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 (Seventh sitting)

Debate between Ellie Chowns and Lloyd Hatton

Committee stage
Tuesday 14th April 2026 Public Bill Committees

[Dr Chowns]

I consider companies and trade unions to be completely different entities. One is a profit-making organisation, and the other is a membership association designed to represent the interests of its members. The two are not parallel, and I am completely fine with trade unions making donations.

Company donations have a huge influence on our politics. There is also a tax advantage for companies; there is effectively a taxpayer subsidy to them, and the advantage can be up to about 40% for companies making donations from company funds, compared with individual funds. I would therefore like to hear why the Minister thinks it is important to retain the ability for companies to make donations and does not want to follow the example of France and Canada in stopping such donations. Individuals can still make donations.

On a couple of specific points, the hon. Member for Hazel Grove referenced the fact that there is a clear problem in the Bill as currently drafted. A loophole permits companies to give donations up to the limit multiple times, both to a party and potentially to every single one of its candidates. Surely the limit should be set so that it reflects the total value of donations to all recipients. That has been argued for by the Electoral Commission and in Philip Rycroft’s recommendation 4, and it is also covered by amendments 36 and 37 in the name of the hon. Member for Warwick and Leamington.

It is also clear that the test should be post-tax profit, not revenue. It is far too easy for companies to inflate their revenues by engaging in what is sometimes called transfer pricing in other sectors, effectively enabling them to completely bypass the intended restrictions. Surely it is in the spirit of the Bill, and should therefore be put into the letter of it, that the test should be post-tax profit, not revenue. If we are going to permit company donations, we should be really clear that they are derived from profit made in-country, because using the revenue test provides a huge loophole. Again, that is called for in Philip Rycroft’s recommendation 2, and by the Electoral Commission and many others, so I very much hope the Minister will respond positively.

Amendments 34 and 35, in the name of the hon. Member for Warwick and Leamington, would make the donor criminally liable. The Minister responded by saying that the onus should all be on the recipient of those donations, but that is not how the law operates in other areas when it is broken: the commissioners of the offence, as well as the recipient of the funding, are guilty. So I ask the Minister to think again. If we are talking about large companies making huge donations, they arguably have greater capacity, and certainly just as much responsibility, as the recipient to check that they are operating within the law. I refer the Minister to my comments on a previous clause about establishing a donor register, which would enable us to deal with these issues and involve the Electoral Commission in ensuring that these checks are in place.

I will briefly touch on new clause 13, in the name of the hon. Member for North East Hertfordshire (Chris Hinchliff), new clause 32, in the name of the hon. Member for Poole (Neil Duncan-Jordan), and new clause 52, in the name of the hon. Member for Leeds East (Richard Burgon). They all recognise the widespread concern in UK politics, and among all of us to some extent, about how company donations risk twisting, and in some cases have twisted, our politics. Each of those Members has tabled a new clause seeking to ban donations from particular categories of company donor. The first seeks to exclude property development and construction undertakings, the second seeks to exclude those who have had public contracts at any time in the last 10 years, and the third seeks to exclude any companies involved in oil and gas extraction.

I have huge sympathy for the arguments and for the broad thrust of those new clauses. I am not necessarily convinced that, in their current form, they are ready to be incorporated in the Bill, but they highlight a key concern. For example, there has been widespread concern about cases where large donations by a property developer were associated with planning decisions under a previous Government that went in favour of that property developer. There have also been serious concerns about the revolving door between the Government and the legislature, and profit-making companies. I would really like to hear the Minister’s response to those three new clauses tabled by Labour Members, which highlight concerns about the influence of particular groups of companies on our politics.

However, the issues I really hope the Minister will respond to are, first, stopping all company donations, because people who want to make donations can still make them as individuals; secondly, adopting the post-tax profits test, rather than the revenue test; and, finally, ensuring that the donations limit applies to the total value of donations, not just single donations.

[Lloyd Hatton (South Dorset) (Lab)]

I will keep my remarks brief. As we start the afternoon sitting, it is worth putting on the record that clause 60 goes a significant distance towards finally tightening up the rules around corporate donations, which many campaigners, including in civil society, would argue have been left unaddressed for far too long. What clause 60 seeks to do is effective.

That said, and I will not repeat in too much detail the points made by the hon. Member for North Herefordshire, it is worth reflecting on the recommendations in Philip Rycroft’s review around revenue versus profits, and how we can tighten things up. So I am keen to understand how, as the Bill progresses, we can potentially take his recommendations into account.

