The current concern with foreign financial interference in British politics (whether Musk or Moscow driven) is belatedly welcome. However, the Government’s response seems both lethargic and limited.
Shrewd investors do not deploy large sums of money without expecting a return. Ministers – and MPs – should be asking themselves what this is all for, and why the scale of this interference has only now become a matter of public concern.
The wider context of motivation is important, as the US experience should warn us.
In their 2010 election manifestos the three major parties all committed themselves to “taking big money out of politics”. The Conservatives promised to “end the big donor era”, Labour noted that “funding of political parties must be reformed if the public is to regain trust in politics” and the Liberal Democrats proposed that all donations should be capped at £10,000 annually.
As a direct result the Committee on Standards in Public Life (CSPL) examined the options and published recommendations in its report “Political Party Finance” in November 2011.
These were promptly rubbished by party leaders on the grounds that – in a period of austerity – no increase in state funding could be contemplated to compensate for the reduction in donations.
However our 2013 cross-party draft Bill, contained in the report “Funding Democracy”, showed how to reallocate existing public funds, with net increase, while restricting the power of donors. By then the Conservative Party was having second thoughts about any restrictions on its income.
The CSPL has not given up. Its 2021 report “Regulating Election Finance” is both comprehensive and persuasive. This recommended that national party campaign spending limits should be reduced by 15%. In response the Johnson Government in 2023 increased the limit by 80%, with substantial increases for donations.
Even more damaging were the reactions to other recommendations. Ministers refused to ban the secretive donations of “unincorporated associations”, which can hide the identity of the original money source, even for foreigners. The CSPL had proposed transparency here, and a general ban on donations to parties or political campaigning organisations from those who were not UK citizens resident in the UK.
It also recommended that company donations should not exceed net profits after-tax generated in the UK, within the preceding two years, to deal with another donation dodge for foreigners.
The Elections Act 2022 weakened the existing controls in the opposite direction. By extending the franchise to overseas resident UK citizens who could claim ever to have been on an electoral register here they became eligible to make political donations. Since most local registration authorities have time-limited records, and the check on eligibility depends on necessarily difficult to police “attestation”, this is another large loophole. Tax-avoiding millionaires anywhere in the world, having emigrated long ago, can now exert financial pressure on UK politics.
The Elections Act also had damaging implications for transparency and limitation of campaign spending.
Since 1883 a core legal requirement has been that all money spent to secure the election of a candidate in a constituency should be rigorously controlled, reported and publicly accessible. This stemmed from the days of corruptly bought seats and MPs.
As recently as 2018 the Supreme Court issued its judgement in the Thanet case (R v Mackinlay and others UKSC 42), confirming that a candidate’s expense return must include appropriate expenses even if they were not authorised by the candidate, his or her agent, or someone authorised by either or both of them. This case related to a massive central party financial commitment to the election campaign of a particular candidate (to withstand a UKIP threat, as it happens).
The Electoral Commission (EC) then drafted guidance to incorporate this reiteration of the law: candidates and their agents had to take responsibility for all expenditure for their campaigns, at least during the statutory “short election period”.
All major parties had got used pouring money into target, marginal seats in the months previous to the dissolution of a parliament, often to the tune of many times the total permitted in the short campaign itself.
In recent years, by devious devices (e.g. avoiding an actual constituency or candidate name) they had invested yet more hundreds of thousands of pounds in these seats, right up to polling day. With the remorseless switch to mail shots, call centre contacts and social media sophistication, control had become even more impossible and lax. The Commission set out some basic guidance to fulfil the Supreme Court judgement.
With the Elections Act 2022 the Johnson Government turned this on its head. In effect, candidates and agents cannot be held responsible for campaign expenditure, by their central parties, to promote their election, if they can claim not to have “authorised, directed or encouraged” it themselves.
If the public cannot be confident of the integrity of constituency elections that undermines our whole representative democracy.
There is no interest as powerful as a “personal interest”: I suspect that many Labour MPs may now be looking over their shoulders at the potential impact of big money in their own constituencies and urging the leadership to take these issues seriously after all.
Political donations was a major topic under discussion in the recent Housing Community and Local Government Committee meeting on Electoral Policy and Reform.
