your chairship, Mr Paisley. It is a pleasure to respond to this debate on behalf of the Labour party, and to follow the hon. Member for Edinburgh North and Leith (Deidre Brock). I congratulate the hon. Member for Folkestone and Hythe (Damian Collins) on securing the debate and on his thoughtful remarks, which in places were worrying. I also thank my hon. Friend the Member for Aberavon (Stephen Kinnock) for his important comments on the prevalence of dark money and dirty data, the complacency with which this issue has been treated up to now, the shortcomings of the Electoral Commission, and his recommendations on transparency, deterrence and monitoring.

Members can certainly agree that the laws that govern our elections are complex, fragmented and confusing. We need the highest possible standards for electoral finances—free, fair and corruption-free—with strong regulation to guard the integrity of our democracy and to guard against the influence of foreign state and non-state actors and all threats to our democracy, both at home and abroad. It is widely accepted that our electoral laws are not fit for the modern age, with many written before the creation of the internet. Such an archaic system has left huge loopholes in the way our elections are regulated. The Law Commission’s report back in 2016 made a series of constructive recommendations about electoral law, but the Conservative Government have failed to take any action before now.

The fact is that, over the past decade, the Conservatives have failed to take any action to modernise our electoral laws or close the loopholes that allow foreign money to flood into our democracy. The reason is clear. The archaic laws benefit the Conservative party, allowing wealthy foreign donors who have never paid tax in the UK to bankroll their campaigns. Instead of closing these loopholes, the Government’s Elections Bill announced this week will further weaken our donation laws, allowing rich Conservative expats unlimited access to our democracy and opening the floodgates to foreign money coming into our politics, at our peril.

It is disappointing that the Government have chosen to pre-empt the Committee on Standards in Public Life report with the Bill, which represents a step back in our democratic process. Indeed, as Dr Jess Garland at the Electoral Reform Society pointed out:

“The Elections Bill not only fails to take into account the comprehensive recommendations of the Committee, but continues to leave many of the most troubling loopholes in our election laws wide open.”

Many of those loopholes have been listed by previous speakers today.

Labour welcomes the “Regulating Election Finance” report published yesterday by the Committee on Standards in Public Life. We certainly need this Committee more than ever. The report suggests practical steps to modernise and streamline the way donations are made. The report lays bare the damage that years of inaction by the Government has caused, undermining transparency in our democracy. A key issue at the heart of the report is the role of the independent elections watchdog, the Electoral Commission. Labour is clear that an independent watchdog is paramount in having proper accountability in our democracy. The Committee on Standards in Public Life’s report overwhelmingly supports that view, recognising that an independent electoral watchdog is the cornerstone of any democracy.

I am sure that Members of the Committee were deeply concerned by the recent comments by the Conservative party co-chair, the right hon. Member for Cannock Chase (Amanda Milling), calling for the regulator to be abolished or radically overhauled, removing all independent oversight in the conduct of our elections. The regulator needs to be stronger, not weaker. Such action would be hugely harmful and a worrying step for the integrity of our democracy, and one that Labour will continue to strongly oppose.

This week’s Elections Bill contains numerous worrying provisions that weaken and politicise the Electoral Commission, enabling the Tories to dictate the priorities and agenda of an independent watchdog. I hope that the Minister will respond to the concerns raised by the Committee’s report regarding the unbalanced membership of the Speaker’s Committee on the Electoral Commission, which for the first time, as has been mentioned, has a majority of members from the governing party. I share the concerns of my hon. Friend the Member for Aberavon about that. Can the Minister, who I welcome to her place, confirm that she agrees with the Committee that

“independence can be ensured only if cross-party consensus is maintained”?

The report also highlights the weaknesses in laws governing online space, which allow foreign money and untraceable advertisements to threaten our elections and the security of democracy in the UK. In my own election, I was faced with advertisements placed by an opponent who claimed she was a Nobel prize winner; that was not true, but it was hard to counter these advertisements, We need rules that ensure that the data that is used and put out can be retracted and changed, and the record can be put straight during the election, not afterwards when it is too late.

I hope the Minister will take on board the Committee on Standards in Public Life’s recommendations to tighten the requirements to identify the true source of donations. The public deserve and need to know how money is being spent and where that money comes from. It is their vote, after all.

