Political party finance and the Electoral Commission: Regulatory powers and proposed changes

Approximate read time: 10 minutes

The House of Lords is scheduled to debate the following motion on 2 July 2026:

The Earl of Kinnoull (Crossbench) to move that this House takes note of the regulatory regime for political party finance and the role of the Electoral Commission.

1. How is political party finance regulated in the UK?

Political parties in the UK generally receive most of their funding from donations and loans.^[1] They may also receive fees from registered members and supporters and benefit from direct and indirect state funding.

The Political Parties, Elections and Referendums Act 2000 (PPERA) introduced rules on how certain donations and loans to political parties registered in the UK must be recorded and reported.^[2] The act also established the Electoral Commission, which regulates political finance in the UK.^[3]

The commission publishes details of reportable donations and loans received by political parties on a quarterly basis via its political finance online portal.^[4]

For a summary of the laws on donations to political parties, see the House of Lords Library briefing ‘Reforming the law on donations to political parties’ (5 February 2026).

The commission states that it “proactively monitors” everyone it regulates.^[5] It also has investigatory powers when there are reasonable grounds to suspect an offence under political finance laws. To enforce compliance with the law, the commission can:^[6]

• issue a stop notice
• apply to a court to forfeit funds received from impermissible donors
• impose a civil sanction through monetary penalties, up to a maximum of £20,000
• issue a compliance or restoration notice
• pass information to the police or prosecuting authority where a criminal offence which cannot be addressed by civil sanctions is suspected

The Electoral Commission is accountable to Parliament through the Speaker’s Committee on the Electoral Commission.^[7] The committee examines the performance of the Electoral Commission, scrutinises annual financial estimates and business plans, and oversees the selection of commissioners.

2. How have regulatory powers been used recently?

Under PPERA, the commission is required to report annually on the use of supervisory and investigatory powers, and civil sanctions. In the annual report for 2024/25, the commission said it had concluded 14 investigations during the year, compared with 17 in the previous year, in addition to a number of initial enquiries which were able to be clarified at assessment stage without the need to open investigations.^[8]

The commission stated it did not use its powers to apply for an inspection warrant to enter premises or apply for any court orders for disclosure during the 2024/25 period, nor did it issue any stop notices. One compliance notice was issued.^[9] As shown in figure 1, seven civil penalties were imposed in 2024/25, totalling £7,450. Figure 1 shows the number of sanctions from 2017/18 to 2024/25.

(Electoral Commission, ‘Annual reports and accounts 2024/25’, 17 July 2025, p 50; and ‘Annual report and accounts 2019/20’, 14 July 2020, p 40)

Details of the investigations, including which party was involved and what decisions were made, are available on the closed investigations page of the Electoral Commission website.^[10]

3. What changes have been proposed for the Electoral Commission’s role?

3.1 Labour manifesto commitment and ‘Restoring trust in our democracy’ strategy

The Labour Party’s manifesto for the 2024 general election included a commitment to “protect democracy by strengthening the rules around donations to political parties”.^[11]

The government subsequently published a strategy entitled ‘Restoring trust in our democracy: Our strategy for modern and secure elections’ in July 2025.^[12] This included a commitment to bring forward a bill in the current parliament to implement the ambitions included in the strategy. The Representation of the People Bill was introduced in the House of Commons on 12 February 2026. See section 4 of this briefing for more information on the bill.

In response to an urgent question in the House of Commons on the strategy at the time of its publication, Rushanara Ali, then a parliamentary under secretary of state at the Ministry of Housing, Communities and Local Government, said the government intended to “give the Electoral Commission the power to administer a hefty fine, of up to a maximum of £500,000, to deter bad behaviour”.^[13]

The Electoral Commission said the proposed reforms “have the potential to improve the strength of donation controls and help ensure voters can have confidence in the political finance system”.^[14]

The Electoral Commission has previously stated it would benefit from increased powers in evidence to the Committee on Standards in Public Life in 2020.^[15] The commission called for the ability to impose fines over £20,000, to share information with the police and other regulatory agencies, and to expand its role to the regulation of candidate as well as party finance.

3.2 Independent review into countering foreign financial influence and interference in UK politics

In December 2025 the government announced an independent review into countering foreign financial influence and interference in UK politics, led by Philip Rycroft, a former permanent secretary.^[16] The review followed the sentencing of Nathan Gill, a former MEP, for accepting bribes linked to the Russian state while he held elected office.

