Representation of the People Bill (Eighth sitting)

Debate between Ellie Chowns and Lloyd Hatton

Committee stage
Thursday 16th April 2026 Public Bill Committees

[Dr Chowns]

I rise to move new clause 4, tabled by the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne). I will also speak briefly to new clause 12, tabled by the hon. Member for Warwick and Leamington, and new clause 20, tabled by the hon. Member for Hazel Grove. She is here and I am sure she will speak.

This incredibly important group of new clauses responds to a glaring absence in the Bill relating to crypto donations. As I will get on to, Rycroft has talked about this and the Government have committed to bringing forward related amendments. I am pleased about that, but it is very important that, in Committee, we take the opportunity to discuss in detail what shape those amendments might take and what the issues are around this topic.

There is consensus across wide parts of the political spectrum that cryptocurrency poses particular risks in relation to political donations. Transparency International has highlighted a number of factors: cryptocurrencies are fast and borderless, there are various exchanges offering anonymity and they are increasingly used for money laundering. There are clear risks with crypto, which makes it a high-risk vehicle for political donations through which foreign actors, who would otherwise be unable to, might be able to donate to political parties and candidates and try to influence British politics. Again, as Transparency International points out,

“it is reasonable to assume there is a strong likelihood that this alternative payment method is being used by hostile actors, such as Russia, to destabilise Western political systems.”

We need to take these warning very seriously.

Indeed, the Royal United Services Institute says:

“Cryptocurrency donations to UK political parties present an urgent and under-addressed challenge to the UK’s electoral integrity and, by extension, to its national security.”

It points out that

“the Bill does not mention cryptocurrencies”,

and says:

“This leaves a critical gap in our foreign interference defences as the pseudonymous, cross-border and decentralised features of crypto enable it to be used as a political money laundering accelerant”.

There are clearly many risks associated with crypto.

Philip Rycroft pointed this out himself and recommended:

“The government should legislate in the Representation of the People Bill to introduce a moratorium on political donations made in cryptoassets, with a power to end the moratorium only once Parliament and the Electoral Commission are assured that relevant regulation is effective.”

There is some debate about whether we should have a blanket ban on cryptoassets or a moratorium with safeguards.

I am mainly concerned about the outcome, rather than the particular terminology that is used to deal with this. We must ensure that crypto is not used as a vehicle for the pollution of British politics. One of the key issues is the use of AI to split donations into lots of tiny fragments that go under the radar of any benchmarks or limits, and of the scrutiny of donations. That is a risk, but as RUSI points out, the more significant, under-recognised and under-dealt with risk is the indirect use of crypto.

It is very easy to translate crypto into a fiat currency at the point of donation, so although I am moving new clause 4, tabled by the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), which would

“prevent parties and candidates from accepting donations in cryptoassets”,

we actually need a stronger regulatory environment and to recognise that there may be even bigger risks from the indirect use of crypto further down the chain, which could still be used to hide the provenance of funding, even though it may not be in the form of crypto when it enters the coffers of a political party or candidate.

[Lloyd Hatton (South Dorset) (Lab)]

The hon. Member is articulating very real concerns about cryptocurrency and the way it can manipulate our democratic processes. Will he join me in welcoming the fact that, when the Rycroft review was published before the Easter recess, the Government responded pretty swiftly on this, and particularly on a moratorium on political donations made through cryptocurrency. Does she welcome the Government’s urgent response in the Chamber?

It was clear from Ministers that they intend to get this right. The immediate response to the Rycroft review was about making sure that we get something in place straight away. From listening to Ministers inside and outside the Chamber, I know there is an enthusiasm to make sure this is done right. Does the hon. Member welcome that initial response and, like me, does she look to see how we can tighten up our defences against cryptocurrency in the longer term, however they may be used to try to infiltrate our democratic processes?