Labour is clear that the Government could prioritise many of these changes right now, well in advance of any election. This is urgent. What is more, the Government have a clear opportunity to use the Elections Bill to introduce the measures. Instead, we have Tory Government who are scaremongering over voter fraud and pursuing dangerous voter ID policies, instead of working to genuinely increase the transparency and accessibility of our democracy. Indeed, I note that the Bill is no longer called the electoral integrity Bill. Can the Minister explain why the name was changed? Could it be because the Bill has nothing to do with integrity and everything to do with voter repression? I look forward to hearing the answer.

If the Government really want to improve the integrity of our elections, they should consider the findings of the Committee on Standards in Public Life, strengthen the regulation, close the loopholes and stop using parliamentary time to weaken the pillars of our democracy.

[Ian Paisley (in the Chair)]

Before I call the Minister, I should say that in the course of this debate a number of wide-ranging and wild allegations were made by some Members, without any reference to evidence. I took advice in the course of the debate to ensure that no allegation of impropriety was made against individual Members of the House and that no new crimes were alleged to have been committed. I am glad to say that all of this debate fell within fair public comment. I think it is important to say that, because of the importance of some of the things that have been said in the course of the debate.

It is a pleasure to call the Minister. Like others, I am delighted to see her back in her place.

16:05

[The Minister for the Constitution and Devolution (Chloe Smith)]

Thank you very much, Mr Paisley. It is an absolute pleasure to return to the House in person after some illness, but it is a particular pleasure to join you this afternoon and to respond to this debate under your chairmanship.

First, I thank hon. Members for the debate that we have had. It is extremely important that these subjects have been debated this week. I particularly thank my hon. Friend the Member for Folkestone and Hythe (Damian Collins) for doing so with reference to his deep experience in these matters and the research that I know he and colleagues have done through their work on parliamentary Committees.

Let me also, at the outset of my speech, welcome the new hon. Member for Airdrie and Shotts (Anum Qaisar-Javed). It is a pleasure to have her taking part in this debate and to congratulate her on her by-election victory. She is absolutely right: social media has indeed opened up our democracy, enthused many people and engaged many new voters. That is absolutely a good thing, and I join her in welcoming it. She is also correct to say—all of us here today know this—that the key electoral legislation that we work under is old. It is 20 years old or 40 years old, in the case of the Political Parties, Elections and Referendums Act 2000 and the Representation of the People Act 1983 respectively, so it is time to update it, and that is the substance of what we are talking about today.

The Government are, and I personally am, committed to upholding the integrity of our electoral system. Before I take that sober tone too far, let me give the House today the amusement of why the word “integrity”, which everyone seems so keen on, is missing from the short title of the Elections Bill. That is because it is in the long title. People will be delighted to read it there. People will find it incredibly reassuring that we want to have a Bill that talks about our elections and emphasises their integrity.

As part of our commitment, we take the regulation of election campaign finances really seriously. We already have a comprehensive regulatory framework in the legislation to which I have referred; albeit that it is decades old in establishment, it is doing its work still. That framework governs the spending and funding of candidates, political parties, third party campaigners and other campaigners at elections. Those rules help to maintain the integrity of our elections and uphold the really important principles that we will all agree on, Mr Paisley, of fairness, transparency and controls against foreign interference.

At this point, allow me to acknowledge a particularly important point made by the hon. Member for Aberavon (Stephen Kinnock), who says that we have the opportunity to lead the world. I am glad that he agrees with me, because this is indeed based on our strong democratic heritage. It is based on the work that we do with our international partners at the G7, and I commend to him the work that was publicised at this year’s G7 summit about the rapid response mechanism and, indeed, a speech that I made shortly after that about the ways in which our Defending Democracy programme here in the UK does this work internationally with our partners and domestically. The Bill that is now before the House also does this, so I will talk about how it does so, while setting out the strengths of the existing framework. I will start with donations.

It is absolutely right that voters and organisations in the UK are able to donate to political parties, to specific candidates, and to election campaigns. Our democracy is strengthened by—indeed, it is built on—the idea that people may donate to campaigns that they believe in. The transparency of that, including the regulation of donations and electoral funding, is a cornerstone of our electoral system and contributes towards a healthy democracy. UK electoral law already sets out a stringent regime of donations controls to ensure that only those with a genuine interest in UK electoral events can donate to candidates or registered third-party campaigners and political parties. For political parties and third- party campaigners, a donation is any contribution with a value of more than £500, while for candidates the donation threshold is £50. Donations can be accepted only from certain permissible sources, such as individuals registered on a UK electoral register, and that includes registered electors overseas.

