Elections Bill

Baroness Hayman of Ullock Excerpts

Lords Hansard - Part 2 & Committee stage
Monday 28th March 2022 Lords Chamber

Moved by

[Baroness Hayman of Ullock]

197: After Clause 59, insert the following new Clause—
“Unincorporated associations and permissible donors
(1) An unincorporated association required to notify the Electoral Commission of political contributions by paragraph 1 of Schedule 19A to PPERA must make permissibility checks on donations to the unincorporated association in accordance with subsection (2).(2) An unincorporated association must take all reasonable steps to establish whether the donor of a relevant donation is a permissible donor under section 54 of PPERA.(3) In this section, a “relevant donation” is any donation which is either intended for political purposes or might reasonably be assumed to be for political purposes.(4) An unincorporated association must not accept a relevant donation from a person who is not a permissible donor.”Member’s explanatory statement
This new Clause requires unincorporated associations to establish whether a person making a donation for political purposes is a permissible donor and, if not, reject that donation.

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[Baroness Hayman of Ullock (Lab)]

My Lords, there are quite a number of amendments in this group, of which Amendment 197 is mine. I want to pay attention to amendments specifically looking at foreign interference in our elections and some of the consequences of the provisions to extend the overseas elector franchise. Under the previous group of amendments tabled in the name of the noble Lord, Lord Clement-Jones, we discussed foreign interference, but looked specifically at digital materials, whereas this is wider.

By way of introduction, I say that voters deserve to know that elections in the UK are free and fair, and that laws are in place to safeguard them from unlawful influence. The Bill is an opportunity to make that tighter and better. The Electoral Commission recommended introducing new duties on parties, based on existing money laundering regulations, to enhance the due diligence and risk assessment of donations. The reasons behind this are to protect parties further and to build confidence among voters that sources of party funding are thoroughly scrutinised.

Unfortunately, we do not believe that the Bill takes this into account or does enough, as the Electoral Commission recommends. We need an effective regulatory and enforcement regime that ensures that foreign and dark money cannot enter our political system through donations to political parties. We believe there is the risk not only of money coming into the system that should not be there but of losing the level playing field that we have always striven to achieve in our election law. It is disappointing that the Bill so far does not address these problems. Our amendments and those of other noble Lords aim to address this.

As it stands, the Bill creates a paradox, because it opens the floodgates for a potentially large influx of foreign-based money into our democracy while making it harder for civil society organisations, charities and trade unions to have their say—as we heard during the debates on previous days on Clauses 24, 25 and 27—despite the massive contribution they make to British life. We have tabled amendments that would protect our democracy from this foreign money that is already impacting our politics. We believe that this Bill threatens to make the situation much worse.

Concerns about how our democracy is being affected by malign foreign influences have been highlighted in the Russia report and were mentioned in the previous debate. I am sure we will hear more about this from the noble Lord, Lord Wallace of Saltaire, when he speaks to his amendment on this specifically, so I will not go into any more details about the Russia report.

Why are we concerned that the Bill will allow even more foreign interference in our democracy? The system created by the Bill is more vulnerable to overseas interference. It allows a person to call up any and every local authority to say that they were resident in the area 30 or 40 years ago and provide what we think is fairly flimsy proof; I am sure that it will not be a photographic identification, as would be the case for other electors. Having done that, they would then be able to donate enormous sums of money, if they wished. I am sure that the Minister will say that that is not the intention but, if he accepts our amendments, he can be sure that the possibility of this happening is strictly safeguarded.

We have a number of amendments. Amendment 197 specifically looks at whether a person making a donation for political purposes is a “permissible donor”—if not, that is then rejected. My noble friend Lady Smith of Basildon has an amendment that would require donors to be based in the UK, and one that would prevent overseas electors from donating. My noble friend Lord Collins has an amendment about the Secretary of State publishing

“draft legislation to regulate expenditure deriving from donations by non-UK nationals.”

We also support other amendments in this group that have been tabled to provide better security against overseas donations. If the Minister has understood our genuine concerns and intends to close this loophole that will weaken our democracy, he can choose from plenty of amendments that will greatly improve the Bill. We believe that this is a serious matter and that these amendments bring proportionate safeguards.

