Elections Bill

Lord Sikka Excerpts

2nd reading
Wednesday 23rd February 2022 Lords Chamber

[Lord Sikka (Lab)]

My Lords, this Bill is part of a power grab by the Government and it is hard to find any redeeming features in it. I cannot support the imposition of photo ID for voting, against which many noble Lords have already spoken eloquently.

Where exactly is the evidence of voter fraud? In 2019, there was a general election, a European Parliament election, local council elections, mayoral elections and police and crime commissioner elections. There were only four convictions and two cautions for voter fraud in all those elections put together.

More importantly, where are the Government’s credentials which show that they are interested in fighting fraud? The Government themselves have seriously facilitated ID fraud on a massive scale. Let me give some examples. For the payment of just £12, anyone from anywhere in the world can form a company in the UK. They can use imaginary names and fictitious addresses—absolutely no authentication check of any kind is made at Companies House. A few days ago, I drew the Government’s attention, through Written Questions, to the names of directors registered at Companies House. These included “Adolf Tooth Fairy Hitler”, “Lord Truman Hell Christ”, “Judas Super-Radio Iscariot”, “Victor Les-appy Hugo” and a “Joseph Smith Jr” who gave his occupation as “Guardian Angel of the Ring of Mormon”, among others. All these were accepted, and these people got certificates of incorporation with which they could open a bank account and connect with the world’s financial systems. In the past 12 years, there has not been a single legislative reform to curb this.

The Government claim that they are interested in fighting fraud. First, they cannot provide evidence of voter fraud. Secondly, their own records show that they have no intention whatever to do so. They are simply seeking electoral advantage by claiming that they are fighting fraud. There is no other reason.

The Electoral Commission tells us that the imposition of photo ID will prevent many people participating in their God-given democratic right. The commission has already fined the Conservative Party for failing accurately to report donations. The revenge has been swift. The Bill neuters the powers of the Electoral Commission and hands them to the Government, who will inevitably use them against campaigners, while those on their side receive less scrutiny.

Scotland uses proportional representation. It would be helpful to know if the Minister is going to force the Scottish Government to abandon that and use the first past the post system. This is what the Government are proposing, for England at least. The UK and Belarus are now the only countries in Europe to use the first past the post system for general elections. It guarantees that a party with minority support will always end up with a huge majority in the House of Commons. This is undemocratic and unacceptable, and must be opposed by all right-minded people.

The ability of trade unions and civil society organisations to engage and campaign is vital to the renewal of democracy and to enabling the voices of people who are marginalised and silenced to be heard. This Bill silences them. It does not advance people’s rights in any way whatever.

People know that the political system is corrupt. It will remain so as long as political parties and individual legislators are funded by private money. Over the years, the Conservative Party has gleefully collected money from Russian oligarchs, smugglers, tax dodgers and other corrupt people. One in three billionaires in the UK donates money to the Conservative Party. But these people do not donate money, they invest—and they expect a return on that investment in the form of compliant laws, toothless regulators, subservient legislators and Governments who keep threatening laws off the political agenda.

The Minister referred earlier to the Political Parties, Elections and Referendums Act 2000 and said that it works pretty well. No, it does not, and I can give him plenty of evidence. I will refer to just one example, which relates to Lord Ashcroft’s donations to the Conservative Party. Some years ago, he donated £5 million while he was a non-dom—in other words, he was not necessarily paying full taxes in the UK. The political contribution was made by a company called Bearwood Corporate Services. It was registered in the UK but had a director and secretary with addresses in the British Virgin Islands. From where exactly was the company controlled? You can guess. This company never had sufficient profits to fund those political donations. Where exactly did the money come from? It came from a company called Stargate Holdings Ltd, registered in Belize and controlled by Lord Ashcroft. To disguise the origins of that money, it was passed through three UK companies—Astraporta (UK) Ltd, Bearwood Holdings and Bearwood Corporate Services. Each was carefully designed to qualify as a small company under the Companies Act, so that it did not have to disclose its political donations. Astraporta and Bearwood Holdings did not trade with any third party and therefore had no profits out of which they could make the donation. It is clear that the law is being subverted and not complied with.

Finally, freeing political parties from corporate money is a necessary precondition for curbing political contributions in this country. I look forward to working with others who seek to achieve this end.

Elections Bill

Lord Sikka Excerpts

Lords Hansard - Part 1 & Committee stage
Monday 21st March 2022 Lords Chamber

[Baroness Scott of Bybrook (Con)]

Before my noble friend Lord Hayward sat down, the noble Lord, Lord Sikka, rose to intervene. Perhaps we could allow the noble Lord’s intervention.