May I say in passing, Mr Paisley, that I am really sorry that the Labour Front-Bench team seems to think that all overseas electors are in some way dodgy. They are not. They are a vital part of the fabric of our democracy and they deserve their place, which is why we are extending that part of the franchise in the Elections Bill. Donations can also be accepted from registered companies that carry out business in the UK, trade unions appearing on a relevant UK list or a UK-registered limited liability partnership or friendly society.

I also gently pick up the hon. Member for Edinburgh North and Leith (Deidre Brock), who I think is misguided in the extreme—and possibly as unwise as her party leader was this week in the Opposition day debate—to try to have a go at unincorporated associations, from which her party has benefited; I hope that she will reflect on that while she tries to spray mud around. The key point I want to make here is that donations from foreign donors are not permitted. That is the key distinction, and it is the right one that we all depend on.

Turning to permissibility checks, how do we know that donations are fair? Political parties, registered parties, registered third-party campaigners and candidates are supported to carry out the necessary permissibility checks by the Electoral Commission, who provide guidance and advice. If a donation is not permissible, as we all know, it must be returned. In order to ensure accountability and transparency, as we all know, the details of donations received must be recorded and reported, including those that may be impermissible by the Electoral Commission. The commission publishes this online, ensuring that the details of donors of significant amounts are available for public scrutiny. That is one of the foundations of our system, and it is quite right. Political parties are in addition required to provide quarterly donations reports and annual accounts.

There are also important rules about proxy donations, which prevent donations from being given by a permissible donor on behalf of someone else who does not meet the relevant criteria to donate, and that means that the rules cannot be circumvented in that way. It ensures that only those people and organisations with a legitimate interest in UK elections are permitted to fund campaigns.

I want to pick up an argument that has been advanced this afternoon and that I recognise comes in the work of the APPG, led by the hon. Member for Aberavon and the hon. Member for Edinburgh North and Leith. It is the argument that the framework I have just outlined is not enough in itself, and that darkness may still creep in. I would share that concern if I thought that was real, but I think that the framework is enough. It is sound; it is sufficient. It rests on core principles. I look forward to more debate on this point as we get into the Elections Bill, but I want to place it on the record at this point that I think the donations framework is the right one and that it is based on sound principles. I think there is more that can be done in guidance, and a couple of hon. Members have mentioned the idea borrowed from financial services of what they would call the Know Your Client regime, or the idea that an entity can proactively check for itself where its donations or support may be coming from. I am sympathetic to those arguments. We may be able to look at providing guidance to help recipients be proactive in complying with the good framework that we have in place.

Let me turn to spending. The rules also carefully control the spending of political parties, third-party campaigners and candidates in the period before an election, as I suspect, Mr Paisley, we all know. The regulated period differs across the different elections, and we will be familiar with the lengths of time. Candidates are subject to regulation from the day when they become a candidate, and the regulated period for political parties and third-party campaigners is, for example in a UK parliamentary general election, 365 days.

At all those times, spending limits are applied. While they differ according to the type of campaigner or the specific election, these limits are in place to ensure that there is a level playing field and that no campaigner could unfairly spend more on an election campaign than anybody else. That avoids the situation that we see in some other countries, where election campaigns are all too often a fundraising race, which can be unhealthy. In the UK, our spending limits provide for an even playing field but also allow for a focus on the merits of the competing policy arguments at an election. I acknowledge the point made by my hon. Friend the Member for Folkestone and Hythe that there is a debate to be had about the regulation of arguments and of what happens during election campaigns. I will not cover that in my remarks, but I acknowledge his points and look forward to addressing them on another day.

I turn again to how we know our spending framework is good. We know it is good because reports on it must be made to the Electoral Commission or the returning officer. As we all know, that includes all spending on digital campaigning as well as on more traditional campaigning methods. Information is then made available for public scrutiny, and returns for political parties and third parties are published online by the commission. Once again, that brings us back to a core principle that is already in our regulation and that should stay there in pride of place: having transparency for the public and accountability for campaigners.