However, if the Government do not accept these amendments or commit to introducing their own in a similar vein, it will look as if the real motivation behind these changes to overseas voting is to create a loophole in donation law that would allow donors to bankroll Conservative Party campaigns from their offshore tax havens. What other justification is there for changing the law in this way, without closing this loophole?

Let us look at some of the evidence. Research from the Times shows that, through existing methods, the Conservative Party was able to accept about £1 million from UK citizens living in tax havens ahead of the 2017 general election. The Bill takes away the barriers that kept this at just £1 million. With the situation in Ukraine, it is more important than ever to end the flow of dirty Russian money flooding into our country—and that must include political donations, to block the threat of foreign interference in our politics.

We appreciate that it is impossible for someone with only Russian nationality, however rich they are, to donate legally to a UK political party. But what has undoubtedly happened is that a series of people with dual UK-Russian nationality or with significant business links with Russia have donated heavily to the Conservative Party in recent years. Questions about Russian donors that warrant further investigation have been raised in the media during the current Prime Minister’s tenure. For example, Lubov Chernukhin has given the Conservative Party over £2 million, £1.9 million of which was given after her husband, Vladimir, received money from Suleiman Kerimov, a man who was later sanctioned by the United States Treasury, not only for being a Russian government official: he was arrested in France for smuggling in hundreds of millions of euros in suitcases.

Then there is Mr Temerko, who has donated £1.2 million to the Conservative Party. The problem is that he used to operate at the very top of the Russian arms industry, with connections high up in the Kremlin. He works with Mr Fedotov, who is a key shareholder in Aquind Ltd, which the Guardian reports has donated £700,000 to the Conservative Party, along with another firm. This is unfortunately the same Mr Fedotov who, according to the Pandora papers, has revealed that his fortune was made through an offshore financial structure in the mid-2000s, at about the time that he was allegedly siphoning funds from the Russian state pipeline company, Transneft.

Another big Tory donor in the Johnson era is the businessman Mohamed Amersi, who has given £258,000 over the period. He advised on a lucrative telecom deal in Russia in 2005, with a company that a Swiss tribunal subsequently found to be controlled by an associate of Russian President Vladimir Putin. We consider this extremely concerning. One reason for this is that the Sunday Times recently reported that high-value Conservative donors were invited to participate in an “advisory” group, during which they were allowed to bend the ear of the Prime Minister, senior Ministers and officials.

Members of the public have a pretty low opinion of politicians much of the time. Reports of outside influence that threatens to undermine our democracy serve only to further drive down trust. The Bill provides an opportunity to increase trust in our political system, but, unless this loophole is closed and political donations are cleaned up and given proper scrutiny, trust will continue to fall. If we are to open up our system by allowing far more overseas electors to vote, we must at the same time ban them from making donations to individual politicians and parties. That is the only way to ensure that our system does not receive unwarranted donations and influence from outside. I beg to move.

[Lord Wallace of Saltaire (LD)]

My Lords, my name is on several of the amendments in this group, and I will therefore speak to some of them.

Amendment 197 would tighten the rules on permissible donors and incorporated associations. Amendments 198 and 199 would limit permissible donations to companies and individuals resident in the UK, as would Amendments 204, 212D and 212E. Amendments 200 and 212G, the longest in this group, offer different language on the need for much more careful scrutiny of donations. Amendments 212A, 212B and 212DA, with the reference to the CSPL, would put caps on donations. The Minister will have noticed that, among other things, we are concerned that people who do not live in the United Kingdom should not be allowed to donate to political parties, even if they are on the electoral register.

In a facetious moment, I wondered whether I might table a separate amendment banning British citizens who live in Monaco or the Channel Islands from donating to political parties. Since the major motive of British citizens moving to those places is to avoid tax, that would be a way of saying that we do not want people who are deliberately avoiding paying tax in Britain to be funding political parties here, which we know happens. Some people believe that the main factor in extending overseas voting in the slipshod way it is being done is to make it easier for tax exiles to make major donations to the Conservative Party. “Perish the thought”, the Minister may say—but not everyone in the Conservative Party is as honest as he is.

