Date of publication
17 July 2025
Reading Time
4 minutes, 55 seconds
The Government has now published its much-anticipated statement on electoral reform, providing more detail on commitments the Labour Party made in the run-up to the 2024 polls. Their pledge to ‘protect democracy by strengthening the rules around donations to political parties’ now has clearer shape, with a list of reforms in the pipeline. Here’s a quick rundown of what’s in the prospective Elections Bill, and importantly what’s missing.
Closing dark money loopholes
There are welcome and much needed reforms to stop shell companies and unincorporated associations being used as conduits for money of foreign and unknown provenance. Recently, we counted that these sources had donated almost £50 million, where the origin of funds are unclear. Strengthening the law in this area is well-overdue, with support from the Committee on Standards in Public Life – the Government’s ethics watchdog – and the Electoral Commission.
Ministers have pledged to activate anti-evasion rules passed by Parliament in 2009 but not commenced by subsequent governments. This would require donors to declare they are the source of funds for contributions, with criminal penalties for those making false statements. Parties will also need to do more checks on those they’re accepting money from – something some claim to do already, and which is a legal requirement in large parts of the business sector.
Overall, promising. Though there is room for improvement.
Clarifying the law on donations to candidates and ministers would reduce regulatory confusion, and address a transparency black hole totalling millions, if not tens of millions of pounds. Considering a ban on crypto and cash contributions, possibly over a certain threshold, would help address concerns of these being used as conduits for illegal funds. Stopping foreign governments from using all-expenses paid trips as part of their influencing operations would seem prudent. And reducing the reporting threshold for donations – increased substantially under the past government – would make the law and money in politics easier to follow.
Strengthening the Electoral Commission’s powers
The proposals address some crucial current enforcement gaps that risk leaving the law as little more than just a piece of paper.
The Electoral Commission will be awarded powers to issue bigger fines – up to £500,000 from the current £20,000 – and more effectively police the rules for local campaigning. These changes should increase deterrence against breaking the law, which can be dismissed currently by the larger parties as the cost of doing business. The Commission will also receive greater information sharing powers, allowing it to send and receive intelligence more effectively with law enforcement and other agencies.
Again, significant steps forward, but a few key errors and omissions.
Surprisingly, the Government has decided to keep ministers’ ability to direct the Electoral Commission through a strategy and policy statement. This is something Labour were vehemently opposed to during the last Parliament, but have since changed their tune since gaining office, and now propose to issue a new one. Given this fetters the Commission’s independence and risks undermining its effectiveness at enforcing the law, Parliament should remove this ministerial power at the earliest opportunity. At the same time, they could remove the bar on the regulator bringing forward criminal proceedings, if necessary. Perversely, almost anyone can do this through a private prosecution, yet the body required by law to enforce the law cannot. These changes would require simply revoking two unpopular and undesirable sections from statute.
On fines, the Government have also only accepted part of recommendations made by a range of bodies, including the CSPL, parliamentary committees and civil society (including us). Our proposal has been to increase the maximum fine the Electoral Commission can levy to at least £500,000 or 4 per cent of the spending limit (whichever is the greater). While this announcement will deliver on the former, it misses the latter. This might have something to do with the statutory maximum for expenditure being raised to £34 million in 2024, which would equate to an upper penalty of £1.4 million. This leads us to the elephant in the room.
Ignoring the UK’s big money problem
While what’s in the statement is necessary to advance ministers’ goal of ‘restoring trust in our democracy’, it is in no way sufficient. What’s conspicuous by its absence is anything that would address the corrupting influence of big money in politics. Addressing this would be timely given the Electoral Commission have just announced 2024 was the most expensive election in modern history.
In order to pay for increasingly excessive campaigns, some parties are resorting to securing a growing proportion of their income from a small number of very wealthy donors. While historically donations from individuals and companies giving £1 million or more in a year formed an insignificant proportion of overall contributions, in 2023 they formed the majority for the first time. During this year, we also saw the biggest amount given by a single benefactor to a political party within a 12-month period when Frank Hester donated £10 million to the Conservatives.
We stand at the beginning of a new and dangerous era, where big money dominates in a way that has corroded US politics across the Atlantic. Already, it buys privileged access, potential influence, and honours. A growing reliance on a small number of wealthy backers is making the problem worse, undermining trust in politics and reinforcing a widespread view that the ultra-rich have undue influence over the major issues of our time. The prospective Elections Bill, expected before the end of Parliament, presents an opportunity for MPs to tackle this issue head-on - by reducing the cost of elections and capping donations, as Australia has just done (albeit imperfectly). In doing so, ministers can protect our democracy so it works for the many, not just the few.