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Written evidence submitted by the Electoral Commission

1. The Electoral Commission is the independent body which oversees elections and regulates political finance in the UK. We work to promote public confidence in the democratic process and ensure its integrity.
2. The Electoral Commission regulates political funding and spending in a way that is effective, proportionate and fair. We are committed to providing those we regulate with a clear understanding of their regulatory obligations through our guidance documents and advice service. 
3. Our response to the “House of Commons Committee on Standards Review of the Code of Conduct” is informed by our expertise in electoral law. It covers the proposed changes to categories which could affect the information we are required to hold, monitor and publish under political finance law. 

Political finance law and the MP’s Code of Conduct

4. Under the Political Parties, Elections and Referendums Act 2000 (PPERA) the Electoral Commission has a statutory responsibility to maintain a public register of donations and regulated transactions (such as loans) to elected office holders, including Members of Parliament. We also have an enforcement role in relation to impermissible donations which an MP receives or accepts from an unpermitted source towards their political activities (sums of £500 or over). 
5. These responsibilities and a list of impermissible sources are set out in the Political Parties, Elections and Referendums Act 2000. They are part of the political finance regulatory system that the Committee in Standards of Life recommended in 1998 which aims to ensure that political donations are transparent and come from UK-based sources.
6. In 2006, the UK Parliament passed a new measure in electoral law to allow streamlining of the political finance requirements and the separate regimes for elected representatives to declare their financial interests.
7. In 2009, the Parliamentary Commissioner for Standards and the Electoral Commission agreed that the streamlining process should be applied to MPs. It was agreed that MPs should only have to report once to the Registrar, and that the Registrar must give the Electoral Commission access to the necessary information to fulfil its publication duties. On that basis, the Electoral Commission formally informed the Secretary of State that it was “satisfied” that it would receive the required information and asked them to pass a Statutory Instrument that would end “dual reporting” requirements for MPs. MPs are still required to report impermissible donations or transactions directly to the Electoral Commission.

Memorandum of Understanding

8. Attached is a Memorandum of Understanding (‘MOU’) between the Electoral Commission and the Parliamentary Commission for Standards (updated July 2016 and currently in operation). The MOU sets out the agreed administrative arrangements necessary for ending the requirement on MPs to report certain donations and regulated transactions directly to the Electoral Commission.
9. Paragraph 5 of that MOU says:

“The Office of the Parliamentary Commissioner for Standards will provide the Electoral Commission with the information that the Commission is required to publish in respect of permissible donations to and regulated transactions entered into by Members. Members are not required to report such donations and regulated transactions directly to the Electoral Commission but will, instead, report them to the Parliamentary Commission for Standards for publication in the RMFI”

10. Accordingly, it is important that the reporting categories and rules in Chapter 1 of the Code ensure that the Parliamentary Commissioner for Standards can provide the Commission with the information required under political finance law. We have set out below comments on the proposed categories where we have identified specific issues or requirements that would enable us to continue to deliver our legal responsibilities and ensure transparency without unnecessary burdens for MPs.

Category 1: Employment and earnings

P2: Whether Members should register and declare a salary received from a political party

11. If this is incorporated it is important that it is clearly marked as a salary when published in the RMFI so that it is clear that it does not fall within the scope of PPERA.

Category 2(b): Any other support received by member

12. We have identified an exemption that currently appears in the Code, but does not appear in Schedule 7 of PPERA. The exemption reads:

“18. Members should not register under this category:

a) Direct support from the Member’s own political party organisation”

13. It is our understanding that any gift or donation given by the Member’s own party is excluded from being reported because of this exemption. We are aware of cases where MPs have been provided with donations by their own Party, however there is no transparency about those type of donations, despite them being reportable under PPERA. Removing the exemption would increase transparency around funding and ensure the reporting under the Code provides consistency with the requirements under PPERA.

