National Security Bill

Baroness Hayter of Kentish Town Excerpts

Report stage
Wednesday 1st March 2023 Lords Chamber

So I invite your Lordships—I am minded at the moment to test the opinion of the House on this matter in due course—to consider this with great care and to come up with some pretty good reasons if there are real objections to this and explain what they are based on broad and objective criteria, not on anything that could be suspected of being self-interest.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, one of the reasons for supporting the amendment, to which I have added my name, as the noble Lord, Lord Carlile, said, is the Government’s recent change which allows long-term expats to continue to be on the UK electoral register and therefore to be permitted donors to UK political parties. This means that someone living —for the sake of this argument—for 40 years in, say, Russia, to take the example just given, can be on the electoral roll here. A British subject, living for 40 years in Russia, can now be on the electoral roll here, with no checks or questions asked, and that person can then donate money to a British political party—no names, no pack drill, and importantly, of course, no checks whatever on the source of the money they are able to donate to a British political party.

PPERA—the Political Parties, Elections and Referendums Act, as most of us know—requires parties to check only that the donors are “permissible”; no checks are needed on the source of their funds. They are not even required to carry out enhanced due diligence on donors operating in high-risk countries which are listed in the money laundering and terrorist financing regulations 2022. There are no obligations on political parties to do the due diligence that we would expect of anyone else handling money from any of the countries on that list.

Incidentally, that is very, very different from those of us—well, all of us in this House—who are PEPs under the AML rules. Indeed, at this moment in the Moses Room the financial services Bill is being discussed, which is trying to reduce the extraordinary number of hoops that we and our children all have to go through in our banking activities because of our presence here. However, Russian-based UK citizens, who long ago gave up paying taxes of any sort here, can donate money, without any question as to its provenance, to a UK political party, surely influencing our democracy way beyond some of the other minor activities that this Bill seeks to make transparent—an issue we will return to later.

Amendment 51, tabled by the noble Lord, Lord Carlile, would capture any possibility that the money could come from a foreign power. As the amendment states, it would include donations made through an intermediary. We on this side would certainly like to know the source of donations made from outside the UK to a political party, whether in government or opposition, or to a party with no elected Members.

The noble Lord, Lord Sharpe, has been very helpful on this Bill. To our surprise, in Committee, he claimed that our existing electoral law has

“a stringent regime of controls on political donations to ensure that only those with a legitimate interest in UK elections”—[Official Report, 21/12/22; col. 1166.]

can donate. I question that in respect of someone who has been out of the country for that long, does not use any of our services and does not pay our taxes. Even more, do we check the legitimate interests of those long gone who can put in money from another source?

I trust that the Government have now looked again at what was a rather complacent reply and that they share our interest in revealing full details, including instigating proper checks. I hope that they will therefore accept Amendment 51. As the Minister knows, it has the full support of the Electoral Commission. I hope that he would welcome a duty on political parties to check the true source of donations and assess the risk of accepting money from overseas, particularly from those on the list of the AML regulations. Rather along the lines of “know your customer” which the banks have to do, there should also be a “know your donor”. This should be a culture in all our political parties. It would mean assessing the risk that donors might pose, especially those from overseas countries. There would be an enhanced due diligence on new donors and proper recording of such checks.

I received a letter from the Minister today which I think has not yet been shared with the House. It says that it is in the national interest to have greater openness about the influence on British politics by foreign powers. We agree. Amendment 51 would ensure that all overseas donations were openly made and disclosed.

[Lord West of Spithead (Lab)]

My Lords, I support Amendment 51, which would help increase the transparency and accountability of our political system. The ISC’s Russia report of 2020 recognised that the UK had clearly welcomed Russian money, including in the political sphere.

The Government have previously assured the House that the protections within the electoral financing laws are “sufficient”. However, as other noble Lords suggested in Committee, there are clear differences between the requirement on companies to undertake due diligence when receiving foreign money and that on political parties, which have no such duties. This would help close the gap.

