Madam Deputy Speaker (Dame Rosie Winterton): ... I call the Chair of the Intelligence and Security Committee, Sir Julian Lewis.

Sir Julian Lewis: Thank you, Madam Deputy Speaker.

Lords amendment 22B, accepted by the upper House last Wednesday, 21 June, requires a UK-registered political party to publish a policy statement ensuring the identification of foreign donations and providing the Electoral Commission with an annual statement showing the foreign donations received. This is the second time that the other place has amended the Bill to include such a clause. On behalf of the ISC, I spoke in favour of the previous version of the amendment when the Bill was last in the Commons, and, as Lord West stated on Wednesday, the ISC’s position remains the same: we firmly support the introduction of this provision. It is deeply concerning that the Government continue to oppose it.

In 2020, the ISC’s long-delayed Russia report highlighted the risk of foreign state-linked financial interference in UK politics. There is clearly a threat that needs to be tackled. The Committee on Standards in Public Life, in a major 2021 report on regulating electoral finance, concluded that

“the current rules are insufficient to guard against foreign interference in UK elections.”

That committee also observed that, since 2018, the Electoral Commission has supported the introduction into electoral finance regulation of risk management principles that are used for anti-money laundering checks conducted by companies. This amendment falls into that same category.

Members from both sides of both Houses have previously spoken strongly in support of the Lords amendment and, together with the evidence provided by the ISC, the Committee on Standards in Public Life and the Electoral Commission, have clearly set out why it is needed and why the current safeguards in our law are insufficient. By refusing to accept the need to update the law, the Government are rejecting the non-partisan conclusions of both Parliament and the Electoral Commission. They are inexplicably rejecting the opportunity significantly to improve the transparency and accountability of our political system by requiring political parties to take modest but important steps to identify and disclose donations received from foreign sources and states.

The Government claim to oppose this Lords amendment on the basis that the existing protections within electoral law are sufficient; that the amendment would not work in practice; and that it would place an undue burden on grassroots political organisations. Almost everyone else disagrees. The Government rely on the fact that existing electoral financing law requires political parties to check that a donor is “permissible”. Yet that misses the central point: the lack of any requirement for a political party to check the source of the funding.

There is currently no rule that political parties must conduct adequate due diligence on donors – not even donors operating in high-risk countries. Citizens domiciled abroad and companies based in the UK can donate to a political party with no questions asked about the source of the money. That applies even to companies that are making no operating profit. Why should a UK charity, or a UK company, have to undertake enhanced due diligence, under money laundering and terrorist financing law, where a donor is linked to a high-risk country, whereas a political party is exempt from that duty? Political parties surely require the highest level of protection.

Martin Docherty-Hughes: On that point, the hon. Gentleman is clear that even small and medium-sized registered charities, whether they are in Scotland, England, Wales or Northern Ireland, have to do as he says. I am absolutely perplexed as to why the Government cannot agree with him and his Committee on why that should not be extended to political parties.

Sir Julian Lewis: I hope he, like us, will persevere and maybe one day that mystery will be solved. In fact, the amendment does not even represent the highest level of protection. It is a very modest measure that would not place undue burdens on political parties. The Electoral Commission says that such rules could be introduced in a way that recognises the need for proportionality, as we have heard, with different requirements depending on the size of an entity’s financial infrastructure and/or the size of the donation. Guidelines would prevent this amendment, which increases transparency and accountability, from becoming disproportionately onerous.

The fact that due diligence measures are used in the charity sector, and not just by commercial entities, demonstrates that it should be entirely possible for similar steps to be taken by political parties. We know that there is both a threat and a vulnerability. We know that current safeguards are inadequate. This is a modest, sensible and proportionate amendment: the Minister should seize the opportunity by accepting it or proposing his own alternative.

Amendment 122B, also passed by the upper House last week, relates to repeated refusal by the Government to update the ISC’s memorandum of understanding in order to ensure that we retain the power to scrutinise effectively all intelligence and security activity taking place across Government. The Minister for Security, my right hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), accepted the need for action when the Bill was last in this House, acknowledging that an update to the ISC’s memorandum of understanding “needs to be made”. Why is such a process overdue? The reason is simple and has been explained, time and again, ever since the national security and investment legislation came before this House, as the right hon. Member for North Durham (Mr Jones) pointed out, over two years ago.

