Political Donations

Martin Rhodes Excerpts

Monday 31st March 2025 Westminster Hall

[Martin Rhodes (Glasgow North) (Lab)]

It is a pleasure to serve under your chairship, Mrs Harris. I draw attention to my entry in the Register of Members’ Financial Interests regarding donations to my election campaign and through my local Labour party.

Often in debates like this, we look at our political system and there is a preoccupation with the form of the democratic system—for example, debates about our voting system or whether we should have a second Chamber. Important as they are, they can often dominate the discourse. The internal mechanisms of democratic political systems are important, but we also need to examine and discuss the relationship of those internal mechanisms with external actors and the political electoral systems in which we operate. That is why I welcome my hon. Friend the Member for North Ayrshire and Arran (Irene Campbell) moving the motion, and I am grateful to the petitioners for bringing the matter before us.

At the general election, I stood on a manifesto that pledged to protect democracy by strengthening the rules on donations to political parties. I take that commitment seriously, as effective regulation of political finance is, in my view, crucial for maintaining public trust in our electoral systems across the UK. As has already been mentioned, under current legislation, any company registered as conducting business in the UK is a permissible donor to a political party operating in Great Britain. It is therefore possible for money from foreign sources to enter our politics via donations from UK companies. That undermines the credibility of our political system and gives greater scope for a further decline in trust. That leads to the interests of those foreign groups or individuals, in practice or perception, being seen to have influence in our political system through their funding.

I want to address one point that has been raised in this debate, which is the matter of accountability and deterrence. Although foreign donations to political parties and other campaigners are illegal, the current legislation fails to act as a sufficient deterrent. There is an often-quoted behavioural study of day centres that sheds light on this issue—apologies, Mrs Harris, but I will cite it again. In the study, parents who arrived late to pick up their children were fined, but instead of reducing lateness, the number of late pick-ups actually increased. Understandably, the parents began treating the fine as a fee for extra childcare, seeing it as an acceptable trade-off rather than a punishment.

We face a similar risk in our political donation system. Under current rules, the electoral system can issue fines of up to £20,000 for breaches. However, for a political party that can spend millions of pounds on a campaign, that amount may be seen as a small price to pay for breaking the rules. It becomes less of a deterrent and more like an operational cost, just as the day care fine became the cost of convenience. If we are serious about protecting the integrity of our electoral system, we must ensure that penalties are strong enough to truly deter illegal behaviour, and are not just seen as a fee to be factored into campaign budgets.

As my hon. Friend the Member for North Ayrshire and Arran mentioned, the Committee on Standards in Public Life agrees and suggests that maximum fines should be 4% of the campaign’s total spend or £500,000, whichever is higher. Without sharper teeth in our regulations, we risk allowing those with deeper pockets to buy an unfair advantage, undermining the very principles of democracy.

I therefore support the Government’s intention to strengthen the rules on donations to political parties to protect our democracy and uphold the integrity of elections. I understand that they will be published in due course, but I urge the Government to do it as quickly as possible. While the current rules remain in place, the potential for abuse remains evident. The Electoral Commission stated in January this year that it would use its expertise and experience in regulating the political finance regime to help to ensure that any changes are workable and evidence based. Any proposals to change the rules on donations should be properly scrutinised and debated before becoming law.

I look forward to this debate continuing when said changes to electoral law are put before the House. To maintain public trust in our electoral system, those rules must be strengthened. It is upon all of us in this place to increase people’s engagement with the political process. However, to develop that engagement and promote transparency, we need to build trust. One way in which we can build that trust is to take action on the rules on political donations.