Let me turn to enforcement. It is absolutely critical that measures are in place to ensure that all campaigners, including parties and candidates, follow the rules on political finance. I have just made the point that transparency and public accountability play an important role. To facilitate that, the Electoral Commission publishes and regularly updates guidance on political finance, including on donations and spending, as well as information on donations. Campaigners can also contact the Electoral Commission for advice. It is really important that the guidance is accessible and comprehensive, and I note another recommendation in the report published yesterday by the CSPL, which calls on the commission to improve its online resources and guidance. That is quite an important point, because campaigners must be supported in understanding how to comply with the rules, if this important regulatory framework is to be effective.

When political finance rules are broken, be it by a political party or a third party campaigner, the Electoral Commission has the necessary powers to investigate, has civil sanctioning powers to take action where it feels necessary, and can and does refer far more serious suspected offences to the police. Clear guidance and proportionate use of both civil and criminal sanctions are essential for ensuring compliance and communicating the seriousness of the rules.

I turn to some of the measures in the Elections Bill, which will further strengthen the rules on election campaign finances. I am acting on a recommendation in the House of Lords Democracy and Digital Technologies Committee’s report to introduce a new tier of registration for third party campaigners. At this point, I acknowledge the political attack that the hon. Member for Putney attempted to make, which is that somehow I have jumped the gun on the CSPL by having the temerity to publish the Elections Bill this week. I am not sure that she can have it both ways. I have spent years listening to and reading recommendations from all quarters to ensure that the Bill is as good as it can be. I welcome the CSPL’s work and that of many Committees, and I suggest that we now get on with the Bill.

Under the new rules, campaigners spending more than £10,000 on regulated campaign expenditure during a regulated period anywhere across the UK will be required to register with the Electoral Commission. That is particularly important, with digital campaigning proving far more cost-effective than traditional offline campaigning. The rules will ensure that campaigners spending significant amounts of money in any of those ways are transparent and accountable to the public—again, that is one of the core principles. The Bill will also protect the integrity of spending limits, and the even playing field that they provide, by removing the potential for anybody to register as both a political party and a non-party campaigner at the same time. I find it breathtaking that this has actually happened—a campaign group has done both, which is a slap in the face for those who believe that we should have a level playing field and that spending limits mean something.

I turn now to another thing that our Bill does: there will be provisions to clarify the law on notional expenditure for candidates. This clarification is intended to restore the understanding widely held before a Supreme Court ruling in 2018. It is really important that candidates are liable only for benefits in kind that they use themselves or that they or their agent directed, authorised or encouraged someone to use on the candidate’s behalf. Doing that will allow candidates and agents to have confidence in their legal responsibilities again. It is really important that those involved in campaigning, spending and reporting—particularly volunteers, as election agents often are—understand their responsibilities and can execute their duties with certainty.

A theme that we will return to time and again with the Elections Bill is the broad-based nature of our politics in this country. It is something to be proud of that our democracy is built on volunteers and grassroots participation. I acknowledge that there will be an argument for taking regulation to the extreme degree. One of the recommendations in the report by the hon. Members for Aberavon and for Edinburgh North and Leith and their APPG, which I have read carefully, is to reduce to zero the threshold for non-cash donations, for example.[Official Report, 18 August 2021, Vol. 699, c. 12MC.] I am concerned that such a recommendation might damage that space for legitimate grassroots participation in our democracy inside this country, which I will defend to my dying day. I am sure we will return to that in further debates, but I thought it helpful to set out my thinking on that at this point.

I will turn to digital imprints, on which my hon. Friend the Member for Folkestone and Hythe rightly focused when he said that he is seeking transparency of funding and of information. That is really important, and I entirely agree with him. I am proud that the Elections Bill will do something world-leading. Not many countries have so far succeeded in doing that, so it is really important that we take the opportunity to do that and do it well.

We are seeking to introduce a digital imprints regime for digital campaigning material. The importance of doing so is widely recognised. We have consulted in depth on the policy to ensure that we create something that will stand the test of time. As set out in the most recent Government response to our consultation, the new regime will require those behind online political adverts and other digital campaign material targeted at the UK electorate to declare themselves all year round, wherever they may be in the world, providing greater levels of transparency to online campaigning. We are also empowering the relevant authorities to access the information that they need, including from social media companies, to investigate suspected offences. As I have mentioned, through those proposals we will be introducing some of the most comprehensive digital imprint rules in the world. I really look forward to giving them the correct scrutiny through the Elections Bill.

