Spotlight on Corruption welcomes today’s publication of an elections strategy which sees the government commit to crucial reforms that will help protect our democracy from the risks of undue influence and foreign interference.
Our recent briefing examined the various ways that foreign or hostile actors could hijack the next General Election. We are pleased to see that the strategy addresses several of the loopholes we raised and commits to closing them through an Elections Bill. We will have to wait for the details of this Bill to see just how comprehensive these measures are.
The strategy paper’s strong measures on political finance and enforcement include:
- The introduction of ‘Know Your Donor’ checks to increase scrutiny of donations, requiring recipients to conduct enhanced checks to decrease the risk of illegitimate donations entering our system and guarding against foreign interference. Spotlight has long-campaigned for proper ‘Know Your Donor’ checks like those announced today. In May 2023, we produced a model KYD policy in association with experts in electoral law.
- New rules to ensure that in the future, ‘shell companies’ will not be permitted to make political donations to UK political parties.
- New rules for Unincorporated Associations (UAs) include much lower thresholds for when they have to register with the Electoral Commission and report on gifts they receive. UAs will also be required to conduct permissibility checks on donations with a value of over £500 and disclose donations to individual candidates.
- Measures to make it easier for the authorities to enforce against illegal donations through a proxy or intermediary.
- Increasing the Electoral Commission’s maximum fining powers from £20,000 to £500,000.
However, several issues remain unaddressed in the strategy. Fortunately, the Government still has time to consider these vital reforms before it makes its final decision on what to include in the upcoming Elections Bill.
In particular, we believe the government should address the following issues in the Bill:
1. Restoring the independence of the Electoral Commission
In order to safeguard UK democracy and the trust of the British public in elections, it is critical that the Electoral Commission is robustly independent, and that its activities and operations are completely free from any political influence.
However, the government has not committed to removing the strategy and policy statement, introduced by the previous government, which gives the government of the day the power to set out what the Electoral Commission should do to support its own electoral agenda.
This is incredibly short-sighted and leaves the door open for this and any future government to assert political control over the UK’s electoral body. Read more in our recent briefing.
2. Ongoing foreign interference risks in digital campaigning
While the government announced planned tweaks to the rules on who is behind digital campaigning, there is still no requirement for non-party campaigners (NPCs) to declare the source of their income under the £10,000 notification threshold.
Additionally, once registered, NPCs can still avoid declaring the source of any individual donations under £7,500. Nor is there an explicit ban on foreign individuals or organisations funding campaign advertising in the UK.
3. Crypto donations
Despite a senior Cabinet Office Minister this week saying that the UK should consider banning political donations through cryptocurrencies, there was no indication in the elections strategy that this was on the cards.
Reforms will at least extend new KYD checks to all political donations including crypto, but the government should also look at prohibiting cryptocurrency donations altogether, as Ireland and Brazil have recently done to prevent political interference and ensure full transparency of political donations.
At the very least, the Electoral Commission needs to issue clear guidance on how to properly record and assess the permissibility of crypto donations. Notably, crypto’s extreme volatility complicates valuation – especially now that donors giving over £7,500 must declare whether they’ve received similar amounts from individuals or entities in order to reveal whether a person making a donation is the true donor or is acting on behalf of someone else.
4. The enforcement gap
While it is great news that the Electoral Commission’s fining powers will be significantly strengthened, political finance enforcement remains fragmented across multiple agencies, and given the Police and Crown Prosecution Service’s inconsistent and insufficient engagement in criminal cases, a significant enforcement gap persists.
Ensuring the new rules have real teeth will require a single specialist police unit to be given the specific mandate and resources and held accountable for policing complex political finance crime, as well as new specialist prosecutorial posts created in the CPS.
5. Spending outside of regulated periods
The elections strategy fails to address the ongoing risk of unregulated political spending between elections. Parties and campaigners can continue to deploy significant funds to influence the political landscape year-round, with no reporting or disclosure requirements.
Closing this regulatory gap requires extending rules beyond election periods, ensuring full transparency through consistent annual limits and modernised reporting mechanisms.
6. Addressing the influence of major donors
This strategy does not address the potential that political party donors exert major influence over public policymaking and spending. At a minimum, the government could prohibit companies and directors of companies that receive or are bidding for public contracts from making political donations to prevent the risk of major conflicts of interest in procurement.
A more ambitious reform would be to introduce a donation cap, as called for by organisations including Transparency International UK and IPPR. Dr Sam Power meanwhile has suggested a ‘democracy backstop’ that would limit political donations from any individual, corporation or trade union to £1 million a year.
Next steps
The commitments announced today are sorely needed to prevent undue influence and foreign interference in our democracy. But real questions remain over whether the Elections Bill will match the scale of the challenge. We will be working hard to ensure the Bill is as ambitious as possible to protect UK democracy and help restore public trust.
Nor is there an explicit ban on foreign individuals or organisations funding campaign advertising in the UK.
