Written evidence from Dr Alistair Clark[1] (TEC 11)

Public Administration and Constitutional Affairs Committee

The Work of the Electoral Commission

1. My expertise is in electoral integrity and administration, with several published research articles and reports on these themes, including on the relationship between political parties and their regulators. I have previously conducted an evaluation of electoral administration in the 2016 EU Referendum, commissioned by the Electoral Commission. I write in a personal capacity (http://www.ncl.ac.uk/gps/staff/profile/alistairclark.html#background).

2. Democracy demands both transparency and accountability of political actors to the electorate. Through the Electoral Commission’s existing work in regulating party finance, and advising on and overseeing (but not regulating) electoral administration, we have much more information and data about how electoral processes work in the UK than prior to PPERA 2000. This is extremely valuable. It needs to be recognised and supported across the political spectrum. The Commission’s work should be extended to enable further transparency and accountability of political parties to voters.

Effectiveness

3. A fundamental difficulty in the Electoral Commission’s ability to regulate party finance and advise on electoral law effectively is that it is a creature of statute, created by parliament in PPERA 2000 (as amended by subsequent acts), responsible to parliament via the Speaker’s Committee for the Electoral Commission, and overseen by other parliamentary committees.[2]

4. This is constitutionally correct, but it has a serious conflict or paradox at its heart. While the Electoral Commission may be operationally independent, it seeks to regulate the very political parties whose politicians make the laws which can delimit (or extend) the Commission’s power.[3] There is therefore a delicate balance to be struck. One commentator, writing as the Commission was being established, described its challenge as being:

to operate in a manner which simultaneously maintains the goodwill of the regulated community and satisfies the legitimate expectations of the public and press that it will be an effective watchdog prepared to bare its teeth and if necessary bite hard.[4]

5. Given that the Commission can restrict party activities, there is seldom much goodwill towards it evident among politicians and parties. There is thus a continuous institutional opportunity and incentive for parliamentarians to seek to limit the powers of the Electoral Commission. The Commission is regularly attacked and pressured from parliamentarians from all sides of the political spectrum, both in the press and through institutional processes.

6. The independence of Electoral Commissions is associated internationally with well-run and transparent electoral processes. Their independence from political interference is therefore an international standard, to which the UK is signed up to through its membership of various international organisations. It cannot be stressed too strongly that this is absolutely vital in achieving public trust in electoral matters.

7. While normal oversight through institutional processes may be constitutionally appropriate, current attacks on the Electoral Commission and its senior office holders by the Conservative Party go well beyond this, are entirely inappropriate and amount to attacks on the Commission’s independence. This equally applies when others from different political parties attack the Commission. It is these attacks which risk undermining public confidence in the Electoral Commission, not the Commission’s implementation of its powers.

8. A clear, and meaningful, restatement of the importance of the Electoral Commission and its independence to the conduct of transparent and well-conducted elections is necessary, from all political parties and from the UK government. As a matter of electoral good practice, oversight of the Commission and any attempts to change its powers or resourcing must take place on a cross-party basis. 

9. Any discussion of the Electoral Commission’s effectiveness and regulatory powers over party finance and other electoral law should start from the assumption that political parties will seek to exploit loopholes in the party finance and electoral law regime. There is plenty of evidence in this regard from most political parties. This has included the two major parties at Westminster, but also parties like the DUP who were connected with exploiting anonymity rules in Northern Ireland during the Brexit referendum.[5] Most parties, including sometimes their accounting units, have attracted fines for various breaches. These have included serious offences where there is considerable public interest, as well as less serious offences, such as slightly overdue submissions.