[Lord Sikka (Lab)]

Thank you very much. I certainly have not come across any evidence to suggest that ID cards are an answer to the problem of voter fraud. I would like to broaden the debate a little and think about the consequences. I grew up in east London, where it was not unusual for people of certain backgrounds to be stopped in the street by the police and asked to show ID, when you are not required to carry any ID. What would happen in this brave new world when the police stopped people and said, “By the way, you now have an official ID. Have you not got it? Can you not bring it from home and report to the police station?” What would be the consequences for the young people who are unwilling or unable to produce those officially sanctioned ID cards? Would that drive a wedge between the police and the community? Would that criminalise people? Would that fuel more dissatisfaction with our parliamentary system? Would that fuel social instability? I would like to hear from the Minister where this ID concern will stop. What would be the broader social consequences? It seems to me that we would be opening up American-type social problems. They would be imported here, because people simply do not have or cannot produce officially sanctioned ID cards.

It is minorities who will be targeted. It is well known and well documented that the police target minorities. They would have a new authority to wield to criminalise minorities. I would love to hear the Minister’s views on that.

[Baroness Noakes (Con)]

My Lords, voter ID is not something dreamed up by the Government with the express intention of suppressing voter turnout, as various noble Lords have come perilously close to suggesting in both today’s debate and our debates last week. I am sure that, as parliamentarians, we all share a belief in the centrality of elections to our democracy and a desire to achieve the highest standards of integrity and participation. I believe that it would be a unworthy slur to suggest that my party believes anything else. The plain fact is that the Electoral Commission has recommended voter ID, as have international election observers. Most European countries require it; Northern Ireland has had it for nearly 40 years.

Elections Bill

Lord Sikka Excerpts

Lords Hansard - Part 2 & Committee stage
Monday 28th March 2022 Lords Chamber

We need to strengthen controls over public finance in the Bill: involving both major domestic donors and, much more importantly, donors with foreign influence. It is already a problem; it has contributed to a loss of confidence in public life. I hope, therefore, that the Minister will be willing to accept, in some revised form or other, some of the overlapping language that appears in several of these amendments, including the ones which have my name on them.

[Lord Sikka (Lab)]

My Lords, I will speak to Amendment 212. It is a great pleasure to follow the noble Lord, Lord Wallace, and I also fully support the position taken by my noble friend Lady Hayman on this Bill. There are a number of amendments here which all have a common concern with preventing abuse and ensuring that there is a level playing field, and my amendment is a contribution to that. Amendment 212 seeks to end abuse of “permissible donors” and prevent the flow of foreign money into UK political parties.

The Political Parties, Elections and Referendums Act 2000 was really shaped by the Committee on Standards in Public Life’s fifth report, which was published in October 1998 under the chairmanship of Lord Neill of Bladen. In developing its recommendations, the committee invited evidence and considered the issue of foreign donations at some considerable length—chapter 5 of the report covers that. In its evidence to the committee, the Conversative Party stated:

“in the future we will not accept foreign donations.”

That appears on page 69 of the report. There was concern about abuse, and on page 74 the Neill committee report said:

“It is possible to imagine that a foreign corporation wishing to evade the underlying purpose of the provisions which we advocate might cause to be brought into being a UK subsidiary, the sole function of which would be to receive money from the foreign corporation and then channel it to the political party of its choice. This would clearly be an abuse of the system”.


That is a very powerful statement. The committee recommended that the legislation should consider:

“making it a criminal offence to attempt to evade or to render nugatory the statutory provisions limiting donations to those coming from ‘permissible sources’. It would, for example, be a crime for an individual in the United Kingdom, who did not, himself or herself, have the resources to make a large donation, to become a mere conduit pipe through which foreign money was channeled to a particular party.”

The legislation has been grossly circumvented and exploited. I will give a couple of examples of this—that is all I will have time for, although I am sure that the Ministers may be able to add more examples, given their experience and knowledge of the party. The first example relates to Lord Ashcroft, who was once upon a time a treasurer of the party. Around 2008 and 2009, I was asked by a number of media outlets to investigate his donations to the Conservative Party, which added up to £5,137,785. These donations were made by a company called Bearwood Corporate Services, a limited company registered in the UK. However, it never had sufficient profits to be able to pay the donations. My investigations uncovered a complex network of corporations behind it, and the aim of this network was to obfuscate the money trail.