I note that the amendment requires a political party to publish a policy statement within three months of the passing of the Bill. The Secretary of State also has three months to produce the accompanying guidance. It may be advisable for the Secretary of State to publish the guidance before political parties are required to produce their policy statements. I simply raise that as a practical point. It does not affect my support for the amendment.

As regards the government amendments, it is not clear why they seek to exclude parliamentary proceedings from the definition of political processes, thereby moving them outwith the scope of any new foreign interference offence. I appreciate that the Government have said that it is to clarify that the Bill does not intend to interfere with parliamentary privilege, but I do not see that the answer is to remove the concept entirely.

To commit the foreign interference offence, one needs to conduct “prohibited conduct” which has an “interference effect”. “Prohibited conduct” includes a variety of unacceptable behaviours—from a criminal offence to threatening to damage someone’s reputation or causing financial loss. Surely, it is critical to prevent any foreign interference in parliamentary proceedings which involves a person conducting such unacceptable behaviour. Perhaps the Minister could explain how including parliamentary proceedings in the foreign interference offence would undermine parliamentary privilege, given the need for the prohibited conduct of the offence to apply. Even if the amendment is warranted, could the Minister explain why the Government have not replaced it with wording similar to that in Clause 70, as amended. This refers to interference with

“a Member of either House of Parliament, the Northern Ireland Assembly, the Scottish Parliament”

rather than “parliamentary proceedings”, which would ensure that no gap was created.

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I hope the Minister will assure us that the way in which contacts with the American, Dutch, Danish, Swedish and other Governments are treated will be of a qualitatively different order. I hope he will say that we need to change that part of the Bill. On a previous occasion when I criticised some of what this Government have done in the last few years, the Minister responded, “Yes, but now this is a different Government”. Happily, it is. We now have a Prime Minister who understands diplomacy and understands that we gain more by treating our neighbours as friendly Governments. I congratulate him on the achievement that he has just managed to negotiate. In that case, we need a different approach in this Bill as well. This amendment is a way of pushing us in that different direction, towards the foreign powers that are our closest friends, allies and neighbours. I beg to move.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I will speak to Amendment 74 in my name. It deals with the definition of “foreign powers”, which clearly is a key part of the overall Bill.

However, I first need to talk about this part of the Bill in relation to FIRS, which we will cover next week—or maybe the week after, or the week after that, given the rate at which we are going; I hope not. I need to do that because the definition of a foreign power in Clause 32 determines who will be covered by the scheme we will come to later. In doing so, I make it clear that I greatly welcome the changes to FIRS contained in the government amendments, which again we will come to later, as they take account of the arguments made in Committee.

However, there is an anomaly that remains which particularly worries me. Many external political parties, including those from friendly states—not only NATO, as the noble Lord, Lord Wallace, mentioned, but New Zealand and Australia—will find themselves subject to registration and reporting requirements on issues completely unrelated to Government policy, let alone security issues. This is the National Security Bill we are discussing, not a lobbying Bill. These states will be caught on issues that have nothing to do with government policy or security.

Clause 32(1)(e) defines a foreign power as a political party whose members form the Government. At the moment, that would mean, for example, the Democrats in America, the Labour Party in New Zealand and Australia, and En Marche!—or whatever it is now called—in France. The Minister will know better than I do which of the Conservatives’ close associates are also in Government in various countries and therefore would be caught by this. The definition in Clause 32 covers the whole Bill, which might be appropriate for some parts of the Bill but certainly not for Part 3. The registration and reporting of activities in Part 3 has an enormous number of requirements—if we leave this definition to cover that—for political parties on non-security issues.

Assuming the Minister’s amendments go through, perhaps most worrying is the new Clause 70(3)(d), which means that FIRS covers any communication by a relevant overseas party—one whose members form the Government—which could affect, or is about,

“the proceedings of a UK registered political party”.