It is worth remembering some of the big case studies that have been a cause for concern. We therefore know that, in some cases, corporate donations can carry a significant risk of nefarious interference in the democratic process. There was much media coverage and speculation about the idea that Elon Musk, the California-based billionaire, could legitimately make a donation to a UK political party via a UK subsidiary of Tesla.

When we look at some of the research conducted by CenTax or Transparency International, we see that around £1 in every £10 that comes via a company as a donation could be because the individual in question could not donate directly themselves. According to that same research, around a quarter of money donated by companies is completely untraceable. So these measures are really welcome.

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[Lloyd Hatton]

I will keep my remarks brief in the interests of avoiding repetition. It is important to put on the record the changes in the Bill, which are hugely welcome. One of those is massively improving the information sharing and investigatory powers of the Electoral Commission to ensure closer working with regulators and law enforcement.

It should go without saying that the commission is the key watchdog in our democratic process and that it ensures that our elections and our political parties operate with integrity day to day. That is why it is particularly important that we look at some of the points being made as part of new clause 46. As has been said often today, that is touched on in some detail as part of Philip Rycroft’s review; the need to ensure that the information-sharing and investigatory powers of the Electoral Commission are as effective as they need to be, and that they work in a two-way direction to ensure that that work is undertaken.

I note that the Minister already touched on this at the start of this grouping, and that her and her officials will be wanting to look at it in more detail. I look forward to that, because it is important that we get this right as we make these positive steps forward in this part of the Bill. We must ensure that the Electoral Commission, as our key national watchdog for elections and the democratic process, has the powers and information at its fingertips to operate as effectively as possible.

[Dr Chowns]

I strongly support measures to strengthen the capacities and powers of the Electoral Commission, which plays a crucial role in regulating our politics. I will speak briefly to new clauses 46 and 53. As has already been highlighted, they are basically fully in line with Philip Rycroft’s recommendations 9 and 10, so I hope that Government amendments will be tabled in due course to address those recommendations, the justification for which has been clearly outlined.

My new clause 57 concerns the Electoral Commission’s fining power. I very much welcome the Government’s announcement that they will bring forward secondary legislation to increase the commission’s maximum fine to £500,000 from £20,000, which is clearly peanuts and no disincentive at all. That will be a significant improvement, and of course will bring the measure in line with the penalty that can be imposed for breaches of electoral finance rules in relation to referendums in Scotland.

[Lloyd Hatton]

Does the hon. Member share my view that the old system that we inherited meant that foul play by a political party was essentially priced into the system, because the fine was so small? What the Government are doing, by increasing the fine to £500,000 for a single offence via secondary legislation, means that that type of culture, in any political party, will come to an end—no party can simply say that these fines are the cost of doing business.

[Dr Chowns]

Absolutely. It is clear that the previous level, £20,000, was utterly inadequate, so I welcome the Government’s commitment to strengthen that. The purpose of my new clause 57 is to suggest ways in which it could be strengthened further, namely by putting the maximum fine into primary legislation, and by providing that the maximum fine would be £500,000 or 4% of campaign spending, whichever was the higher. I will explain why.

Most other regulators in the UK can impose unlimited fines, a high multimillion-pound fine or a fine as a percentage—for Ofcom, for example, 10%—of annual turnover. In its 2021 review of electoral finance, the Committee on Standards in Public Life recommended that the fine should be 4% of the value of campaign spending or £500,000, whichever was the higher. My new clause simply calls for what the Committee on Standards in Public Life argued for.

Analysis from Spotlight on Corruption has shown that the currently proposed increase to a £500,000 maximum fine would amount to a mere 1.5% and 2.1% of the campaign spending of the Labour and Conservative parties respectively, as the two largest-spending parties. If those parties had committed an egregious offence during the 2024 general election and the 4% measure had been in place, the maximum fines would have been £1.2 million or £955,000 respectively—double the current maximum. Arguably, it should be even higher—Ofcom can fine 10%—but my new clause simply puts forward the recommendation of the Committee on Standards in Public Life.

The Minister touched on the question of whether to have the limit in primary or secondary legislation. She argued—I think I am paraphrasing accurately—that one of the advantages of having it in secondary legislation is that it can be easily updated. However, the previous level of the fine, which was £20,000, was set out in secondary legislation—it was in the Political Parties, Elections and Referendums (Civil Sanctions) Order 2010—and it was never updated. The Minister said that the level of the fine might need to be set out in secondary legislation so that it could be more easily updated to make it higher, but the historical record shows us that we have had fines that are far too low and that they are not adapted.

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.

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[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.