The trail of money began with a company called Stargate Holdings Ltd, which was based in Belize and controlled by Lord Ashcroft. The moneys went in various packages from there to a UK-based company called Astraporta (UK) Ltd. From there, the moneys went to another company called Bearwood Holdings Ltd, and then from there to Bearwood Corporate Services Ltd, and then from there to the Conservative Party. The attempt was to disguise the origins. None of the companies disclosed the payment of political donations. They were all carefully constructed to ensure that they met the definition of a small company, because small companies do not need to disclose political donations. The UK companies involved in this chain either did not trade at all or had insufficient profits to enable them to make the donations. For all practical purposes, the moneys came from Belize and were finally handed over to the Conversative Party. I am sure that a lot of legal advice would have been taken in order to complete that particular route. Clearly, the moneys originated from abroad.

I reported the matter to the Electoral Commission. I told the commission that I was investigating it and what I had initially found. At the minutes of a meeting, the commission noted that it had heard from me. However, in the end, no action was taken by the Electoral Commission.

The second example, which has already been cited, relates to the company called Aquind. This company was incorporated in the UK in 2008, and over many years it remained dormant, but it has paid large sums of money to the Conservative Party. As recently as 2019-20—I have looked at its accounts—the company had no turnover. Indeed, it had no turnover at all at any time in its life. It never made any profit. So, the donations made by the company to the Conservative Party did not originate from any trade or profit in the UK; they obviously came from abroad. The company says that it is ultimately controlled from Luxembourg. I have not looked into who controls the Luxembourg entity, because there is not sufficient time, but I would be happy to take that assignment for the Conservative Party if it wished.

These two examples show how determined donors have been able to play our legal system and bypass it by carefully constructing transactions, and that is not helpful. My suggestion is that companies that make political donations should be able to make them only if they have sufficient realised profits. The term “realised profits” is well understood in the Companies Act. It is nothing new, so I am connecting to it. It generally means the company must generate profits that must result in cash or cash equivalent. If it is not trading, it cannot generate realised profits. This is a way of ensuring our legal system is not abused.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I put my name to Amendment 200 of the noble Lord, Lord Wallace, and I have Amendment 210 of my own. The noble Lord, Lord Wallace, has done most of the heavy lifting on Amendment 200, as he explained. I joined with him because I thought that, where we dealt with donations and national security risk, an additional power for the Electoral Commission—the fit and proper test—might be helpful. I tabled the amendment separately, and then, as the noble Lord explained, we wound them together so they are now one amendment.

The concept of a fit and proper test is well developed. Importantly, it lies at the heart of the powers of the Financial Conduct Authority and other financial regulators. It is important because it can put under the microscope the behaviour of individuals, not just a company itself. It has been found that, when people find that they themselves are going to go under the microscope as opposed to the company they work for, that tends to concentrate the mind rather wonderfully. The fit and proper test has a number of aspects to it that might usefully form part of the Electoral Commission’s armoury: honesty, integrity, reputation, competence and capability and financial soundness, all of which would be helpful for the Electoral Commission to have.

What I was seeking to do with the amendments here was propose a similar arrangement in respect of donations from overseas where there was a security risk. This amendment is not going to try and lay down what the fit and proper test should be in respect of this area, because that will need to be done specifically. I just gave the examples from the financial regulator to show the sorts of areas I think the Electoral Commission could usefully focus its activities on. This amendment, along with the broader amendment that the noble Lord, Lord Wallace, tabled, will give the Electoral Commission a full set of tools to police this important part of our national life.

I briefly turn to Amendment 210, which is also in this group. It is a probing amendment—it is not in a final form by any manner of means—but it would prohibit individuals or companies donating to registered political parties where they have been awarded government contracts of more than £100,000. The broad purposes would be to prevent conflicts of interest, to mitigate any appearance of impropriety relating to the awarding of an individual contract, and to contribute towards maintaining public trust and confidence after a number of scandals—Greensill springs to mind.

Elections Bill

Lord Sikka Excerpts

Report stage
Monday 25th April 2022 Lords Chamber

[Lord Grocott (Lab)]

My Lords, I strongly support my noble friend’s amendment, although I do not think it goes to the source of the problem. The source of the problem is the massive increase in the electorate contained within this Bill. We know from the impact assessment and I know from written replies I have had from the Minister that it increases the electoral roll of people living abroad—many of whom have lived abroad for decades—from around 1 million to 3.3 million, an increase of 2.3 million names. I remind the House that these will overwhelmingly be people who have lived abroad for more than 15 years—for many, 50 or 60 years —and who have no reasonable expectation of ever returning to this country. The Bill makes it easier for this registration to persist as, once on the register, names now remain for three years as opposed to one year previously, and you can get on the electoral roll by the process of attestation—in other words, providing you can get someone to attest that you lived at 22 Station Road 60 years ago, even though 22 Station Road has been demolished and you have not been back since, and that you are a bona fide former resident of the United Kingdom.