Stop and think about that. This will cover a political party in a friendly country having to register its activities in this country. The Minister will immediately pop up and say, “No, not if they do it directly—only if they do it through a third party”, but that is what happens, as we do these things through third parties. For us, it means if a fellow member of a sister party that is in Government—I do not know if the Conservatives call their friendly parties “sister parties”, but we always use the phrase—uses a consultancy, for example, or a PR firm, to ask us to support the change in the venue for the next Party of European Socialists Congress, or our work on the environment or an equality manifesto, the publication of something in a newspaper, an ad about a disaster or anything completely internal to our party-to-party relationships; but if is done by an intermediary, it becomes reportable to the Government, not of our political persuasion at the moment, of course, and published.

I doubt that is what the Government want because this is not about transparency now. We are into Big Brother land. I ask the Minister whether, if members of a party in Government, not the Government itself, contact any of us—if you look at Schedule 14 it could be not only us but, for example, councillors, even candidates, mayors via a conference organiser or a public affairs adviser—about any issue, such as a free trade agreement or a completely non-government issue such as an upcoming internal seminar being run between parties, where we tend to use intermediaries such as conference organisers, and they want to invite a party member as a speaker, it would have to be reported because it is via an intermediary. That is how I have read it and it is what he said when we had a very helpful meeting: if you use an intermediary, it is reportable.

Similarly, if party staffers from the party in Government organise a stall or a workshop at a party conference, and do so via a conference organising company, they are paying these intermediaries; therefore, they are acting under their direction. Those were the very helpful words the Minister gave me. They are therefore doing it on the order of the sister party in that other country. They are being directed by that party; the party is paying them to contact us to appear in a seminar or whatever it is. Is that reportable, and is there a criminal penalty if they fail to do it?

If they use an intermediary, who could be an interpreter or a translator, and they pay for that expertise, and they are again directing that party as to what they should do, would that be reportable—not just reportable, but reportable, for us as the Labour Party, to a Conservative Secretary of State, and a lot of this published? Non-governing parties are not covered, so the French socialists can come over and do what they like with us, and that is fine because they are not in Government, but it applies if we start holding seminars which the German Social Democrats, for example, set up using an intermediary such as a conference facilitating company.

For the Minister’s own party, some of their sister parties would also be covered by this when they go to Birmingham, or wherever the Conservatives have their party conference. I doubt very much that, at the beginning, it was the intention of the Government for their definition of foreign influence to get down to this level.

Over the weekend, or perhaps on Monday, some of us were sent very helpfully all the draft regulations and the forms that have to be filled in with people’s private mobile numbers and all sorts of details about what is going to happen, the dates of it, its purpose, the desired outcome, the individuals involved, contact details, the contact for the intermediary, and the invitations and which MPs they are going to. For possibly one meeting on the fringe of a party conference, or a TV interview, or the drafting of an article done by a party via an intermediary, all this would need to be reported.

I am not asking Ministers tonight to redraft this. I am asking—and I think there may be some willingness to do it—for the Government to look hard at whether it is really the intention that FIRS should include this party-to-party relationship, or party-to-politician relationship, where it is done via a third party. I hope that we can get some satisfactory answers or an undertaking that we could perhaps meet, and, if necessary, that some further tweaking might happen to this part of the Bill.

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[Lord Sharpe of Epsom (Con)]

My Lords, ruling parties are the foreign power. As I have tried to be clear and have stressed twice now, registration will be required only where an individual or entity is directed by a foreign power—that is the condition. Therefore, if a think tank was being directed by a foreign power, the answer would be yes. If it was not, the answer would be no.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, does the Minister accept that an intermediary could be a conference-arranging organisation? If he is coming to that, I would be grateful.

[Lord Sharpe of Epsom (Con)]

I noted the noble Baroness’s questions about intermediaries, and I promise that I will address that.

I know that we have had some debate about what it means to be directed by a foreign power. I want to reassure all noble Lords that this is a high bar. The natural meaning of “direction” is an order or instruction to act. It is possible that such direction could be delivered in the language of a request but only where there is a power relationship between the person and the foreign power which adds an element of control or expectation to the request: for example, through a contract, payment, coercion or the promise of future compensation or favourable treatment. It is not enough for a foreign power to fund an activity, so generic requests, joint collaboration or simply an alignment of views, absent the power relationship, will not meet the test for direction.