I draw my remarks on this area to a close by thanking the Committee on Standards in Public Life for its review, which many hon. Members have spoken about. It included recommendations on a range of fronts. I am pleased to say that we are already taking forward a number of the recommendations as part of the Bill, including the new requirement for political parties to declare if they have assets and liabilities of more than £500 when registering with the Electoral Commission, and if so, to provide details on them.

Furthermore, the Bill will meet the CSPL’s call for the Government to ban foreign organisations or individuals from buying campaign advertising in the UK. We will do that by restricting all third-party campaign expenditure to UK-based or otherwise eligible campaigners during a regulated period before an election. That will safeguard our democracy from foreign interference, in addition to a number of other measures—domestically and with our partners—to defend our democracy.

The Government keep all the rules on elections under close review. Therefore, in addition to what we are bringing forward in the Bill and what we have already covered today, I always welcome reports such as that of the CSPL and other bodies, because they help us to reflect on the most precious thing we have—our democracy.

I again thank the hon. Members who secured today’s debate, and all those who have contributed to it. We have heard a number of arguments begin to be drawn out today, following in the tradition of the reports, investigations and evidence that have been drawn together by parliamentary Committees and—as I mentioned—by the many years of work that go into bringing a Bill before this House. I hope that hon. Members agree that we have begun to engage with those arguments, and that there will be much more to do as we go through the process of the Elections Bill. I really look forward to those debates.

My fundamental argument throughout will be that the existing framework is strong. It is built on the right principles and it serves us well, albeit it needs updating for our age, which, as I have outlined, is what we are doing, particularly with digital imprints. The rules on funding and spending in election campaigns—including, as I have said, by political parties, third-party campaigners and candidates—prize transparency and fairness, while placing important controls on foreign funding and spending. The Electoral Commission has a rightly important role to play in providing guidance to help campaigners comply with the rules. Both the commission and the police have the necessary investigatory and enforcement powers to ensure compliance with the law. As I have said, there will be further measures in the Bill to strengthen those existing principles by increasing transparency, preserving the integrity of spending limits, and extending the prohibition on foreign spending in elections.

The Government remain 100% committed to ensuring that our elections are secure, fair, modern and transparent. That is why I am very pleased to have been part of today’s debate.

16:26

[Damian Collins]

I thank the Minister for her response. I agree that it is good that the Elections Bill has been published: as she said, there has been a very lengthy period of consultation of many of the aspects of that Bill, so it is good to see it published. I am sure that Members will have the opportunity to consider the report of the Committee on Standards in Public Life alongside the Bill as it goes through its stages in both Houses of Parliament.

I thank the Members who have taken part in the debate: the hon. Members for Airdrie and Shotts (Anum Qaisar-Javed), for Aberavon (Stephen Kinnock), for Edinburgh North and Leith (Deidre Brock), and for Putney (Fleur Anderson). I think it says something about the Putney constituency that someone tried to claim they had won a Nobel prize to impress its voters in an election—high standards are expected by the electorate there! I also say to the hon. Member for Aberavon that we seemed to struggle in the debate with different variations on the pronunciation of “Aberavon”, which I think is a consequence of “Grandstand” no longer broadcasting the Welsh rugby results live on Saturdays. Every other week, Aberavon would be the first name out of the hat.

We have had a very good debate on a very important set of issues. The Minister is right to say that the principles that underpin our system are well known, and they are based on transparency and fairness. The important challenge we face now is to make sure that those principles can be translated into the digital world, which is a harder challenge than we have faced before, because in the system as we knew it before digital campaigning many safety brakes were built into the system.

Editors of newspapers are liable for the adverts that they publish; in some cases, the printers of leaflets have a liability for the leaflets that they publish; and so on. There is not the same level of transparency in the way that digital systems work, which is why the law requires reform and change. I am grateful for the debate we have had, and for the opportunity to discuss some of those points this afternoon.

[Ian Paisley (in the Chair)]

Could I just reassure the hon. Member for Airdrie and Shotts (Anum Qaisar-Javed) that I have done a TikTok dance?

Question put and agreed to.

Resolved,

That this House has considered the regulation of election campaign finances.

16:28

Sitting adjourned.