Election Campaign Finances: Regulation — [Ian Paisley in the Chair]

Part of the debate – in Westminster Hall at 3:16 pm on 8th July 2021.

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Photo of Damian Collins Damian Collins Conservative, Folkestone and Hythe 3:16 pm, 8th July 2021

I beg to move,

That this House
has considered the regulation of election campaign finances.

It is a pleasure to serve under your chairmanship, Mr Paisley. Before I start, I would like to say what a pleasure it is to see the Minister in her place in Westminster Hall this afternoon. The debate has come at a timely moment. The Government published the Elections Bill this week and yesterday the Committee on Standards in Public Life published its report on the regulation of election finance—a lengthy review. I myself was interviewed by the Committee on my work chairing the Select Committee on Digital, Culture, Media and Sport’s inquiry on disinformation and fake news. I thank the Minister for giving me the chance to discuss the Elections Bill with her and her officials some months ago, before it was published.

It is very important to have these periodic reviews of election law, because technology changes the way we live our lives and the way in which elections are fought, and regulations have to keep pace with changes to society. At the heart of good election regulation are two simple and fundamental things that have stood us in good stead through the ages, and it is important that they are translated into the modern world: transparency of funding and transparency in campaigning. We all know that when we deliver leaflets in our constituencies during elections, there is an imprint on those leaflets saying who paid for them and who they promote. There is no provision for online campaigning, and given that online campaigning—particularly on Facebook—now plays a much bigger part in everyone’s campaigns, it is increasingly important that there should be. That is why I welcome the fact that the Government are recommending the introduction of electronic imprints as a legal requirement in the Bill. It is a very necessary reform.

One of the big challenges that we face is not campaigning under our party banners. To an extent, we all have a bit of personal jeopardy if we put out leaflets with a party logo or our names on them: there is an assumption that they belong to us. Although, of course, as recent by-elections have shown, it is possible for people to put out leaflets without necessarily saying who they are, so this is not a purely online phenomenon, but it is one that is increasingly important in the online world. When non-party campaign organisations—not official registered party groups—campaign with increasing resources and increasing funding, not just in election periods but throughout the year, it is important that there is some understanding of where their funding comes from when they seek to campaign on a political issue.

The problem does not just affect the UK; it is a problem around the world. In 2019, I attended the International Grand Committee on Disinformation in Ottawa, Canada. That was a meeting of parliamentarians who were mainly interested in digital campaigning, disinformation and the role of elections in the online world. It was the second such meeting. The first was the meeting I chaired here in the Boothroyd Room as part of the DCMS Committee’s inquiry on disinformation and fake news. At that meeting in Ottawa, one of the witnesses we questioned was Ellen Weintraub, the commissioner for the Federal Election Commission in the United States. She set out the problem with online donations as she saw it in America, and I think people would agree that there are a lot of parallels elsewhere in the world, including here. In response to a question that I asked her about the difficulty of tracking money online, she said that

“our entire system of regulation is based on the assumption that large sums of money are what we need to worry about and that this is where we should focus our regulatory activity. On the Internet, however, sometimes very small amounts of money can be used to have vast impact, and that doesn’t even get into the possibility of Bitcoin and other technologies being used to entirely mask where the money is coming from…The problem with dark money is that you never really know who is behind it. There has been about a billion dollars in dark money spent on our elections in the last 10 years, and I cannot tell you who is behind it. That’s the nature of the darkness…We have a constant stream of complaints about dark money. The case I just described to you is one of the foremost examples we’ve seen recently. It can be money that comes in through LLCs…In this case, it came in through the domestic subsidiary of a foreign corporation.”

She sets out the nature of the problem. It is easy to transfer money in small amounts anywhere in the world, but it is very difficult to trace. If that money is being donated to political campaigns, of whatever nature, it is difficult to know the original source of the funding. We need to be very mindful of that in the digital age.

Just before the last general election, I chaired a DCMS Committee session with PayPal. Interestingly, PayPal gave an answer similar to that which we often get from technology companies about the things that happen on their systems. Its view was that it was not its responsibility to know the source of funding, or indeed whether funding was permissible, when someone made a political donation through its systems. If someone overseas makes a political donation to a political party in the UK, the platform facilitating the transaction says it has no obligation to know or check, even though it is being used to facilitate what would be an offence. The liability rests entirely with the party receiving the funding, but I do not think that payment platforms should have no role in supervising what goes on. They could at least change their settings so that the country of origin of a donation is clearer. Again, I know that this is something that the Government have looked at in their Elections Bill to try to ensure that there is greater transparency on foreign donations, which is very important.

The Committee on Standards in Public Life has made some specific recommendations that merit consideration. One is that company donations should not exceed net profits after tax generated in the UK within the two preceding years, which is very helpful. Businesses make donations to political campaigns—I have had businesspeople in my constituency in Kent make donations to my political campaigns. It is a perfectly proper form of donation, but it is clear which companies are involved, as they have to declare it, just as an individual would have to declare it. We should guard against shell companies being used to make large donations when they are not turning any profit, because the question will rightly be asked whether the money was transferred to that company so that it could make a donation but not generated by it. In that case, where did it really come from? The Committee on Standards in Public Life was right to make that recommendation and it is worthy of consideration and debate.

Recommendation 10 in the Committee’s report was that all donations over £500 be donated through the banking system, which would allow greater transparency on the source of funds. People would have the option of making smaller donations through electronic payments and systems such as PayPal. Paying money through the banking system is not a guarantee of transparency, but it is a more transparent method. Again, it is worth considering what the threshold should be in that circumstance.