Category 3,4,5: Gifts, benefits and hospitality from UK sources; visits from outside the UK; and gifts and benefits from sources outside the UK

P1: Changes to the rules on registration set out in Annex 3

14. This proposal may mean that the Parliamentary Commissioner for Standards will not be able provide the Electoral Commission with the information that the Commission is required to publish in respect of permissible donations to and regulated transactions entered into by Members as agreed in the MOU.
15. Please see below examples of the potential impact of this proposal:

• The document explains that the change would also end the requirement to register foreign visits where whole value was over £300 but only part of costs were met by a registrable source. However, the Commissioner would still need to provide the information that the Commission is required to publish in respect of donations under Schedule 7, paragraph 7(3) of PPERA in line with the MOU.
• Donations currently reported in category 3 are unlikely to be relevant to PPERA. However, if the categories are amalgamated there would still need to be a way that the Commissioner could still identify and provide the information that the Commission is required to publish in respect of donations under Schedule 7, paragraph 7(3) of PPERA in line with the MOU.
• Under PPERA gifts from a foreign source with a value of over £500 received for the MP’s benefit in line with their political activities are impermissible (the exception to this may be where they are associated with an overseas visit). Amalgamating categories that combine permissible and potentially impermissible donations under PPERA may have an impact on transparency.
• Under PPERA, UK based visits are treated as non-cash donations whereas non-UK visits are in their own category. This is an important distinction as the legal requirements on permissibility differ. Foreign entities are able to fund the reasonable costs of non-UK visits taken in line with an MP’s political activities. They are not however permitted to provide non-cash donations (e.g. funding associated with UK visits) over £500 to MPs in line with the MPs political activities. There would need to be a way by which the Commissioner could still provide the information that the Commission is required to publish in respect of donations under Schedule 7, paragraph 7(3) of PPERA in line with the MOU.

P2: Whether Members should register any benefits (for example, travel, accommodation or hospitality) they receive as a Government trade envoy

16. If this is incorporated it could usefully be clearly marked as a benefit received as a Government trade envoy when published in the RMFI in order that it is clear that it does not fall within the scope of PPERA.

Accessibility of the Register

P3: That the House service develop in-depth training on standards to be delivered to all Members within six months of a general election

17. To support compliance this could usefully include the rules that Members must follow in respect of reporting donations and regulated transactions under PPERA and the Code of Conduct. We would be happy to contribute to this training.

4 February 2022

Memorandum of Understanding between the Electoral Commission and the Parliamentary Commissioner for Standards (updated July 2016)

Background

1. This Memorandum of Understanding (MOU) between the Electoral Commission and the Parliamentary Commissioner for Standards records our joint agreement on the administrative arrangements necessary to give effect to Section 59 and Schedule 1, paragraph 99 of the Electoral Administration Act 2006 (EAA). The latter added schedule 7A(16) to the Political Parties, Elections and Referendums Act 2000. These provisions ended the requirement on Members of Parliament to report certain donations and "regulated transactions" (loans, connected transactions and credit facilities) directly to the Electoral Commission.

2. The Electoral Commission is required to publish certain information about permissible donations made to, and regulated transactions entered into, by Members of Parliament as regulated donees under Schedule 7, paragraph 15 of the Political Parties, Elections and Referendums Act 2000 (PPERA). It is required to publish this information "as soon as is reasonably practicable". The Commission is also required under section 145 of PPERA to monitor compliance with the legal restrictions on the permissibility of donations made to and regulated transactions entered into by Members.

3. The Standing Orders of the House require the Parliamentary Commissioner for Standards to maintain the Register of Members' Financial Interests (RMFI) which contains such information about Members' financial interests as is required by the House of Commons. In this the Commissioner is assisted by the Registrar of Members' Financial Interests ("the Registrar") and the registry team.

4. The House of Commons requires Members to report to the Parliamentary Commissioner for Standards all such information as is required by the Electoral Commission under PPERA and the EAA in respect of permissible donations and regulated transactions.

5. The Office of the Parliamentary Commissioner for Standards will provide the Electoral Commission with the information that the Commission is required to publish in respect of permissible donations to and regulated transactions entered into by Members. Members are not required to report such donations and regulated transactions directly to the Electoral Commission but will, instead, report them to the Parliamentary Commissioner for Standards for publication in the RMFI.

6. Members remain under an obligation to report directly to the Electoral Commission as required under PPERA donations from unidentifiable and/or impermissible sources and regulated transactions with impermissible lenders. Consequently the Office of the Commissioner will make no inquiries as to permissibility before publication of information submitted by Members. The Electoral Commission will on request provide the Parliamentary Commissioner for Standards with the names of any Members who are under investigation.