As a result of the so-called “fusion doctrine”, intelligence and security-related activities are increasingly undertaken by units within a wider assortment of policy departments, including several that have not generally carried out such sensitive work previously. These new bodies, such as the Investment Security Unit and the Counter Disinformation Unit, are not currently listed in the ISC’s MOU and therefore fall outside the ISC’s remit. Yet, there is no way in which the classified aspects of their work can be scrutinised systematically or effectively by departmental Select Committees.

Effective oversight of intelligence and security matters can be undertaken only by the ISC, and that is precisely why Parliament established it. Intelligence and security activity by parts of Government falling outside the ISC’s independent oversight means that such activity escapes Parliament’s democratic oversight. That is why our memorandum of understanding with the Prime Minister must be promptly updated.

During the passage of the Justice and Security Act 2013, as we have heard, the Government gave the clearest possible undertaking to Parliament that the ISC should have oversight of all of central Government’s intelligence and security activities, both now and in the future. It was clear that the ISC’s MOU was designed to be a living document that could be updated easily to reflect any changes to the security and intelligence activities being undertaken by the Government. Yet, the Government have consistently refused to abide by that authoritative commitment made to this House by our late and much-missed colleague, James Brokenshire, the then Security Minister.

That failure is genuinely troubling. Statements by Ministers are critically important – Parliament, courts and the public rely on them. I am sure I speak on behalf of this House when I say that we expect the Government to meet the commitments that they make in Parliament. Their obstinate refusal to do that in the case of the MOU, which began under the premiership of Boris Johnson but which so far seems to have outlasted him, shows at best an apathetic approach to public accountability and, at worst, an intention to obstruct non-partisan oversight of intelligence and security matters.

At Lords’ Report stage, in opposing a very similar amendment, the Government’s position was that it was not necessary as the Prime Minister was already considering the changes to the ISC’s remit that the ISC had itself proposed. It was stated that the PM would respond in due course and that it was not appropriate to mandate him to update the MOU in a specific timeframe “so soon” after a change had been proposed.

However, when that argument did not prevail, the line changed. Last Wednesday, their Lordships were told:

“His Majesty’s Government consider the current MoU to be sufficient to allow the ISC to discharge its statutory oversight duties of the agencies and the wider intelligence community. The MoU is subject to continuous review and His Majesty’s Government welcome the ISC proposing changes that it would like the PM to consider.” – [Official Report, House of Lords, 21 June 2023; Vol. 831, c. 245.]

In his opening remarks, the Minister in the Lords threw in for good measure the extraordinary assertion that the “true driver” of this amendment was to compel the Prime Minister to attend a session of the Intelligence and Security Committee. The attribution of an ulterior motive of this sort is as discourteous as it is inaccurate. The Minister also told the Upper House that my right hon. Friend, the present Security Minister, had met me to find

“an agreeable resolution to the issue.”– [Official Report, House of Lords, 21 June 2023; Vol. 831, c. 226.]

That was also incorrect. Although we had a typically amicable conversation, he will recall that he simply reiterated the Government’s rigid opposition to the amendment, and no solutions were proposed to resolve the issue.

This morning, ISC members and staff discovered that, sadly without consulting or even notifying us, the Government were, after all, tabling their own version of the Lords amendment, despite having resisted any such thing in all previous debates and discussions with us. This is strange and inconsistent behaviour, and I intend to abstain in the absence of a satisfactory explanation.

Perhaps the Government hope that their amendment might supersede the existing provision in the Justice and Security Act 2013, which explicitly states that our MOU

“may be altered…with the agreement of the Prime Minister and the ISC”.

We believe that this was always intended to be a simple and straightforward process. Unfortunately, all our efforts from 2021 onwards to secure the necessary changes have relentlessly been blocked.

The issue ought not to be controversial, and the Committee has been baffled and exasperated by the Government’s negative attitude. We do not know precisely who in Government are seeking to erode proper parliamentary oversight, nor what it is they are trying to hide, but behaviour of this sort only fuels conspiracy theories, and that is in no-one’s interest. I ask my right hon. Friend explicitly to confirm that the Government support the existence and work of a fully independent ISC that can effectively scrutinise their work – as originally intended – in relation to all the intelligence and security matters undertaken across Government.

Each piece of new legislation devolving intelligence and security matters away from the bodies already overseen by the ISC must come with a commensurate expansion to the ISC’s memorandum of understanding. The Government’s last-minute amendment falls short of that and will not resolve the underlying recurrent problem.