I will talk mainly about Amendment 200, which some noble Lords may have noticed makes a reference to the ISC report on Russia. I remind the Minister that the Intelligence and Security Committee specifically recommended that the evidence it had collected on foreign interference in British politics should be published as fully as possible, and that the Government have said that they see no need to do so because, in their opinion, foreign interference has not been successful. That seems to be a mistake, and I hope that the Government will come to their senses and publish that evidence. So long as it remains unpublished, it will look as though the Government have something embarrassing that they are trying to hide.

The noble Baroness, Lady Hayman, mentioned a number of major donors. One has to say in passing that it is astounding that we are now six years after the 2016 referendum and we still do not know where the largest single donation to the Brexit campaign came from. I was told by a senior figure in the City that everyone in the City knew exactly where it came from and that it had come from a foreign state. I do not know that—but we ought to be informed and we ought to have had some ability to discover where that £8 million came from.

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[Earl Howe (Con)]

That is a highly hypothetical question. I would be happy to give it consideration. For the moment I have to say that the answer is no, but I will reflect on it.

The other amendment in the noble Baroness’s name, Amendment 212B, seeks to place new obligations on donors to report donations to the Electoral Commission where the aggregate total for the year is over £5,000. Yes, there should be transparency around any significant amount of money funding parties and election campaigns, but that does not mean putting the burden on donors. It is for political parties and candidates—the recipients of the donations, who are familiar with the rules—to keep accounting records and report donations over the relevant thresholds to the Electoral Commission. Placing any unnecessarily bureaucratic responsibility on donors such as individual citizens could lead to a chilling effect and discourage people from making donations.

Amendment 212DA, tabled by the noble Lord, Lord Stunell, seeks to cap donations to political parties at £10,000 per calendar year. Perhaps inadvertently, it would require that every penny in a collection box be recorded and attributed to someone, effectively spelling an end to small donations. Even more significantly, the Government cannot, on principle, support caps on donations as this would only lead to taxpayers footing the bill for the inevitable funding shortfall. There is absolutely no public support for expanding the level of public funding already available to political parties. Public funds should be focused on delivering world-class public services and levelling up communities across our country.

The noble Lord asked about the recommendations in the report from the Committee on Standards in Public Life. The Government responded to the report published by the CSPL on regulating election finance in September last year. The Elections Bill already contains measures that closely link to recommendations made in that report, such as the new requirement on political parties to declare their assets and liabilities over £500 on registration, and a restriction of third- party campaigning to UK-based or otherwise eligible campaigners. However, as the Government response stated, the recommendations in the report deserve full consideration, and more work must be done to consider the implications and practicalities, which, I hope the noble Lord will acknowledge, are very considerable.

In conclusion, controls on electoral funding and transparency of electoral funding are a key cornerstone of the UK’s electoral system and contribute to a healthy democracy. UK electoral law sets out a stringent regime of donations controls to ensure that only those with a legitimate interest in UK elections can make political donations and that political donations are transparent. The Government absolutely recognise the risk posed by those who wish to evade the rules on donations. That is why there are existing provisions which explicitly prohibit money being funnelled through permissible donors by impermissible donors, and why it is an offence for donors and campaigners to purposefully evade the rules.

It is right that voters and organisations with a legitimate interest in UK elections be able to donate to political parties, candidates and campaigns. Our democracy is strengthened by people donating to campaigns that they believe in. I am, of course, aware that stories about political donations are never far from the newspapers, but rather than being indicative of a broken system, I firmly believe that this is a sign of the system working. The checks that parties and other campaigners are required to carry out and the reports published by the Electoral Commission allow the press and the public to scrutinise political donations. It is very important to balance the need for parties and other campaigners to generate funds against the cost of actually carrying out checks on donations to ensure they come from permissible sources. The current rules are proportionate and achieve that balance. I hope that, on that basis, noble Lords will feel able not to move their amendments when they are reached, and that the noble Baroness, Lady Hayman, feels able to withdraw her amendment.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the Minister for his response to this large group of amendments. In responding to my amendment, he said that there was a Conservative Party manifesto commitment to extend the franchise for overseas electors. My amendment was not about that manifesto commitment; it was about the donations that could then come in through that action. I was not saying that that should not happen. The amendment was specifically related to donations, and that is what I want to come back to now.

I think we can say that we disagree as to whether excessive foreign donations being allowed to come into our politics is a good thing and whether there should be a cap on them. If the Government feel that stopping overseas donations is not an option, in my opinion, we should certainly look at whether we can cap the amounts.

