Baroness Finn (Con)

My Lords, this has been a long and thoughtful debate. I congratulate the noble Lord, Lord Macintosh of Eastwood, not only on being a long-standing friend of the noble Lord, Lord Foulkes, but on a witty and erudite maiden speech. I wish the right reverend Prelate a long and healthy retirement. Having listened to today’s debate, it is hard to escape the conclusion that this legislation is both rushed and ill thought through, with a lack of proper consultation. However, I thank the Minister for taking the time to meet last week to discuss our concerns. As the Bill progresses, I will work with my noble friends Lady O’Neill of Bexley and Lord Jamieson to provide scrutiny from our Front Bench, focusing on Part 4 on campaigns and political expenditure and Part 5 on enforcement and the Electoral Commission. Before I turn to the details of the debate and the measures we will pursue, I wish to address two matters of principle. First, changes to the rules by which political parties compete should command the widest possible confidence, as my noble friend Lord Markham made clear. Some of the Bill has been consulted on and some of it is welcome, but its most consequential political finance provisions were added late in the Commons, after the Rycroft review, without the cross-party agreement that should accompany changes capable of altering the competitive balance always present in how political parties finance their operations. Even a well-intentioned Government should proceed by consensus wherever they can. The Rycroft review, published on 25 March, recommended an annual cap on donations from British voters living abroad. The Government chose a £100,000 cap and announced that it would apply to donations made from that day. On 6 July, the Government announced a further minimum residence rule. An overseas elector returning to the United Kingdom would remain subject to the cap until he or she had been resident here for a full calendar year, a rule which would apply retrospectively from 25 March. A modified cap, running from 6 July, was also proposed for people moving here who had not been registered as overseas electors. The Government said that those provisions were needed to remove opportunities to circumvent the strengthened regime. The Government are the temporary custodian of state power. They should not use that power to frustrate the finances of their political opponents. The best safeguard against a future Government doing the same to any one of us is a body of electoral law made, wherever possible, by agreement. That brings me to the second principle. Retrospective legislation is an extraordinary measure and demands the most compelling justification. Under these provisions, donations that are today permissible may suddenly become unlawful after their commencement. The Government point to a time-critical risk of evasion, but this House must test whether that claim justifies such an exceptional course and whether adequate safeguards have been provided. It is important to draw a distinction between retrospective measures that apply from the point of a government announcement and those that apply before any formal announcement. If the Reform party has accepted dubious donations in full knowledge of what the Labour Government already laid as amendments in July, that would be unwise of it. Whatever Ministers’ present intentions, they must understand that conventions can break down when there is rushed, retrospective legislation without proper consultation or cross-party engagement. One side cannot resist the temptation to act unilaterally, the next retaliates, and the rules of democratic competition become another instrument of partisan power. We should not begin that race to the bottom. As I said, this has been an interesting and considered debate with excellent contributions, not least from a former Prime Minister, my noble friend Lady May of Maidenhead, who spoke powerfully on crypto assets. It has demonstrated both the depth of concern and the wisdom of subjecting these late and complex provisions to full scrutiny in your Lordships’ House. We have heard important questions on everything from the rationale and consistency of the proposal to give 16 and 17 year-olds the vote, from my noble friends Lord Brady of Altrincham, Lord Bailey of Paddington, Lord Young of Acton and Lord Farmer, to the rights of Commonwealth citizens to vote, from my noble friend Lord Mackinlay of Richborough, and the abuse of candidates, from the noble Baronesses, Lady Morgan of Cotes and Lady Smith of Llanfaes. I digress momentarily to say to the noble Lord, Lord Russell of Liverpool, that he is absolutely right that the great Stanley Baldwin sadly did not lead the Conservative Party to victory in the 1929 election, but he did lead the party to an historic victory two years later in 1931, with more women than men believed to have chosen the Conservatives at that election. I look forward to hearing the Minister’s response to all the concerns raised in this debate, but we should also acknowledge the areas where there is scope for agreement. We support measures that protect candidates, campaigners and elected representatives from abuse, intimidation and violence while preserving robust political debate. We will also engage constructively on the regulation of election advertising, including the challenges posed by AI-generated material. There are other measures, such as the consolidation of electoral law, which many noble Lords have mentioned, that can command broad support. That only reinforces the case for proceeding by consensus wherever possible. This is a wide-ranging Bill that will require scrutiny and amendment across many areas. I draw attention to a few matters that we intend to pursue during its passage. We have concerns about the proposed £100,000 annual cap on donations from overseas electors. Overseas electors are British citizens. It is a significant departure to say that a citizen may help to elect the Government but may support a political party only up to a limit that does not apply to a citizen resident here. We do not believe that difference in treatment has been objectively tested by the Government. Protecting politics from foreign and illicit money requires parties to know the identity of a donor and the true source of the funds. Existing permissibility and reporting rules are not by themselves an answer to