[Dr Chowns]

I welcome the commitment that the Government have made. I participated in that statement in the Chamber before Easter. As the hon. Member will have noticed, I even welcomed and congratulated the Government on their positive actions under the Bill without prompting from the Government Benches. It is important to give credit where it is due. It is also important to have the opportunity, in this Committee, to debate some of these details.

If the Government are to bring forward legislation to institute a moratorium, it is important to think about what conditions will be set under which any such moratorium might be lifted in future. That is crucial, because it could otherwise be overturned very easily. I suggest that, at a minimum, the criteria for lifting any such moratorium should be that an adequate regulatory environment is in place for controlling the ultimate risk and that there is triple positive approval from Parliament, the Electoral Commission and the Financial Conduct Authority—the three most important oversight organisations on this issue. It will be very difficult and complex to find a mechanism to regulate cryptocurrency; I hope that we just get rid of it from our politics completely. But if the Government are going to introduce a moratorium, the conditions under which that moratorium might be lifted must be included in the primary legislation that puts it in place.

Representation of the People Bill (Sixth sitting)

Debate between Ellie Chowns and Lloyd Hatton

Committee stage
Tuesday 14th April 2026 Public Bill Committees

[Dr Ellie Chowns (North Herefordshire) (Green)]

I rise to speak to both the clauses and the new clauses tabled by the hon. Member for Warwick and Leamington, which the hon. Member for Hazel Grove spoke to.

Briefly, commencing section 9 to PPERA, as proposed by new clause 47, is something that was put into legislation 17 years ago, so it feels really quite overdue. Regarding the points that were just discussed around new clause 49, which proposes the reduction to £500 of the threshold for declaring the source of a donation, making such a declaration is not necessarily a hugely onerous process. I imagine that when someone makes a donation and fills in a form, they just put, “Source: my salary”. This is not necessarily a hugely problematic part of the process of creating more transparency. We surely all agree that more transparency is needed in our political financing system, to protect from the corrosive effect of foreign donations, and of huge inequalities and the lack of transparency over domestic donations. I strongly support all the new clauses.

I will raise a couple of additional points, which I would like the Minister to respond to. First of all, regarding the provision in clause 56 and schedule 7 to submit two returns now—to both the local returning officer and the Electoral Commission—I note that the Electoral Commission, in its briefing to the Committee, argued that this provision clearly makes things more complex and problematic, and it argued that the primary responsibility for submission should be to the Electoral Commission. Does that not make more sense? Given that the Bill is introducing a requirement to submit to the Electoral Commission, why do not we just say, “Submit the return to the Electoral Commission”? Then the Electoral Commission can correspond with the returning officer if it wants to. But let us just have one submission and make the process as simple as possible for candidates and parties. Could the Minister respond on that point from the Electoral Commission about the requirement to submit two returns?

Secondly, a point raised by Philip Rycroft in his extremely useful report, under recommendation number 7, is that

“The Electoral Commission should mandate political parties to submit their annual reports and accounts and campaign spending returns in a standardised format.”

Could the Minister comment on whether she proposes to take that recommendation forward? It would be very helpful in improving transparency and clarity in the system.

[Lloyd Hatton (South Dorset) (Lab)]

I will just make some very brief remarks on the record.

I welcome this landmark Bill, which does a great deal to bring our democratic landscape into the 21st century, but I will briefly put on the record some thoughts about new clause 47.

As we digest the Rycroft review, I think that the new clause is worth further consideration, particularly about how we can have meaningful deterrence for the most egregious flouting of political finance rules. If we want to be able to deal with that issue, we also need to have effective prosecutions for serious breaches. My concern at the moment is that there is something of an enforcement gap, and I know that that is a description that the Electoral Commission has outlined as well. I remain concerned that when it comes to the real risks posed by foreign interference, we are leaving that gap open, which would run contrary to the rightful and important aims of this Bill.