10. One difficulty for the Electoral Commission is that it is reliant on parties for accurate information on donations and their sources, party spending etc. This is a form of regulatory capture, which can prevent the effective performance of the Commission’s regulatory role.[6] Such accurate information is not always forthcoming in timely fashion, and co-operation has been wilfully withheld in some cases, with parties not always accepting the requirements of electoral law. For example, the Commission’s report into Conservative Party election expenses breaches in the 2015 general election noted:

• The party’s ‘unreasonable’ lack of co-operation with the Commission and
• The party not accepting the need to keep particular records regardless of regulations.[7]

The Labour Party have also in the past displayed similar attitudes towards compliance with the Commission, notably during the mid-2000s.[8]  

11. A continued complaint since the PPERA regime was established has been that it is too complex for parties’ local accounting units’ volunteer treasurers, and smaller parties, to understand and comply with. This has been strenuously argued by parties, and by some commentators. I would expect some submissions to this PACAC inquiry to argue something similar. The Electoral Commission has, throughout, accepted these difficulties and, in keeping with regulatory good practice, offered advice on compliance and other supportive means for such treasurers. I would expect this to continue. 

12. I am not unsympathetic to this issue for very small and local organisations. However, for the main political parties and their accounting units this argument is wearing somewhat thin. The PPERA regime has been in force for 20 years. Political party donations are a source of influence in public life. Larger parties have sufficiently articulated governance structures with compliance departments which could assist their local volunteers, should they wish to do so. Accepting looser standards for local accounting units and their treasurers creates loopholes which can be exploited by those seeking influence but aiming to minimise transparency.

13. While the Electoral Commission should continue with advice and support to ensure compliance among treasurers, candidates etc, there needs to be less acceptance of this issue. It is simply not good enough after 20 years for political parties to say that it is difficult to comply.

Powers – Party Finance

14. The Electoral Commission’s civil sanctions powers for transgressions of party finance law on donations and spending are entirely inadequate in magnitude. Their powers have fallen significantly behind other equivalent regulators, such as the Information Commissioner’s Office.

15. The Commission has repeatedly argued that political parties and campaigners see such low fines as little more than a ‘cost of business’. They are correct to do so. The largest set of fines for multiple offences that the Commission has levied has been £70,000. The largest fine possible for a single offence is £20,000 (in Scotland £10,000). For parties and organisations spending millions between and during elections and referendums, such fines are hardly serious propositions.

16. The Referendums (Scotland) Act 2020 has recently introduced a maximum fine of up to £500,000. I have argued that this sets a precedent in electoral law that should be extended UK-wide in order to provide a meaningful deterrent under both normal electoral circumstances, as well as referendums.[9] The House of Lords Democracy and Digital Technologies Committee has also recently recommended extending the maximum fine to £500,000, or 4% of total campaign spend.[10] I would reiterate this suggestion of a maximum £500,000 fine as a very strong recommendation to the Committee’s inquiry.

17. The Commission already implements its enforcement functions in a balanced and even-handed way.[11] It has acknowledged publicly that increased civil sanctions would need to be utilised proportionately.[12] Thus, the maximum fine should be imposed for serious law-breaking activity, repeated misconduct and repeated non-compliance and non-disclosure. Lesser fines would be imposed for lesser breaches, first offences, minor non-compliance and so on.

18. The rules and powers on party donations overseen by the Electoral Commission are much too lenient. The permissibility requirement for donations requires only that a check be carried out by the recipient party that the donor is permissible within the rules, using all reasonable steps to do so. This generally means that they are UK resident or a business registered in the UK. There are clear difficulties with this. The recent ISC Russia report has shown that it is not difficult for those permissibility rules to be circumvented with foreign nationals and influences becoming involved with UK businesses and politicians and subsequently donating to political parties.[13]

18. Rules on donations therefore need to be much tighter. One important suggestion has been made by the Electoral Commission’s Director of Regulation to the House of Commons DMCS Select Committee. This is that integrating money laundering ‘know your customer’ requirements might be a straightforward idea which can be implemented into party finance law.[14] Given that these rules are implemented in most financial transactions and are a requirement for the charity sector and its financing, that they are not already a requirement for political party donations is, to say the least, astounding.

19. I would therefore, at minimum, support extending money laundering legislation to party finance thereby giving the Electoral Commission the powers it needs to regulate political party donations effectively, and recommend that the Committee pursue this as an issue for action. Since money laundering legislation is unlikely to stand still, changes would also need consideration as to how best to ‘future-proof’ them to ensure they remain effective.  

20. The party donations regime also needs to keep pace with technology. Thus, issues such as digital and micro-payments are something that the Electoral Commission may need further powers to regulate, monitor and investigate, and given the dynamic nature of this field will also require ‘future proofing’.

