In its 2024 manifesto, the Labour Party said that it would “protect democracy by strengthening the rules on donations”. The Prime Minister’s spokesman has subsequently suggested that the government will “protect democracy from threats to [sic] foreign interference by strengthening the rules around donations to political parties”.

Are foreign donations banned under UK electoral law?

Yes.

The principle underpinning this ban is one of self-determination. Or, as stated by the Committee on Standards in Public Life’s (CSPL) Fifth Report, The Funding of Political Parties in the United Kingdom (1998):

what happens here is the concern of those who live and work here and the political parties should not be entitled to fill their coffers with donations from abroad, made by persons and corporations who have no genuine stake in the country.

Rules surrounding donations and loans to political parties are set out in the Political Parties, Elections and Referendums Act 2000 (PPERA), this act was largely based on the recommendations made in the 1998 CSPL report.

Parties can accept donations or loans with no upper limit if they come from a “permissible source”. Foreign nationals are not included on the list of permissible sources.

Donations are defined as “money, goods or services given to a party without charge or on non-commercial terms, with a value of over £500”. This means that anything under £500 is not counted as a donation.

‘Permissible sources’ include:

  • an individual registered in a UK electoral register (including overseas electors and those leaving bequests in their wills)
  • a UK-registered company which is incorporated in the UK and carries on business in the UK
  • a UK-registered trade union
  • a UK-based ‘unincorporated association’ that is based in and carries on business or other activities in the UK
  • a UK-registered limited liability partnership (LLP) that carries on business in the UK

There are slightly different rules in Northern Ireland around what is and isn’t a permissible source. Parties in Northern Ireland can also accept donations from voters and organisations in the Republic of Ireland.

Are there ways that foreign money can enter UK politics?

Yes.

The rules allow foreign money to be donated to UK political parties in several different ways.

Foreign companies

Any company is a permissible donor if it is:

  • registered with Companies House
  • incorporated in the UK
  • carrying on business in the UK

Therefore, a multinational corporation, owned by a foreign national, could legally donate to UK political parties if they meet these criteria.

In a 2021 review, the CSPL outlined a “risk that the current rules on donations from companies provide a route for foreign money to influence UK elections” (PDF).

Overseas voters

Regulations stemming from the Elections Act 2022 removed the 15-year limit on the right of British citizens living overseas’ to vote in UK parliamentary elections. This means that British citizens living overseas can register on the electoral roll for as long as they live overseas so they remain a ‘permissible source’ of donations to a political party.

In a House of Lords debate on overseas electors in December 2023, Lord Khan of Burnley (Lab, then in opposition) said that the change to the voting rights of British citizens living abroad “could dangerously weaken the restrictions on overseas political donations and allow foreign money to enter British democracy”.

Baroness Penn (Con, then in government) said “it is only right that [overseas voters] should be allowed to make donations to political parties in Great Britain in the same way as other citizens registered on the electoral roll in Great Britain”.

Unincorporated associations

‘Unincorporated associations’ are “association[s] of individuals who have come together to carry out a shared purpose”. They have an identifiable membership and are bound together by formal or informal rules.

The current register of unincorporated associations includes some political organisations, such as:

Unincorporated associations are permissible donors, but they do not have to conduct permissibility checks on their own donors; anyone, including foreign nationals, can donate to them. The Electoral Commission has said that “this means that they could legitimately make donations using funding from otherwise impermissible sources, including from overseas” (PDF).

Funding for overseas visits

A political party can accept money from anyone who wishes to pay for the reasonable costs of a visit outside the UK.

The charity Transparency International UK has estimated that MPs have accepted over £11.6 million worth of visits abroad funded by outside interests (PDF) since 2001. This includes “£4.5m from foreign governments, parliaments and regime-linked groups”.

What reforms have been suggested?

Organisations that have reviewed political financing in the UK have suggested several reforms. These have often focused on requiring unincorporated associations to conduct permissibility checks on their donors and limiting company donations to the profits they make in the UK.

Recommendations from the CSPL include:

  • subjecting unincorporated associations (that meet a pre-existing threshold for registration with the Electoral Commission) to permissibility checks
  • only allowing company donations from profits generated in the UK

Recommendations from Transparency International (PDF) include:

  • introducing an annual cap of £10,000 on donations from individuals and organisations
  • ensuring overseas trips are only funded by trusted sources
  • only allowing companies and LLPs to make contributions from profits generated in the UK
  • requiring unincorporated associations to undertake permissibility checks on donations

Recommendations from the Electoral Commission (PDF), in written evidence submitted to an inquiry by the Joint Committee on the National Security Strategy, include:

  • ensuring that “parties and campaigners can only accept donations from companies that have made enough money in the UK to fund their donation”
  • addressing the “weaknesses in the transparency requirements for political donations by unincorporated associations”

Others are more circumspect. The Public Administration and Constitutional Affairs Committee said that it recognised “the potential gaps in transparency and weaknesses in the permissibility checks on donations to prevent foreign influence”. However, it also suggested that “any further reporting requirements or mandatory checks on donations…do not adversely affect the organisations subject to them.”

Similarly, prior attempts to reach an agreement on a donations cap – such as after a review by Sir Hayden Phillips in 2007 – have collapsed over whether trade union donations were to be included in said cap. A Guardian leader reporting on Sir Hayden’s review noted that “each party [was] anxious that the other might manage to entrench financial advantage in law.”

What will happen next?

In December 2024, the Prime Minister’s spokesman said that there would be a “relevant update in due course” regarding the government’s commitment to reviewing the rules around political donations in the UK.

About the author: Sam Power is a Parliamentary Academic Fellow, working House of Commons Library. He is based at the University of Bristol and author of the book Party Funding and Corruption.

Photo by: Andreea V via Unsplash