Keir Starmer writes to Boris Johnson on the Elections Bill

Keir Starmer MP, Leader of the Labour Party, has today written to the Prime Minister to set out Labour’s proposals for the Elections Bill, which would close the loopholes on foreign money pouring into UK politics.

The text from the letter is below.

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Dear Prime Minister,

Today, during Prime Minister’s Questions, I asked you about proposals within the Elections Bill which relate to the continued flow of foreign money into our democracy and asked for your government’s support for Labour’s proposals to close this loophole.

I understand it is difficult to provide a substantive response during this Question Time, therefore I hope you are able to consider supporting these two comprehensive proposals, due to be considered in the House of Lords in the coming weeks, as common-sense solutions to the continued flood of foreign money into UK political parties.

Our proposed new clause 9 and new clause 2, both attached in an Annex to this letter, would close the loophole allowing the use of shell companies to hide the true source of donations to political parties by foreign actors. These proposals would ensure that donors to UK political parties have a connection to the UK, by mandating that individual and company donors are based here. These proposals would also ensure that there are consequences for breaking the rules for companies and individuals.

Firstly, our proposal would put a stop to plans in the Elections Bill to allow non-residents to donate to political parties through an incredibly relaxed registration process, including people who live in tax havens to avoid paying tax in the UK for decades.

The Elections Bill risks allowing a flood of unfettered donations from people who may never have lived in the UK or contributed here, by removing the 15-year rule. This rule currently prevents expats from donating to political parties after 15 years of living outside the UK. Without it, there are no checks on donations flooding in from overseas. The Labour Party believes only those who live in the UK should be able to make financial donations to political parties.

Secondly, our proposals would bring transparency to companies that donate to political parties. We know that shell companies are used to disguise the true identity of donors.  Our proposed amendment would ensure that only companies based in the UK, subject to Companies House registration, are able to donate to political parties. It would also make individuals liable for donation restriction evasion offences committed by their companies.

Taken together, these proposals would close the dangerous loopholes which allow for our donation laws and our democracy to be weakened. In the context of the recent Russian invasion of Ukraine and the continued threat of Russian influence in our democracy, I am sure you will agree that we must be more vigilant than ever.

These are straightforward amendments which will provide vital safeguards to our world leading British democracy.

I welcome a swift response to this letter and would be happy to meet to further discuss this important issue.

Yours sincerely,

Keir Starmer

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ANNEX

New Clause 9: The Elections Bill:

To move the following Clause—

“Permissible donors to be based in the United Kingdom and associated offences

(1) Section 54 of PPERA (permissible donors) is amended in accordance with

subsections (2) to (5).

(2) At the end of subsection (2)(a), insert “ordinarily resident in the United Kingdom, and domiciled in the United Kingdom for purposes of individual taxation.”

(3) After subsection (2)(b)(ii) insert—

“(iii) employing a majority of its staff at locations within the United Kingdom, and

(iv) employing at least five staff within the United Kingdom”.

(4) At the end of subsection (2)(f), insert “has a majority of partners who are on a UK electoral register, are ordinarily resident in the United Kingdom and are domiciled in the United Kingdom for purposes of individual taxation, employs a majority of its staff at locations within the United Kingdom, and employs at least five staff within the United Kingdom.”

(5) At the end of subsection (2)(h), insert “has a majority of those persons with significant control who are on a UK electoral register, are ordinarily resident in the United Kingdom and are domiciled in the United Kingdom for purposes of individual taxation, and also either employs no staff at all, or employs a majority of its staff at locations within the United Kingdom.”

(6) Section 61 of PPERA (offences concerned with evasion of restrictions on donations) is amended in accordance with subsection (7).

(7) After subsection (2) insert—

“(3) A person commits an offence if they are a director of a company, hold a position of significant control in an unincorporated association, or are a partner in a limited liability partnership, and that company, association or partnership—(a) is not a permissible donor and offers a donation to a political

party (whether the donation is accepted or not), or (b) commits, or otherwise causes to be committed, an act which were the body be a person, would be an offence under subsection (1) or (2).””

Member’s explanatory statement:

This new clause makes requirements for individual and company donors to be based in the United Kingdom and makes persons running companies liable for donation restriction evasion offences committed by those companies.

New Clause 2: The Elections Bill:

To move the following Clause—

“Permissible donors

(1) Section 54 (permissible donors) of PPERA is amended as follows.

(2) In subsection (2)(a), after “register” insert ”at the time at which the donation is made, but not an individual so registered as an overseas elector;”

Member’s explanatory statement:

This new clause would prevent overseas electors donating to political parties in the UK.