The director general of the National Crime Agency highlighted here in Parliament in February that there is a “gap in law” and that

“a foreign state or foreign individual—someone who is impermissible—can transfer money to someone who is in the UK, who is permissible, and that person can give money to a political party or a politician, and there is nothing to stop that. That is perfectly lawful.”

There is an enforcement gap there that I know that the Minister, along with other Ministers and officials, will want to address. It is worth reflecting further on the aims of new clause 47 and how it tries to strengthen this Bill further beyond the work that it already does. As we look to digest the Rycroft review, and the Bill proceeds to further stages, it is important that we give the aims in the new clause rightful consideration, and think about some of those issues around the gap in enforcement when it comes to the most egregious breaches of political finance rules.

--- Later in debate ---

[Dr Chowns]

Broadly, I hugely welcome all measures to improve the risk assessment of donations, which is critical, so I am glad to see those here. I agree that much more needs to be done than is currently in the Bill, as outlined by Philip Rycroft, among others, so I welcome the Government’s commitment to do that. I share the frustration expressed about the fact that we have two processes going on in parallel and so, from my perspective, we will not have sufficient opportunity adequately to scrutinise the proposals that the Government are promising to bring forward in relation to Rycroft. However, I absolutely feel their urgency and look forward to whatever opportunity we do have to scrutinise them.

I agree with the hon. Member for Hazel Grove that there are critical missing elements that we could and should be addressing in this part of the Bill: crypto donations, in particular, but also the desperate need for an overall cap on political donations. We will be able to discuss those issues later, when we come to the new clauses, but it seems rather odd that the Government have put nothing in this part of the Bill in relation to those critical elements.

I want to raise two specific issues in relation to this group of amendments. First, the Electoral Commission has made two points about the articulation of risk factors. It would like the list of risk factors to include any other risk factors that a reasonable party would consider relevant, rather than any other risk factors that a political party itself considers relevant, because that would constitute marking its own homework. It seems to me that that small tweak to language would clarify the risk factors. The Electoral Commission also recommends the inclusion of a risk factor relating to a person’s connections to other countries and jurisdictions. That might be a more inclusive way of addressing some of the points about a foreign influence registration scheme. I would welcome the Minister’s comments on those two recommendations—requests, essentially—from the Electoral Commission.

Secondly, in a report produced last month, CenTax—a joint initiative of the London School of Economics and the University of Warwick—pointed out that it would be potentially much more sensible to establish a donor registration system operated by the Electoral Commission itself. That would mean transferring responsibility for the risk assessment for “know your donor” checks to the Electoral Commission rather than to political parties, which, depending on their size and longevity and so forth, might have varying capacities to do that. When a donor wished to make a donation to a party above a certain minimal threshold, they would apply to the Electoral Commission for a donor registration number and then use that when making the donation. That would make it much easier to keep track of multiple donations by a given donor, either to a single party over a period of time or to multiple parties.

That seems to me a sensible and workable proposal for improving transparency and clarity in the system, recognising and addressing the burden of compliance requirements that will be placed on parties—including local parties, which, as has been mentioned, are very much reliant on volunteers—and ensuring a consistent approach to donor risk assessment and monitoring. I would welcome the Minister’s response to that recommendation from CenTax that a donor registration system should be established.

[Lloyd Hatton]

Before I speak to clause 58, let me say in response to the hon. Members for Hamble Valley and for Hazel Grove that this game-changing legislation and the Rycroft review have both come in the first Session of a new Government. There is a clear understanding—the Minister has made it known here and in the Chamber—that the threats that we face, whether through foreign interference or foreign money trying to influence our democratic process, are severe, and we have made a robust response to them, through this legislation and by commissioning the Rycroft review last year.

I want to make two points on clause 58. First, a key part of the changes introduced by the Bill is the “know your donor” principle, which will require political parties to take more responsibility for exactly who is funding them. Existing rules do not specifically require recipients to consider the risk that a donor is potentially facilitating an illegal donation. I welcome the fact that that will change as a result of this clause, which will bring about a complete overhaul of the system and I believe will improve the integrity of our democracy, help strengthen national security and help restore trust in political parties across the country.

