Election Campaign Finances: Regulation

Stephen Kinnock Excerpts

Thursday 8th July 2021 Westminster Hall

[Stephen Kinnock (Aberavon) (Lab) [V]]

It is a pleasure to serve under your chairmanship, Mr Paisley. My thanks go to the hon. Member for Folkestone and Hythe (Damian Collins) for having secured this important debate and for all the excellent work he has done on this issue over the years in various roles.

I welcome the report of the Committee on Standards in Public Life on the regulation of election finance, and this chance to debate it alongside the Elections Bill, which is making its way through Parliament. That Bill includes five core measures to improve and tighten up the important components of the political finance framework, namely fairness, transparency and controls against foreign spending. The five new measures it introduces are third-party campaigner registration; restriction of third-party campaigning; a ban on simultaneously registering as a political party and a third party; restrictions on co-ordinated spending between political parties and third parties; and the requirement for new political parties to declare assets and liabilities.

These are the right measures in terms of their focus, and they are broadly a step in the right direction, but they are simply not robust enough and do not go far enough. They do not reflect the seriousness of the challenges our democracy faces from dark and dirty money, which has the potential to fundamentally corrupt our democratic system. I will come back to what the recommendations should be and what changes need to be made to the Bill—although we in the all-party parliamentary group on electoral campaigning transparency broadly support the Bill, there are a number of areas where it really needs to be strengthened.

Let me give some extra context as to why we think the debate is so important. For far too long, we have taken our democracy for granted. We have been complacent, and our complacency has allowed malign forces to subvert our rules and undermine our institutions. It is not just a British phenomenon, of course. Dark money and dirty data are a real and present threat right across the west.

The work that I have been doing over the past few years in my role as chair of the all-party parliamentary group, in partnership with FairVote, has been to focus on British democracy and on how we can ensure that we have our own house in order, with a system of election finance regulation that is resilient to hostile threats and fit for the 21st century. We launched our report “Democracy in the Digital Age” in January 2020. It was the first real attempt to step up and meet the challenges around finance and transparency, and we hope that the Elections Bill is a sign that Parliament is finally waking up and realising that our democracy is under threat and that we must do something about it.

Many of the revelations about just how flimsy our defences are were brought to public attention following the EU referendum campaign and through the prosecutions in some of our general elections in the past five years. Our APPG has always been clear that we are about looking to the future rather than back at the past. We are about protecting the soul of our democracy for generations to come, learning the lessons of the past but recognising that we have to be resilient for the future.

Let us be absolutely clear: there is a real problem with election finance. The Electoral Commission was established at a time when political campaigning centred around door-knocking and leafleting. It is an analogue regulator in a digital age. Digital campaigning and online political engagement have revolutionised politics, so it is critical that the commission is given the tools and resources it needs to make it fit for purpose in the 21st century.

Crucially, the Electoral Commission actually recognises that. Its leadership has openly acknowledged that the commission lacks resources and bite. Paltry maximum fines of £20,000 are really just the cost of doing business for some of the very wealthy funders we are dealing with, while a lack of prosecuting power means there is little deterrence for those who are all too ready to break the law.

It gives us confidence to hear from the Committee on Standards in Public Life report that

“The majority of contributors expressed confidence in the Commission as an independent, non-partisan regulator, including those who see room for improvement in how the Commission carries out its role.”

The committee is right to say that. Although some have called for the abolition of the Electoral Commission, and draft legislation has called for taking away its independence and prosecutorial powers, the aim of the forthcoming electoral integrity Bill should be to give the Electoral Commission the resources and power it needs to tackle the threats to our democracy, as outlined in the CSPL’s report.

It is deeply concerning that, for the first time, a majority of the members of the Speaker’s Committee on the Electoral Commission are from the governing party. That is deeply unfortunate, as independence can be ensured only if cross-party consensus is maintained. We urge changes to be made to return confidence in the Speaker’s Committee and its governance role in this context. As the CSPL’s report makes clear,

“An electoral system needs to be demonstrably fair and to command the confidence of political parties and the public and must be overseen by a strong independent regulator.”

Our all-parliamentary group’s report makes 20 recommendations across three specific areas, based on evidence from 70 different organisations and experts. There were three clusters of areas. The first cluster was around transparency: how we make sure that citizens have access to information about online and offline aspects of election and referendum campaigns. Secondly, there was deterrence: how we offer the Electoral Commission the tools it needs to deter and, if necessary, penalise. Thirdly, there was monitoring: how we ensure there is a process to review whether campaign laws are up to date and can be reformed when needed. We believe those are the three key ingredients needed to ensure that the public feel confident that the system works.

Focusing specifically on campaign finance regulation, we said that the Elections Bill needs to be amended according to the following recommendations. All donations should be regulated

“by reducing permissibility check requirements from £500 to 1p for all non-cash donations”.

We should also

“Increase transparency and regulation of local candidate financial reports by shifting oversight to the Electoral Commission…Streamline national versus local spending limits with a per-seat cap on total spending…Modernise spending regulations by instituting per-annum spending limits…Standardise financial reporting”

and

“Require corporate donations to come from profits reported in the UK”.

We also say:

“Third Party Political Organisations and political parties should complete an ‘Exit’ audit after an election period”.

Finally, we should include valuation of the dataset costs in spending regulations. Those recommendations must be taken seriously by the Minister, and I hope she will be open to amendments accordingly.

Over the past year, we have sought to gain support in Parliament, and we are looking to lobby the Government, as well as those in Cardiff and Holyrood. We continue to make progress on those fronts. However, I want to finish by saying this: all around the world, democracy is in retreat. Authoritarian regimes outnumber democracies for the first time since 2001 and they are on the rise. Britain must be at the forefront of the fight to defend democracy and to stand up for human rights and international law. If we are to be effective and credible in working with our allies to do that, we must start by defending democracy at home—we must get our own house in order. It is our job to build processes, systems and institutions that inspire trust. It is our job to clear away the fake news, the dodgy data and the dirty money that is polluting our system. It is our job to save our precious democracy and to safeguard it for future generations. Our most dangerous enemy is complacency, and I will continue to work with colleagues across the House to make sure that Parliament is complacent no longer.