As I have already said, I welcome the fact that the Minister proposes in the Bill to have electronic imprints on electronic campaign materials, but there should also be common standards on the role that technology companies perform in this regard. Some companies have ad libraries where they keep a store of all the ads that a campaign has placed. Facebook does that. It also requires that anyone placing an advert has a Facebook page, and they have to demonstrate to the company that they are a real person. However, I know the Information Commissioner has spoken about the difficulty sometimes in tracking down the real source of campaign ads, particularly when that source is not a political party but a new organisation that has just been set up. We need to make sure we have high standards there, so that people placing political ads are known and are known to be permissible advertisers.

Ad libraries for political campaigns should not be based on the platform policies of the companies. It would be good practice to ask anyone advertising through online platforms, and for those platforms to require a record of ads to be kept. Ads on social media can be placed as dark ads, where they target individuals and not everyone else can see them. It is useful to the democratic process for everyone to be able see and check what a campaign organisation is saying to its voters, even if it is not targeting those adverts at anyone.

In the same way, it is important for people to know why they are being targeted. There are systems, particularly on social media, whereby people can look at why they are receiving an advert—why it has been targeted at them—but they are not necessarily standardised. It would be a good thing for people to be able to see why they were receiving a political message. Is it because they have declared an affiliation for that party and therefore they are being targeted, or is it for other reasons? People should have the right to check and there should be standardised tools in that space.

There is also the question of ads that are fraudulent, wrong or misleading during elections. This is not just about policy debate; I think it is very difficult to regulate political opinions. As we all know, politicians can give two totally different arguments on the same subject, based on different interpretations of the same facts. We cannot seem to regulate that, nor do we try in this country. The fact that we have imprints on ads creates personal jeopardy for what we say—we have to put our name to it and it can be traced back to us. However, in the near future, technology will take us to a place where deepfake films could be made of a politician saying something inflammatory on the eve of an election. In fact, it would be a synthetic creation of them on film, saying something that they had never said. If that ad was being placed online on social media, and it could be demonstrated and proven that it was fake—that it was not based on real footage—what action would be required? Would it be a required action of take-down by the social media companies? Would the content be considered illegal for electoral purposes? Would it be stopped? In the very near future, new technology will make that sort of campaigning very cheap and easy, and we have to consider our response to that.

There is also the question of foreign placement of advertising, such as the much talked about case in America during the 2016 presidential election of the Russians buying ads on Facebook to target voters. It was an offence there, and indeed, foreign buying of ads to target voters in the UK would be an offence too. There are different countries around the world—not just the Russians, but the Iranian Government and other Governments—that engage in the process of electoral interference in other countries. We should regard that as an offence having been committed. If it is an offence that has been committed, and those ads have been identified as being run to target British voters, then it is legitimate to ask whether that activity is illegal. If it is illegal, there are two things we should consider: it is not just an offence committed by the person who has placed the ads, but an offence committed by the platform for running those ads in breach of the law.

The Government’s draft Online Safety Bill will require social media and other technology companies to have policies in place to remove illegal content. We need to consider whether an illegal ad, placed on social media by a foreign agent, targeting UK voters, would require the social media company to remove it as a form of illegal content, as it will be required to do under the Bill. In that situation, should that be a requirement of the regulator? The Bill recommends that Ofcom be the regulator—we can question whether for political ads it should be Ofcom or the Electoral Commission, whichever is most appropriate. If we regard such ads as being illegal, should the regulator’s task under the Bill be to say to the social media company that they must demonstrate to us that they would not only remove those ads when identified, but have systems in place to try and stop this happening—to check when someone places an ad whether it is illegal, to identify it and to stop it? Good practice should be that social media companies take an interest in where in the world people are buying ads from, and, when they do it, whether they are doing so in breach of electoral law.

I labour that point because I think it is important. I remember questioning Facebook about the case in 2016; about whether they had identified Russian ads that had run in America, and whether they had ever identified anything like that in previous elections in the UK. They said that if we had intelligence that that had happened, we could give it to them and they would check. However, there was no obligation for them to have those systems in place to pre-emptively stop it. If this was another form of fraud, such as banking fraud, banks are required to proactively look for, and identify, likely sources of fraud, and to notify the authorities of something suspicious. That does not exist in law around the placements of ads during elections. The combination of the Elections Bill and the draft Online Safety Bill that the Government are bringing in poses this natural question as to whether some forms of campaigning are illegal and, in that case, whether the regulator should take a view on not just acting against them, but ensuring that the companies have policies in place to make sure that this sort of campaigning does not happen in the first place.

These are all incredibly serious and important issues. I have spoken to the Electoral Commission about this, and it finds it quite frustrating, when dealing with technology companies to pursue lines of inquiry about suspicious activity, that unless it has launched a formal investigation, the company will not co-operate, because it is under no obligation to do so. Again, we need to consider the powers of the Electoral Commission in this regard both to make preliminary inquiries of a technology company about likely offences relating to digital adverts and to share information that it has discovered that could be relevant to the work of the police or the Information Commissioner. It is important that we consider those points.

These are important issues, and this debate is timely given the welcome introduction of the Government’s Elections Bill, the soon-to-start parliamentary scrutiny of the draft Online Safety Bill, and the report by the Committee on Standards in Public Life. That report is the first of its kind for 20 years, which shows that these things come along only periodically, so it is important that we get this right.