Donations to Political Parties

Lord Watson of Invergowrie Excerpts

Thursday 12th February 2026 Grand Committee

[Lord Watson of Invergowrie (Lab)]

My Lords, I appreciate the panache and brio with which the noble Lord, Lord Hannan, delivers his speeches, but I have to say that I disagree with him on state funding. I will develop that in the time available to me. JS Mill and Thomas Jefferson lived some time ago, long before the days of what we would understand to be democracy.

I commend my noble friend Lord Sikka for getting this debate. He went on at some length about countries higher on the scale than the UK in terms of corruption measures. He mentioned various countries, but not Germany. I think Germany is the best example of support for political parties. In Germany’s system there is state funding, with three legs to its stool. The first is democratic legitimacy, because the money follows the votes that political parties gain. The second is transparency, with donations having to be declared fully—anything above €50,000 immediately and anything above €10,000 in the parties’ annual reports. That is important. There is also a prevention of undue influence, which I think we see in this country in terms of political donations.

The Conservative Party is funded by business. The Labour Party is funded to some extent by business but mainly by trade unions: I declare an interest as a member of Unite. That does not give us a level playing field. I am sure the noble Lord, Lord Pack, will feel that the Liberal Democrats do not get a fair crack of the whip. If votes lead to the financial donations that the state makes to political parties, as in the German system, following an election, the people understand what they are paying and why they are paying it. The direct connection is important. Generally, I think voters would rather see a fair system and a level playing field, where things are open and transparent, and it is clear that any political party that gains sufficient votes gets support to go into future elections. I do not think that is a bad idea.

Incidentally, in Germany the state also matches donations that political parties get from membership fees and individual small donations, up to a capped limit. That is a good example that we could follow and I hope my noble friend will be able to say something about what the Government’s intentions are in the Bill that has just been published. I commend the German model. France, Italy, Spain and Canada also have a form of state funding. It works for them and it could work for us as well.