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Campaigners say defeat of amendment to close loopholes on party funding leaves UK open to ‘malign influences’

By Ben Quinn, Political Correspondent

Guardian Online – 3 May 2023

UK elections remain at risk from interference by hostile states after the government voted down a move to close loopholes on foreign donations to parties, campaigners have warned. The chair of parliament’s security committee was among those who backed an amendment to the national security bill that would have obliged political parties to carry out due diligence on the true source of donations from companies and individuals. The amendment was sponsored by three members of the House of Lords including the former director general of MI5, Jonathan Evans.

After the government used its majority on Wednesday to whip Conservative party MPs into voting against the proposal, the campaign group Spotlight on Corruption described it as

“a badly missed opportunity to protect the next election from malign influences”.

While parties are banned from taking money from overseas states, critics argue that the rules designed to prohibit foreign donations under the Political Parties, Elections and Referendums Act 2000 (PPERA) are riddled with loopholes allowing money to be channelled to parties and MPs. Those loopholes could include a UK-registered company which draws on profits from abroad, or Unincorporated Associations (UAs) which can donate money to parties that they receive from foreign sources. The UK’s main political parties were reported in 2021 to have accepted £12.9m in donations from UAs over the previous five years, none of which can be connected to the original donor.

Wednesday’s amendment would have required British parties to publish and keep updated a policy statement to ensure the identification of donations from foreign powers, whether made directly or through an intermediary, and provide an annual statement of risk management to the Electoral Commission.

Julian Lewis, the Conservative chair of parliament’s intelligence and security committee, said he firmly supported the proposed clause, warning MPs on Wednesday that the UK has previously “clearly welcomed Russian money, including in the political sphere”.

“The amendment is eminently reasonable, it shouldn’t be controversial for political parties to want to ensure the transparency of their foreign political donations,”

he said.

“We must protect against covert, foreign-state-backed financial donations if we are to defend our democratic institutions from harmful interference and influence.”

The security minister, Tom Tugendhat, said the national security bill was “now in a strong position” and had “effective tools and powers to tackle hostile activity taken on British soil”. The Lords amendment in relation to political donations “is not needed”, he said, adding:

“The law already makes robust provision in relation to donations to political parties. Foreign donations are banned, it is an offence to accept them and there are strong rules safeguarding against impermissible donations via the back door. Parties can only accept donations from permissible donors, as such the government will not accept this amendment.”

The Labour MP, Chris Bryant, asked during the same debate:

“What would a party do if, for instance, they were offered a donation for, let’s say, £50,000 by somebody who lives and works in Moscow today? The law says they have to do nothing as long as they are on the electoral register. But surely, we would want to say I’m not sure that that’s quite right.”

The Lords amendment was voted down by 254 votes to 134 – a majority of 120. Lewis was the only Conservative MP who voted against the government to keep the amendment in. It now returns to the House of Lords, where peers will decide whether to accept the government’s rejection of their amendment, or propose a different amendment.