The Rycroft review was published on 27 April 2026.^[17] The review recommended a range of measures, including an annual cap on donations from British donors living abroad, limits on corporate donations, and a moratorium on donations made in cryptoassets. Additionally, it said the Electoral Commission should:^[18]

• work with political parties and the Ethics and Integrity Commission to develop a non-statutory code of conduct to ensure that robust procedures are in place within parties to better equip party officials to deal with the threat of foreign financial interference
• mandate political parties to submit their annual reports and accounts and campaign spending returns in a standardised format
• coordinate with government, the security services and the police to ensure that political parties receive regular updates on the threat landscape, so that they have a comprehensive and up-to-date picture of the risks around foreign financial interference
• be given extended information-sharing powers so that it cannot only share information with other agencies, but also require information of them
• be given powers to allow it to require information from any person or organisation who may hold relevant material that it reasonably requires for the purposes of carrying out its functions

On the day of the report’s publication, the government said it would, “in advance of the Commons report stage of the Representation of the People Bill […] provide a comprehensive, line-by-line response to all the report’s recommendations”.^[19] At the time of writing, the bill’s report stage has yet to be scheduled.^[20]

Read more about the Rycroft review in the House of Lords Library briefing ‘Threats to UK democracy: Disinformation, foreign interference and declining public trust’ (18 June 2026).

4. Representation of the People Bill

The Representation of the People Bill was introduced in the House of Commons on 12 February 2026. Following the completion of its committee stage, the bill was subject to a carry-over motion at the end of the 2024–26 session, and is awaiting its Commons report stage in the new session.

During second reading of the bill, Secretary of State for Housing, Communities and Local Government Steve Reed said the commission “requires stronger enforcement to meet today’s challenges” so the government would “strengthen its role and powers”.^[21]

Part 4 of the bill concerns political finance. It would make changes to the eligibility of companies, limited liability partnerships and unincorporated associations to make donations to political parties and other campaigners. This is intended to prevent foreign donations entering UK politics.^[22]

Part 5 concerns enforcement and the Electoral Commission. The bill would decriminalise certain offences in PPERA and make consequential amendments to allow the requirements to come under the commission’s civil sanctioning regime.

The government and the Electoral Commission have stated that criminal investigations and prosecutions may, in some cases, be disproportionate to the severity of the alleged offences, and therefore are not taken forward. This can then leave an “enforcement gap”.^[23] For example, it is currently an offence for a party treasurer to fail to deliver annual accounts or reports of election expenses to the commission.

The bill would also extend the Electoral Commission’s civil sanctions regime to candidates and local third parties, in addition to its current remit of political parties.^[24]

The bill is also intended to make provision for increasing the fines the Electoral Commission could impose. At committee stage in the House of Commons, the government said the maximum fine would be increased by secondary legislation at a later date to £500,000 per offence.

At second reading, Shadow Secretary of State, Sir James Cleverly criticised the government for not waiting for the outcomes of the Rycroft review and consultation with political parties before introducing legislation.^[25] Sir James said his party agreed political finance rules should be tightened against foreign interference, but the bill needed to be improved.

Speaking for the Liberal Democrats, Lisa Smart said the bill should do more to strengthen the powers of the Electoral Commission “in the face of historic threats to our democracy”.^[26]

During committee stage, members debated a range of issues, including:

• whether the commission had enough resources to undertake the additional responsibilities the bill would introduce
• how to ensure the ability to apply higher financial penalties would be used proportionately
• whether the commission’s information-gathering powers are sufficient

There was also a government new clause added to abolish the power established by the Elections Act 2022 for the government to set a strategy and policy statement for the Electoral Commission.

The government announced in a statement on 25 March 2026 that it intends to bring forward amendments to the bill at report stage, following the recommendations of the Rycroft review.^[27] The government has said it will cap donations from overseas electors at £100,000 a year and place a moratorium on all political donations made through cryptocurrency. The moratorium would be in place “until the Electoral Commission and this Parliament are satisfied that there is sufficient regulation in place to ensure full confidence and transparency in donations that are made in that way”.

The government announced the changes would be applicable from the day the statement was made, 25 March 2026, subject to the passage of the bill. This means any donations taken in the interim which contravene the rules would then need to be returned.

5. Read more

• Electoral Commission, ‘Briefing on Representation of the People Bill: Commons second reading’, 2 March 2026
• House of Commons Library, ‘Representation of the People Bill 2024–26’, 8 June 2026; and ‘Representation of the People Bill: Progress of the bill’, 8 June 2026

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