I agree strongly with the first thing the Minister said: the integrity of our electoral law is of the utmost importance. This is why there has been so much concern in this debate over whether that integrity is being undermined by the way in which political donations currently work. I know that the Minister said that the current laws manage this, but it is really disappointing that he does not accept the great concerns that have been raised about how donations can ultimately buy political influence. We must be very careful in our country that we do not tip into the way in which other countries have operated when donations get very large. I just wish that the Government would accept that there is a problem and that it needs to be nipped in the bud. This is an opportunity to legislate for that.

I will finish by saying that a lot of strength of feeling on this issue has been expressed in Committee today. I am sure that we will return to this on Report but, in the meantime, I beg leave to withdraw the amendment.

Amendment 197 withdrawn.

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Moved by

[Baroness Hayman of Ullock]

205: After Clause 59, insert the following new Clause—
“Review and consolidation of electoral law
Within 12 months of the passing of this Act, the Secretary of State must publish a timetable for undertaking a wholesale review and consolidation of electoral law.” Member’s explanatory statement
This amendment would implement a recommendation of the House of Commons Public Administration and Constitutional Affairs Committee in its report on the Elections Bill.

[Baroness Hayman of Ullock (Lab)]

My Lords, the hour is late, so I shall be brief in introducing my amendments in this group. I have spoken previously in Committee and in the House about the fact that I used to work in consultation—that was my profession—and was an associate of the Consultation Institute. So these amendments are around my concern about the lack of pre-legislative scrutiny and consultation on significant parts of the Bill.

My Amendment 205 looks to implement a recommendation of the PACA Committee, which referred to the lack of pre-legislative consultation and scrutiny. Basically, it recommended that, once the Bill had been introduced and Second Reading had taken place, the Government should introduce in the Bill a statutory commitment to post-legislative scrutiny of it. This is what my amendment aims to achieve; and my Amendment 206 would also implement a statutory committee for that purpose.

I also have two amendments in my name about provisions not coming into force, one until

“seven days after the Secretary of State has published a consultation on the provisions”

and the other until

“seven days after the Secretary of State has published an equalities impact assessment”.

We are concerned that no impact assessments have been done on all the impacts of this Bill.

There is a long tradition of cross-party working and consensus when we make changes to our law on our democratic and electoral systems. There has always been agreement that we should come together when we change such laws. It is disappointing that this Elections Bill represents a notable exception to this tradition. The lack of cross-party working and pre-legislative scrutiny ahead of bringing the Bill forward was very disappointing; for me, it is a worrying change. I beg to move.

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[Baroness Scott of Bybrook (Con)]

No, I did not say that we were minded to consolidate at all. I go back to what I said: the Government’s immediate priority will be the implementation of our manifesto commitments, which the Bill delivers. I have not given any undertaking that we will do another Bill to consolidate, as was set out in that group of amendments.

Amendment 213 would prevent Schedule 8 coming into force until a time when the Secretary of State has made a statement to Parliament on the voting and candidacy rights of EU citizens. The Government’s position on this policy is clear and settled and was set out in detail in a Written Ministerial Statement in the other place on 17 June 2021. Now that we have left the EU, there should not be a continued automatic right to vote and stand in local elections solely by virtue of being an EU citizen. We have made provision to protect the rights of those who made their home here before our exit and preserved rights where that can be done on a bilateral basis, protecting UK citizens living in those countries in turn. A statement of clear intent on this matter has already been made to Parliament and I can see no purpose in restating our position. I therefore urge the noble Baroness to withdraw her amendment.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the Minister for her response. However, there seems to be a difference of opinion as to whether suitable consultation has been carried out on the Bill. The Consultation Institute states in its response:

“Many of the proposed changes in the Bill are not accompanied by evidence detailing why they are necessary or desirable. Where evidence in support of changes is cited, it has generally involved little consultation and engagement with the public, particularly with the general public as opposed to institutional or organisational stakeholders.”


So in the institute’s opinion, as well as mine and others’, including PACAC, there simply has not been sufficient scrutiny or consultation on the Bill. I thank the noble Lord, Lord Wallace of Saltaire, for his strong support, and I am sure we will be returning to this on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment 205 withdrawn.