To me, that is wrong in principle, but I shall also apply it at a constituency level—the noble Lord, Lord Wallace, raised this and I can give him some of the answer. Under the present system, with the 15-year rule on residence that is allowed, in London and Westminster, 2.43% of voters at the last election were overseas voters. Let us assume that that increases by three, once these 2.3 million are added to the register. You could then have constituencies in the United Kingdom with 6,000 or 7,000 voters in an electorate of 73,000 who have no obvious connection whatsoever with the constituency in which they are voting. That, it seems to me, is wrong.

Whatever your view is, the absolute basis of our electoral system—which I cherish; I have to be controversial here by saying I am a powerful supporter of first past the post and single-member constituencies—is that representation, for a general election, is based on where you live. That is a very good basis for registration and voting, it seems to me. But, no, we are going to add 2.3 million people to the register who never lived in the country—not in recent memory.

In order to do this, the Government are spending some £15 million. I wish that they would show the same anxiety and commitment on making sure that people resident within the United Kingdom and not on the register at present were added instead of spending £15 million on getting people to vote in individual constituencies—possible decisively, affecting the result—who simply do not live in the area.

I am very sorry that this Bill has extended the period of residence from 15 years to life. I hope that the Minister can improve on his answer when I raised this before; he asked what on earth is the basis for objecting to supporting a 15-year rule, which says that—I quote him loosely—if you have been abroad for 15 years, you can vote in an election, but if you have been abroad for 15 years and a day, you cannot vote in an election. That really is a thin argument; he really can do better than that. That applies to any boundary—why do we say people can vote at 18 but not at 17 and 364 days? We can all find numerous examples of how people draw boundaries.

The problem of overseas voting—and here I find myself agreeing with the Green Party, which I do not on every occasion—is that with the possibility of this initial problem, which is that you can vote however long you have been away from the country, you can also now provide funds for parties. It means, as has already been said, that, in theory, a party could be almost entirely financed by people living abroad with no intention of returning to the United Kingdom or of living with the consequences of their vote. That is the other crucial element in our democracy: you live to see the consequences of your vote. People who voted Conservative—I hope a lot of them vote Labour at the next election—bear some responsibility for what is happening in the country at the moment. It is not the same responsibility as the Minister, of course, but they have some responsibility. Of course, if you live abroad, vote from abroad, remain abroad and intend to remain abroad, then you do not live with the consequences of your vote.

I very much regret that, somehow or other, this massive extension of the franchise is in this Bill, without any compensating extension of the franchise for people in this country who are not on the electoral roll. I have seen no sensible, adequate defence of it so far. I am sure that the Minister will do his best, which he is bound to do, but we have made a step in our democracy that violates the principle of representation by place of residence and adds the problem of enabling parties to be massively financed by people living and working permanently abroad.

[Lord Sikka (Lab)]

My Lords, it is a great pleasure to follow the noble Lords who have already spoken. I will speak briefly about Amendment 67. This amendment would require the Secretary of State to establish an independent committee to report on the creation of what I call a foundation for democracy, whose sole aim is to prevent the rich and corporations from directly funding political parties and hijacking the political system. Private money in our political system is a cancer, and the issue has not really been adequately addressed by this Bill.

In 1863, US President Abraham Lincoln visualised democracy as a

“government of the people, by the people, for the people”.

Some 160 years later, that remains elusive—we are light years away from it. Yes, people vote, but political power is increasingly concentrated in the hands of those who can fund political parties and get favour in return. Their preferences are prioritised.

--- Later in debate ---

[Lord Cormack (Con)]

Is the noble Lord not aware that Report is for short, sharp speeches, not this endless diatribe he is currently inflicting upon us?

[Lord Sikka (Lab)]

I am very grateful to the noble Lord for his observation. I am sure that members of the public would be quite interested to note that when an alternative proposal is put forward, it is called a “diatribe”. That kind of confinement of alternative, competing discourses to negative spaces does not do any good. But the message I want to get across is that there is a corrosive element at the heart of our democracy that can be dealt with only by ending the receipt of any private money by any political party.

