Political Party Finance and the Electoral Commission

Lord Carter of Haslemere Excerpts

Thursday 2nd July 2026 Lords Chamber

[Lord Carter of Haslemere (CB)]

My Lords, I declare an interest as I have been advising the charity Spotlight on Corruption on these issues. I am grateful to the noble Earl, Lord Kinnoull, for initiating this debate, since what is more important than the integrity of our electoral system?

Political party finance goes to the heart of this. For many years, there has been no restriction on how much a party can receive from donors, meaning that some parties have had a game-changing advantage during elections. Electoral success should not be significantly determined by financial power, since that diminishes our democracy and risks a handful of wealthy individuals subverting political discourse and policy-making. Now that we have more parties—some at the extremes of right and left—competing for power and receiving large donations, the need to instil a greater degree of fairness in how much each party can receive and spend has never been so important.

To their credit, the Government are addressing some of the issues in their Representation of the People Bill, such as the commencement of Section 54A of the Political Parties, Elections and Referendums Act 2000, which will require donors to declare whether they have received money from another individual in connection with their donation. Parties will be prohibited from accepting any donation without such a declaration. However, the wording of Section 54A, enacted—unbelievably—17 years ago but never commenced, is vague and too easy to circumvent in 2026. It prohibits money given to the UK donor

“with a view to, or otherwise in connection with, the making of the donation”.

However, the UK donor might have received the money from a person abroad who was not on the electoral roll and who purported to give it for a different purpose, in circumstances where it was obvious to each of them, but no one else, that it was intended as a political donation. The noble Baroness, Lady Hayter, touched on that point. One answer is to expressly prohibit foreign money unless earned by an elector here or abroad, since it would be much easier to establish whether money has come from abroad and test the legitimacy of that than to try to prove beyond reasonable doubt that the donor knowingly or recklessly made an unlawful declaration under Section 54A.

The Government have said they will impose a £100,000 limit on donations from an elector abroad, but this does not deal with non-electors abroad. It also seems inconsistent to treat electors in the UK and abroad differently. As an alternative to a donation cap, is it time for a tighter cap on campaign spending? After the 80% increase in the spending limit in 2023, both Labour and the Conservatives increased their campaign spending by tens of millions. Set at the right level, spending limits promote fairness by preventing wealthier parties massively outspending others, and thereby reduce the risk of electoral success being influenced by financial power. The amount of the spending limit should be independently agreed with the Electoral Commission, the Ethics and Integrity Commission and the Speaker’s Committee. Fair spending limits are arguably the best way of putting political parties on a more equal footing. As Professor Keith Ewing put it, not having fair spending limits is like

“inviting two people to participate in the race, with one participant turning up with a bicycle, and the other with a sports car”.

The Government should also facilitate criminal enforcement, which is virtually non-existent. Despite receiving referrals from the Electoral Commission, there have been no prosecutions by the Met, no doubt because of the complexities of electoral law, lack of resources and other priorities, but there is no point having rules if they are not enforced.

The Electoral Commission has the expertise in electoral law, and one option is to give it more resources to investigate offences; for example, by having greater powers to demand information from financial institutions and others, with the police retaining responsibility to refer cases to the CPS. Alternatively, as recommended by the Joint Committee on the National Security Strategy in its recent third report, we could create a new national political finance enforcement unit, staffed by secondees from across existing agencies.

To conclude, election Bills do not come around often. The Government are addressing some issues in their Bill but not going far enough. They need to take this rare opportunity to finish the job by tightening restrictions on political donations and spending, and by giving more powers to the Electoral Commission to investigate breaches.