Representation of the People Bill (Second sitting)

Debate between Ellie Chowns and Lloyd Hatton

Committee stage
Wednesday 18th March 2026 Public Bill Committees

[Lloyd Hatton]

Q I have a very quick final question, taking a step back and responding to what you have just said. You feel that in the current landscape no single law enforcement body has overarching responsibility for enforcement, and particularly enforcement of electoral finance laws. It feels a bit patchwork at the moment: sometimes it is the police; sometimes it is the commission. Do you feel that is something that we need to look at overhauling so that we can have a much more comprehensive response that works more robustly, and hopefully more swiftly, in response to the issues that you just mentioned?

Dr Susan Hawley: We really welcome the recommendation of the Joint Committee on the National Security Strategy—published today—that there should be a specific unit. I think that there is growing recognition within law enforcement bodies that that is required. Up to now, the problem has been that those law enforcement bodies will argue that they do not have the laws or the sentences that would empower them to use the serious investigative tools that they have at their disposal to get to the bottom of some of this behaviour. That is why the criminal offence in section 54 and section 54A really needs to be looked at. We welcome the amendment recently tabled by Matt Western to address the knowledge test so that it is not set too high.

We also need to look at sentences because we hear again and again from law enforcement that if you do not have a serious crime-level sentence, you cannot use the skills that you can deploy for serious crime for this kind of offending. If we are talking about foreign interference, those are the tools that need to be deployed against impermissible donations.

[Dr Chowns]

Q You have answered many of the questions that I had. Thank you all for your work. Briefly, do you have a view on where the cap on political donations should be, or how it should be set? That is a question for each of you. And should we have a cap on annual spending, to get away from the gaming of the system around regulated periods that Dr Power referred to? Where should it be set, and how?

Duncan Hames: We propose that a cap of £50,000 annually from any one donor is reached by 2030. That would still be much higher than in a number of other jurisdictions that have introduced donation caps, such as Canada, France, Italy and—from July—Australia. If it were phased in, with a cap reducing year by year between now and then, that would provide time for political parties to adapt.

We have done our own modelling, which I would be happy to share with the Committee, in which we look at the effect of that cap on overall party fundraising. I think you will find that, although we have recently had an arms race in campaign spending—not least because the spending limits were raised so dramatically just before the last general election—political parties fought all sorts of elections and referendums in the previous decade without needing anything near the kind of money that was available in the last general election, when nearly £100 million was spent.

Dr Power: I agree that we absolutely need a cap on donations. I am less wedded to a level as much as to the idea that there needs to be a cap that people can get around the table and agree to, and which seems fair. To not have a cap on donations risks much more than to have one. It is absolutely essential. We have seen the effect that can have in countries that do not have caps on donations, particularly the USA, and the effect that the very rich can then have.

What I mean by that is not an effect on the outcome of politics but an effect on the process of politics. You end up with about 400 individuals accounting for 75% of total party donations. Given that we are discussing the Representation of the People Bill, that is not a situation in which people are represented. It is essential that we find some way—in a Bill called “Representation of the People”—to fix the system properly such that the people feel represented. A cap on donations is essential and well within the remit of the Bill.

On a cap on spending, I align with the 1998 CSPL review, as well as Jack Straw when he introduced the Political Parties, Elections and Referendums Act 2000. He said that there has been an “arms race” in spending and that we should always set a spending limit below the extent to which we expect to spend at an election. Until 2023, that limit was set at £19.5 million, if you stood a candidate in every constituency, which does not happen. If we say that the limit was £19.5 million, that should have been the baseline, and there was no good justification for it to be uprated in 2023—in fact, I think there is a good case for bringing the limit down further still. It would not have an effect on the good that money does in a system, which is to enrich debate and to allow political parties to get their positions across.