Labour's election funding reforms: closing loopholes at one door, welcoming foreign influence at another
Welcome
It’s time for another of my updates from seeing up close how government and Parliament operate. This time, it’s the news just out about the government’s plans to reform how our elections are run. Although on the financial side all the rhetoric - and coverage - is about closing down financial loopholes, the picture looks rather different when you dig into a crucial piece of detail.
Locking the back door but putting a welcome mat down at the front door
According to the media coverage, today the government published plans to crack down on dodgy money flowing into our political system, including protecting the UK from foreign influence.
The Electoral Commission has also generally welcomed the plans.
But… look up close at the details, and it’s a case of locking the back door (good move, and to be welcomed) while leaving the front door wide open, and even putting out a welcome mat.
What looks to be coming, and is to be welcomed, is a wide range of measures to improve transparency over where donations to parties and politicians really come from. For example, it will be good to see a curbing of the ability of unincorporated associations to act as a ‘cut out’, obscuring the original source of donations funnelled via them.
However, when it comes to company donations, all that the government intends is:
We will require companies to have made sufficient UK (or Ireland) generated income in order to donate.
That will stop the use of shell companies. Fine.
But all it means is that a foreign government or billionaire needs only a UK company with a turnover of a few million. Many already do, such as Elon Musk.
Moreover, general elections are pretty cheap compared to the corporate or government sector. £1 million a year is a large political donation, but a relatively small income generation level for a company. If the foreign government or billionaire needs to buy a UK company to enable big political donations, the price will hardly trouble their financial resources.
If that foreign money already owns, say, a football club, the price of buying a general election will be rather less than that of buying a new star striker for their team.
What is planned is not going to protect our democracy from foreign interference. Which is why the government is locking the back door while leaving the front door open when it says things like:
To further tighten the regime and make it more difficult for malign actors to funnel illegitimate foreign money into unincorporated associations, and then onto parties or other campaigners, we will require unincorporated associations to undertake checks on donations with a value of over £500, similar to the checks on donations undertaken by political parties.
That is welcome. But it won’t stop Elon Musk or a foreign government.
To make matters worse, the government isn’t just leaving the front door open. It is laying down a welcome mat as well - in the form of pushing ahead with plans to let foreign governments own significant chunks of our newspaper sector.
This was the subject of my latest oral question in Parliament:
But let’s end with some good news. My very first oral question in Parliament asked about when the government would enact a political finance reform that was passed in 2009 but never enabled.
Today’s announcement, whether due to that question or not, includes the news that they are going to implement it:
To help enforcement agencies take action against facilitators of illegal donations, the government will commence section 54A of Political Parties, Elections and Referendums Act 2000, which requires those making political donations of over £7,500 to declare if they have received (or expect to receive) money or any other benefit worth more than £7,500 from another individual or entity in connection with their donation.
Bingo!
In case you missed last time’s edition…
Thank you
I hope you enjoyed reading this, and if you did please do encourage others to take a read too:
Best wishes,
Mark
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Mark
Great article and well done for reminding them of the dormant reforms!
Interested to hear your thoughts on solutions. In many ways it is positive that there is less money involved in UK politics compared to say the United States, but the relatively small amounts required to finance a winning campaign leaves our system vulnerable to anyone with a few million to spare and an axe to grind.
Does capping donations work or just lead to more intransparent salami slicing?
Should we look at the bottom of the pile where small donations do not qualify as donations? Are bad actors access the system in this way?