Political Donations

Debate between Irene Campbell and Cameron Thomas

Monday 31st March 2025 Westminster Hall

[Irene Campbell]

I absolutely agree that we need to see change; my right hon. Friend makes the point very well.

More recently, as people will be aware, Elon Musk proposed to donate a large sum to Reform UK. While he could not make a personal donation, there are ways that he could get around the rules, which I will describe. The current rules on donations to political parties are defined in the Political Parties, Elections and Referendums Act 2000, which is based on the 1998 report by the Committee on Standards in Public Life, “The Funding of Political Parties in the United Kingdom”. A lot of what I have said already demonstrates how complex this area is.

The Committee summarised the purpose of the rules by saying that

“what happens here is the concern of those who live and work here and the political parties should not be entitled to fill their coffers with donations from abroad, made by persons and corporations who have no genuine stake in the country.”

More recently, the Elections Act 2022 changed the electoral rules, removing the 15-year limit on the voting rights of British citizens living overseas to vote in UK parliamentary elections, and allowing them to register on the electoral roll and donate to political parties without a time limit.

To be clear, under current UK electoral law, foreign donations are banned as they are not a “permissible source.” Permissible sources include individuals on the UK electoral register, UK registered companies, trade unions, unincorporated associations and limited liability partnerships, or LLPs. It is worth noting that, under the rules, parties can accept donations or loans with no upper limit, as long as they come from one of those permissible sources. Donations are defined as

“money, goods or services given to a party without charge or on non-commercial terms, with a value of over £500.”

There are additional rules around the thresholds for party headquarters and local accounting, but I will not go into detail because they are not straightforward.

There are ways for foreign individuals to get around those rules. For example, a multinational corporation owned by a foreign national could legally donate to UK political parties. Additionally, unincorporated associations, which are permissible donors, do not have to conduct permissibility checks on their own donors, leading to a lack of transparency in their donations.

[Cameron Thomas (Tewkesbury) (LD)]

The hon. Member made an interesting point about the role of companies, and specifically referred to Reform UK. Will she join me in putting on the record that Reform UK is not a political party like most of ours are, but in fact a limited company registered at Companies House, with the primary shareholder being the hon. Member for Clacton (Nigel Farage)? Does she agree that, where necessary, any change to legislation needs to incorporate such risk factors?

[Irene Campbell]

I fully agree with the statement the hon. Member has just made.

The Electoral Commission, the independent regulator for the rules, has said that, at present, donations can be made using funding from otherwise impermissible sources, including from overseas. There are variable monetary penalties from the Electoral Commission for breaking the rules, which are outlined in the Political Parties, Elections and Referendums Act. These can be between £250 and £20,000, depending on the severity of the breach, which is another area that the petition seeks to address.

There are many electoral reform recommendations from independent bodies that address some of the concerns in this petition. In relation to fines for breaking the rules, the 2021 report by the Committee on Standards in Public Life recommended reviewing the maximum fines that can be issued for breaking electoral rules, saying that the maximum fine the Electoral Commission may impose

“should be increased to 4% of a campaign’s total spend or £500,000, whichever is higher”.

The Electoral Commission supports that, saying in 2020:

“The Scottish Parliament recently raised the maximum fine to £500,000 for Scottish referendums, and we believe this would be a reasonable benchmark for the maximum fine in relation to other parts of the UK’s political finance regulations”.

Additionally, the Committee on Standards in Public Life recommends that political parties introduce caps on donations. It said:

“A cap of £10,000 should be placed on donations to a political party or regulated donee from any individual or organisation in any year.”

Similarly, Australia’s new electoral reform Act imposed caps on political donations and electoral expenditure, after recent elections where a multimillionaire donated 117 million Australian dollars to a political party.

Both bodies have also addressed the loopholes that allow possible donations from foreign parties. In particular, the Electoral Commission said last year that parties and campaigners should

“only accept donations from companies that have made enough money in the UK to fund…their donation.”