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Access to information

7. Successive editions of the RMFI will be published in a format enabling easy identification of new material.

8. Following its first publication after a general election, the RMFI is published approximately fortnightly when the House is sitting. With two exc ptions, this timetable is adequate to allow the Electoral Commission to fulfil its obligation to publish the required information "as soon as is reasonably practicable". These exceptions are the period following a general election, when there is an extended interval before the publication of the first RMFI of a Parliament, and the summer recess, when the interval between published Registers is longer.

9. For the purposes of the Electoral Commission fulfilling its statutory obligations under PPERA, the Parliamentary Commissioner for Standards, during the periods described in the preceding paragraph, will forward by email information from the unpublished Register, or send copies of the relevant unpublished returns by Members. Publication of this information by the Electoral Commission during these periods may, and usually will, take place in advance of its publication in the RMFI.

10. The office of the Parliamentary Commissioner for Standards will be responsible, in accordance with the requirements of the House of Commons for the collection, retention and storage of the original information supplied by Members for the RMFI.

11. The office of the Parliamentary Commissioner for Standards will, on request, forward copies of the original material (or provide the Electoral Commission with reasonable access to original material where requested) where it is relevant to a question relating to the permissibility of the source of a donation or regulated transaction.

12. The addresses of individual donors are required by the Electoral Commission in order to verify that a donation or regulated transaction is from a permissible source. The office of the Parliamentary Commissioner for Standards will forward them to the Electoral Commission by e-mail at the same time as the relevant register entry is published in the RMFI, or notified to the Electoral Commission in advance of that publication.

Advice and guidance

13. The office of the Parliamentary Commissioner for Standards will provide advice to Members on their reporting obligations under the Rules of the House. They will refer questions about the permissibility of donations and regulated transactions to the Electoral Commission. The Electoral Commission will provide advice and guidance to the office of the Parliamentary Commissioner for Standards about the valuation of donations where this is in doubt. The office of the Parliamentary Commissioner for Standards will advise Members on the importance of timely registration of donations.              /

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14. The Electoral Commission and the office of the Parliamentary Commissioner for Standards may jointly hold seminars for Members on reporting and permissibility requirements in respect of donations and regulated transactions.

Matters relating to compliance and investigations

15. Information required by the House of Commons under its Rules is subject to oversight by the Parliamentary Commissioner for Standards, who may investigate allegations of breaches of these Rules, and who reports to the Committee on Standards.

16. For the purposes of monitoring compliance with PPERA in respect of the permissibility of donations and regulated transactions, the Electoral Commission may ask the Parliamentary Commissioner to confirm that certain information was submitted and the date on which it was submitted.

17. Where the Electoral Commission forms the opinion that information published in the RMFI or an individual address provided by the office of the Parliamentary Commissioner for Standards to the Commission suggests that an impermissible donation or regulated transaction may have been accepted or entered into, it will first approach the office of the Parliamentary Commissioner for Standards to exclude the possibility of an error in the preparation of the RMFI or the transmission of the address. The Electoral Commission will only approach the Member after receiving a reply from the office of the Parliamentary Commissioner for Standards. To ensure that the Electoral Commission's inquiries can be conducted in a timely manner, the office of the Parliamentary Commissioner for Standards will use their best endeavours to respond within five working days of the.approach being received.

18. Where the Electoral Commission has reasonable grounds to suspect that an impermissible donation or regulated transaction has been accepted or entered into, and it is investigating the matter, it may approach the office of the Parliamentary Commissioner for Standards for documents, information or explanation relevant to the explanation. To ensure that the Electoral Commission's inquiries can be conducted in a timely manner, the office of the Parliamentary Commissioner for Standards will use their best endeavours to respond within five working days of the approach being received.

Review of arrangements

19. The Electoral Commission and the Office of the Parliamentary Commissioner for Standards will keep under review the effectiveness of the arrangements set out in this Memorandum and of the aligned reporting arrangements arising from the commencement of Section 59 and Schedule 7A(16) of the EAA. To this end the Registrar and a representative of the Electoral Commission will meet every six months and will consider whether to recommend any change to this Memorandum to the Electoral Commission and the Parliamentary Commissioner for Standards.

Commencement date of this memorandum

20. This memorandum replaces the previous one dated 15 April 2009 and shall commence on 9 July 2016.

Claire Bassett, Chief Executive

Electoral Commission

Kathryn Hudson

Parliamentary Commissioner for Standards