Representation of the People Bill (Second sitting)

Lloyd Hatton Excerpts

Wednesday 18th March 2026 Public Bill Committees

[Zöe Franklin]

Q I have a second question. The Joint Committee on the National Security Strategy recommended a temporary ban on crypto donations until there is statutory guidance. From your perspective and understanding of crypto, do you agree? Expanding a bit more, is there anything you would recommend in any guidance on crypto?

Alexander Browder: I saw that report, which was very good. As I mentioned, cryptocurrency as a whole may only be properly regulated, at best, by the end of 2027. It needs to be established that cryptocurrency can be regulated, and that that can be enforced properly, to stop bad actors like Russia from entering our elections. What also needs to be established is that the people who are donating are not foreign entities like Russia, but are UK citizens. This is a big issue; due to the inherent nature of cryptocurrency, you are not able to verify properly the source of funds.

[Lloyd Hatton (South Dorset) (Lab)]

Q To build on some of the lines of questioning that have been put forward, I am keen to get your perspective on what the best approach is to make sure we look at the next big challenge that could be posed by crypto donations, particularly if those come indirectly. How do you see us being able to challenge that problem and take it seriously if we find that crypto donations are reaching political parties in this country via an indirect route, particularly via companies or a third party, for example?

Alexander Browder: There need to be stricter “know your donor” requirements. Not only that, but the enforcement on parties should be greater. If they do not respect the political process, there should be higher fines and stricter policies.

On your last point, through my investigations I have found that Companies House has been abused by cryptocurrency exchanges. In one particularly egregious case, two IRGC-linked companies managed to register here in the UK under false names. They were operating for four years, while registered here in the UK, processing billions for the IRGC. That raises the question whether some foreign actor or criminal could set up a UK-registered company and donate through that? That definitely has to be looked at.

[The Chair]

I am afraid we are out of time for this witness panel, but thank you, Mr Browder, for your evidence this afternoon.

Examination of witnesses

Colin Blackwell, Imogen Tyreman, Richard Williams, Jenny Shorten and Tom McAdam gave evidence.

--- Later in debate ---

[Lisa Smart]

I am working with the Public Bill Office on an amendment that extends the regulated period. Given the narrow scope of the Bill, that is a way of thinking about that.

[Lloyd Hatton]

Q In the interests of full transparency, I have worked closely with Duncan and Susan and knew both of them prior to being elected to this place. I have a quick question that builds on some of the areas we have already talked about. Susan, on the point of how we put into practice checks that could look at people who may be connected to somebody who is politically exposed or to a high-risk jurisdiction, you said that the Bill has good “know your donor” checks but that they need to be strengthened further. How would those be delivered in practice?

Dr Susan Hawley: The Electoral Commission needs to come up with robust guidance on that. It needs to look at industry standards from the regulated sector to tackle money laundering. I want to come back to the donor declaration, because that is also critical to this. We have heard from law enforcement that it is not clear to them that the proceeds of crime are not allowed as donations, for instance. If you have a situation where proceeds of crime can be donated, that is pretty extraordinary. We need a robust section 54A that puts some onus on the donor and makes a false declaration a criminal offence.

I do not know whether that answers your question, Lloyd, or whether you wanted me to talk more about “know your donor”, but I think they complement each other. You have “know your donor”, which is about what parties do, but also the donor declaration, so that you are putting some onus on the donor to actually be honest about where that money comes from.

[Lloyd Hatton]

Q Thank you; that is helpful. Another key point that we have discussed in detail is about recent investigations finding that around £6 million in donations through UK-registered companies have ultimately turned out to have been owned by individuals who are not eligible to vote here in the UK, and therefore not permissible donors. Do you feel that the proposed safeguards governing corporate political donations are sufficient, and do you think that this Bill goes far enough to up the ante against that kind of foul play?

Dr Susan Hawley: No. I think it has done a valiant job in introducing the beneficial owner test and a UK connection test, but we know that the Electoral Commission has flagged the revenue test for corporations as a real risk for foreign interference. The way that is laid out in the Bill also does not provide a cap at all; it allows money to be donated to a host of different people.

The revenue test really needs to be looked at again, because we have the Electoral Commission saying very clearly, “There is an increased risk of foreign interference if you keep the revenue test.” You also have tax experts saying that it is actually fairly easy to generate significant UK turnover while having no genuine UK operations. This is the moment to look at that again. It is also not quite clear why a company that owes a lot of tax, or that is making a loss, should feel it needs—or should be able—to donate.

[Lloyd Hatton]

Q Shifting attention slightly towards enforcement, we know that, when trying to tackle foreign interference in the democratic process or dodgy donations, enforcement is essential to creating a better, fairer and more transparent landscape. The intention is to increase the Electoral Commission’s fining capabilities to £500,000 per offence, up from the current £20,000, via secondary legislation. Do you think that that shift upwards is sufficient as a strong, robust deterrence against breaking the rules in this country?

Dr Susan Hawley: It is very much an improvement on what we have at the moment; I think everyone would agree that, if you have a multimillion-pound campaign budget, a £20,000 fine is frankly laughable. We would, however, like to see it strengthened in two ways.

First, we would like this to be on the face of the Bill. We have a report coming out next week in which we compare the Electoral Commission’s powers to the Information Commissioner’s Office and Ofcom. Those bodies have this in the legislation, and they also have not just a maximum fine level but a percentage; the Committee on Standards in Public Life recommended that it should be £500,000 or 4%, whichever is higher. Again, you could argue that, if you have a multimillion-pound campaign budget, £500 k could become a potential cost of doing business, so we need that percentage option to give the Electoral Commission the flexibility to impose penalties in egregious cases.

Secondly, the Electoral Commission has a very high threshold, compared with other regulators, for when it can actually impose penalties. Ideally, we would like to see that looked at again, because no other regulator is hampered by that high threshold.

Duncan Hames: If I may, the problem with enforcement is that it takes a long time, and we are talking about democratic events here; by the time enforcement takes place, the consequences have already happened. People saw Elon Musk giving out cheques to make millionaires of people taking part in an election campaign in the States; they all thought that the rules were being broken and that something should be done about it, but nothing was, and he was at the right hand of the President within weeks of that moment. We ought to be looking at measures that we can take that prevent problems from happening, rather than just chasing things after the event.

Nathan Gill is serving a 10-year prison sentence for bribery offences, which he admitted to in court, that happened nearly 10 years before he was convicted. There is a long lag if you rely on that kind of enforcement to address offending, and the problem that you are trying to stop.

[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.