[Lord Rooker (Lab)]

My Lords, the purpose of Report is to report back on things that were inadequately dealt with in Committee. Amendment 69, which I am speaking to, was inadequately dealt with in Committee. We had a debate and a very unsatisfactory answer, so I want to return to it—not at the same length as in Committee, but nevertheless in some detail that might make for uncomfortable listening for different parties in the House.

The idea is for risk assessment and due diligence policies to be used to control and look at procedures on political donations. What is the problem? Dirty money in the UK leaves parties exposed to malign influence, risks fostering dependence on the proceeds of crime and other dubious funds, and undermines the integrity of the electoral system. PPERA does not require UK political parties to run anti-money laundering checks on donors. In fact, there are no indications that parties do robust checks on the source of donations, nor that parties reject donations after such checks have been made. As the UK’s anti-money laundering framework has been progressively tightened over the last decade—I pay tribute to the current Government on this issue, as I have done before—political parties’ minimal checks have become an increasingly glaring anomaly. Examples from the media suggest that if parties check the source of donations at all, they are inadequate and fail to prevent the flow of tainted money into UK politics.

The Electoral Commission has argued since 2018 that risk management principles from anti-money laundering checks by businesses could apply to election finance. In July 2021, the Committee on Standards in Public Life recommended that parties have anti-money laundering style procedures to determine the true source of donations.

How would Amendment 69 address the problem? It would update PPERA to require parties to develop and publish reasonable and proportionate risk-based policies for identifying the true source of donations above £7,500—we are not looking at small donations here. Parties would need to have reasonable and proportionate risk assessment and due diligence controls and procedures in respect of those policies, as provided for in a statutory instrument. For any donation or an aggregate amount exceeding £7,500, parties would need to undertake enhanced due diligence checks, with a simplified process thereafter. Donors giving over £7,500 would need to declare whether their business is in a high-risk sector, which is defined in the amendment, and whether they have been under formal investigation or convicted of certain offences. Parties would need to include a statement of risk management in their annual accounts identifying that.

What have the parties done about due diligence checks on donations? The Committee on Standards in Public Life’s report, Regulating Election Finance, identified broad support for exploring anti-money laundering style regulations from the Liberal Democrats, Labour and the Scottish National Party. Both Labour and the Liberal Democrats agreed that there was merit in exploring this style of regulations but that it would be important to think about how the process would work and the administrative workload involved. The Conservative Party told the Committee on Standards in Public Life that it thought that current regulations for donations were sufficient.

In their response to the Committee on Standards in Public Life’s recommendation that parties should have procedures in place for the true source of donations, the Government said that

“it is very important to balance the need for parties and other campaigners to generate funds against the cost of actually carrying out checks on donations, to ensure they come from permissible sources. We think the current rules are proportionate and achieve this balance.”

When a version of Amendment 69 was debated in Committee—it was rather longer; it is still long but it has been tightened up a bit—the noble Earl, Lord Howe, said that

“all we can do is keep the rules under review. I am suggesting that in this particular area, the balance is about right.”—[Official Report, 28/3/22; col. 1378.]

Let us look at the balance: due diligence checks would be a relatively low administrative workload. If due diligence checks had been required on donations above £7,500 in 2021, the Liberal Democrats would have conducted checks on just 11% of donors, or 72 donations out of 642; Labour on 25%, or 133 out of 536; the Greens on 29.2%, or 19 out of 65; and the SNP on 63%, or seven out of 11. This means that, at most, Labour would have had to do checks on one donation every 2.7 days over the course of a year, and the Liberal Democrats would have had to do one check every five days. Obviously, because some donations come from the same donor, it would probably be less frequent than that.

Now we come to the Conservatives; no wonder we get complaints from the Tory Benches about what is being said. I apologise to the noble Lord, Lord Cormack, but that was a very unfortunate intervention. The Conservatives would have checked 51.5% of donors— 457 donations out of a total of 887 were of £7,500 or more. Of course, this reflects their greater resources, with donations of almost £19 million in 2021—around double what Labour received.

I have three examples of potentially suspect donations. I gave a lot more in Committee, and I stand by them all; they are all there on the record. All major political parties have accepted potentially suspect donations from individuals and companies that were under investigation or later found to be involved in economic crime. The media has reported on a catalogue of such donations, with Spotlight on Corruption providing most of the information. The Conservatives received £2 million in cash donations from Lycamobile, a company whose premises were raided by French authorities in 2016 on suspicion of money laundering, leading to the arrest of the company’s directors. Despite evidence emerging in 2015 that Lycamobile employees were dropping off rucksacks full of cash at post offices across London, the party took a further £587,000 from the company until July 2017.