I will quote directly from the letter I sent to the noble Baroness, Lady Hayter—I apologise for not sharing it more broadly with the House but I was cleared to send it only this morning:

“In terms of what activity would be registrable, we consider that where a parliamentarian is to be directed by a foreign governing party, for example, being paid or on the promise of favourable treatment, to influence Government Ministers or fellow parliamentarians, this would require disclosure under FIRS.”


I will come back to my quote in a second. I digress briefly into the subject raised by my noble friend Lord Balfe and his quick canter through the Stiftungen of Germany. We are in touch with the German Government on this issue and are grateful for their constructive engagement. We do not consider that, for example, the Konrad-Adenauer-Stiftung would constitute a foreign power under Clause 32 of the Bill. A person acting under the direction of such an institution would not be in scope of the foreign influence registration scheme. We will have another opportunity to debate these issues next Tuesday. Konrad Adenauer should be reassured that it is not covered.

I want to be clear that there is no requirement for the activity to cease, only for it to be transparent. In these circumstances, there is a strong national interest in greater openness on the influence of British politics by foreign powers. It should be clear not only to the Government, but to parliamentarians and to the public, where this influence is being brought to bear. FIRS seeks to address the gap, providing us all with more information about the scale and nature of foreign political influence in the UK.

I will answer the question from the noble Baroness, Lady Hayter, directly. In the example she described, the intermediary would have to register, if directed by a foreign power. The noble Baroness herself, or a foreign power, would not.

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[Baroness Hayter of Kentish Town (Lab)]

This is at the heart of it. If the German SPD engaged somebody to set up a stall at our party conference, they would be directed, be paying and have a contract for it. This would then have to be registered. I have seen the draft regulations which the Minister kindly sent me. They would have to disclose which MPs they had invited to the event and all of that. As the Minister has just said, as soon as the intermediary—the conference arrangements organisation—is paid by an outside political party to organise this, according to the form that I have been sent, we would have to fill in our names. We may not be the ones registering, but it would be wholly disclosable. It has nothing to do with the Government nor with national security. It is a party-to-party issue. It is simply because they have used an intermediary—a conference arrangements organisation or interpretation.

I think it is clear and that we agree on this. I am not asking that we should be able to bring it back at Third Reading, but I am asking the Minister to leave a little chink of light. Having thought about it, in consultation with his colleagues, the Government might be willing to look at whether this is really what they want to achieve.

[Lord Sharpe of Epsom (Con)]

I thank the noble Baroness for her comments. I am more than happy to continue engagement on this subject.

The final amendment in this group, concerning the definition of a foreign power, was initially tabled in Committee and has been retabled by the noble Lords, Lord Marks and Lord Wallace. It seeks to exclude members of NATO and other nations, via regulations, from the definition of a foreign power. I want to put it on record that we do not consider all foreign powers to be hostile. When this amendment was initially tabled, I put forth that the National Security Bill focuses on the harmful conduct undertaken by a person and not the foreign power they seek to benefit. I continue to believe that this is the right approach.

The Government do not seek to create gaps in the legislation which could allow states to act through proxies and thus undermine what the Bill seeks to do—to take necessary and appropriate action against harmful activity. Again, no doubt to groans, I will bring your Lordships’ attention to the case of Daniel Houghton. He is the dual British-Dutch national who attempted to sell sensitive information to the Dutch intelligence service in 2010. If this amendment were to be accepted, and NATO states excluded from the definition of a foreign power, cases such as Daniel Houghton’s would not be captured by the offences and measures in the Bill. This would not be an appropriate outcome which could undermine the Bill. I believe that the Dutch came to us on this particular occasion and I commend them for it. I ask again that these amendments tabled by noble Lords be withdrawn.