Powers – Electoral Administration

21. Except in particular circumstances, the Electoral Commission does not have powers of direction over electoral administrators in local authorities. The Commission currently only holds advisory and guidance powers over normal electoral events such as general elections. While the Commission’s advice is widely used and helpful to electoral administrators, there is nevertheless no independent regulation or national-level responsibility for the conduct of electoral administration. To the extent such responsibility exists for electoral administration in UK general elections, it lies with the Cabinet Office. This fails to meet the requirements of regulatory independence.

22. When problems occur in electoral administration, the Electoral Commission is often given the blame, and the role of responding. This is both unfortunate, and incorrect. For example, the then Electoral Commission Chair was forced to respond to the problems with queues at close of poll in the 2010 general election, when, in reality, this was not the Commission’s responsibility. Politicians often wrongly attribute, knowingly or mistakenly, responsibilities to the Electoral Commission which the Commission does not actually have. This contributes considerably to undermining the Electoral Commission.

23. Where the Electoral Commission does have powers of direction over electoral administration is during UK-wide referendums. There have been two of these since PPERA 2000: the Alternative Vote referendum of 2011; and the 2016 EU referendum. There were difficulties in the 2011 AV referendum, with the Electoral Commission overriding local knowledge and expertise.[15] However, by 2016, research I conducted (with Toby James, and funded by the Electoral Commission) among counting officers found that the Commission ran the administrative side of the EU referendum well. Lessons had clearly been learned about exercising such powers of direction. While there were some limited difficulties, these were localised, not systemic and did not in any significant way impact or impede the overall referendum process and declaration of the result.[16]

24. Consideration should be given to extending the Electoral Commission’s powers in electoral administration beyond its current powers of guidance and advice. These could include giving the Commission powers of direction to returning officers in normal electoral events, and under certain circumstances. They could also include more responsibility and resourcing for funding electoral administration, which has been seriously underfunded by the Cabinet Office, and for reforming the currently flawed electoral registration system.[17] It should also be working on achievable reforms to electoral law.[18] 

Broader Perceptions of the Electoral Commission

25. The UK’s Electoral Commission is respected among international electoral practitioners and democracy assistance organisations. It is perceived as carrying out its functions independently and properly. Notably, it is also respected among many election agents; Prof. Justin Fisher’s surveys of constituency election agents have repeatedly found high levels of satisfaction with the Commission among agents. While other electoral commissions have encountered similar difficulties to those described above, the Canadian Electoral Commission is generally perceived as being a good international model, relatively well resourced and respected.

Recommendations

R1. The Commission’s work should be appreciated and extended to enable further transparency and accountability of political parties to voters.

R2. It cannot be stressed too strongly that regulatory independence from political interference is absolutely vital in achieving public trust in electoral matters.

R3. A clear, and meaningful, restatement of the importance of the Electoral Commission and its independence to the conduct of transparent and well-conducted elections is necessary, from all political parties and from the UK government.

R4. As a matter of electoral good practice, oversight of the Commission, and any attempts to change its powers or resourcing, must take place on a cross-party basis.

R5. Political parties, and their accounting units, need to refocus their efforts on compliance, instead of seeking to undermine the Commission by non- or belated compliance, or denying the need to comply in the first place.

R6. The Electoral Commission’s powers to implement civil fines of up to a maximum of £20,000 should be extended considerably to a maximum potential fine of £500,000.

R7. The permissibility regime for party donations is not working. At very minimum, the party funding regime should be brought into line with that for donations to charities. The Electoral Commission’s powers on party donations should be extended to at least require checks based on money laundering ‘know your customer’ legislation.

R8. Additional powers are likely to be needed to keep pace with developments with technology and digital payments. Both this and the preceding recommendations (R7) will need ‘future-proofed’ to ensure they keep pace with developments and technology.

R9. Consideration should be given to extending the Electoral Commission’s powers in electoral administration beyond its current powers of guidance and advice. These could include giving the Commission powers of direction to returning officers in normal electoral events, and under certain circumstances.

November 2020

6