every modern risk, so we support proportionate risk-based due diligence duties. As my noble friend Lord Johnson of Lainston pointed out, we go to a great deal of trouble to ensure that we avoid the wrong type of donor. A residence-based cap is a potentially blunt proxy. The Electoral Commission has warned that the new overseas donation rules are complex. We will test their proportionality, workability and transitional effects in Committee. There is, however, one related area where for now we support a clear prohibition. That is for donations made in cryptocurrency. The noble Baroness, Lady Morgan of Cotes, made a compelling case for a moratorium rather than an outright ban. If we cannot know with confidence where the money funding a donation has originated, we cannot know whether it ultimately came from a permissible source, and that is a fundamentally different issue from restricting a lawful donation from an identifiable British citizen simply because that citizen lives overseas. Where the origin of the funds cannot be reliably ascertained, protecting the integrity of our political system must come first. We also oppose the Bill’s proposal to restrict a company’s political donation by reference to its post-tax profits over the relevant five-year period. My noble friend Lord Leigh of Hurley spoke eloquently on this issue. There are many legitimate reasons why a company may record little or no profit. A start-up may take years to become profitable, while an established business may reinvest its earnings in growth. Neither circumstance is inherently suspicious. Company directors must act within their legal duties, and political donations or expenditure exceeding £5,000 in aggregate over 12 months generally requires prior shareholder authorisation. The Government can target shell companies, foreign control and pass-through funding directly without excluding genuine British businesses merely because of their accounting position. The interaction between the Bill and the Electoral Commission’s revised sponsorship guidance creates another risk. The guidance was published on 27 August and is due to apply from 1 January 2027. It explains that a payment may be sponsorship even when made on commercial terms if it helps a party to meet the costs of an event. Branding on banners, literature, lanyards or videos may therefore fall within the donations regime. The position is more nuanced than the present draft suggests. The conference stands supplied within the commission’s maximum rates, and genuine services for an external fringe event bought at market value, may remain commercial transactions, but parties and businesses need a clear and predictable boundary. When the Bill’s new corporate profit and control tests are layered on top, ordinary exhibitors may become impermissible or may simply withdraw, rather than risk being treated as political donors. Party conferences are important forums in public life and businesses commonly engage with more than one party. We will seek a clear statutory protection for genuine commercial transactions while ensuring that disguised donations remain fully regulated. A related problem concerns party-linked property companies. Political parties have long been associated with social and political clubs whose land or buildings may sit in a legally separate company. If an asset-rich but non-trading company winds up and transfers property to the connected party, the new profit test could prevent the party accepting the transfer even though it is not the mischief at which the rule is aimed. If the profit test remains, we will seek a tightly drawn exemption for long-standing party-connected companies incorporated before a fixed date, with suitable anti-avoidance safeguards. The transitional treatment of certain exempt trusts under the Political Parties, Elections and Referendums Act 2000 provides a model for protecting historic arrangements without opening a route for new shell companies. The Elections Act 2022 created a power for the Government, subject to parliamentary approval, to designate a strategy and policy statement to which the Electoral Commission must have regard. The current statement expressly preserves the commission’s operational independence. Clause 78 would repeal the power and the associated duties. We oppose the repeal because the statement puts proper weight on practical protections against electoral fraud and interference. The 2015 Tower Hamlets election showed why vigilance matters. Despite the comments of the noble Baroness, Lady Bennett of Manor Castle, and as my noble friend Lord Udny-Lister highlighted, more recently Democracy Volunteers reported possible family voting across 15 of the 22 polling stations that it observed at the Gorton and Denton by-election, and there is evidence that it occurred in Birmingham in May 2026. Clear national guidance, training and reporting are essential. Repealing the statement without demonstrating how those safeguards will be maintained risks sending the wrong signal. I turn finally to a point raised by my noble friend Lord Jamieson. Devolved franchise rules in Wales and Scotland allow qualifying foreign nationals who are lawfully resident, including some people with limited leave to remain, to register for devolved and local elections. Once registered, they are permissible donors under the current United Kingdom political finance rules, and no general cap applies to individual donations. The Rycroft review said that it had not been provided with evidence that this route had been used to channel foreign money, and I make no allegation that it has, but it identified a potential vulnerability requiring monitoring. If the Government’s case is that the political finance rules must be coherent against foreign influence, they should explain why they are retrospectively capping British overseas electors while leaving this route unaddressed. Electoral law belongs to the whole country. It is not the private preserve of the Government of the day. Ministers should legislate as though every power and precedent they create may one day be used against them. We will support measures that genuinely protect the ballot, but we will resist provisions that weaken confidence that the rules are being made in a non-partisan manner. The Government should think again before the temporary possession of power becomes a permanent invitation to partisan retaliation.