Despite diplomatic relations between the UK and Russia heading on a downward trajectory for the last few decades, Russian influence in the UK has grown.
In its long-awaited report on Russia, published in July 2020, the UK Parliament’s Intelligence and Security Committee called Russian influence in the UK “the new normal”.
In the build up to the current crisis in Ukraine, the Government said on several occasions that any Russian incursion into Ukraine would be a “strategic mistake and subject to consequences”, including an "unprecedented” package of coordinated sanctions.
There have been widespread calls, however, for the Government to go beyond sanctions and bring forward the initiatives and proposed legislation on countering foreign influence in the UK, that have been promised in the last few years.
Russian wealth in the UK
Russian investment in the UK totals tens of billions, but it is not clear exactly how much because of the difficulty in tracing the beneficial (ultimate) owners of some assets, including UK property.
Government and Parliamentary Select Committee reports suggest that, in addition to the investor visa scheme, the UK has for decades been an attractive place for Russian investment because of perceived lighter regulation, strong capital and housing markets, a strong judicial and financial system, use of the English language, and global cultural brands like football clubs and universities.
Today, 24 Russian companies are listed on the London Stock Exchange, including gas giant Gazprom, oil company Rosneft, and Sberbank (Russia’s largest bank), although prices have plummeted and trading in many of their shares has been suspended. The Russian Government has also raised billions in the UK by issuing sovereign bonds, but the UK Government has banned future issuances.
Anti-corruption organisation Transparency International estimates that £1.5 billion of UK property has been bought by Russians accused of corruption or links to the Russian Government, including £430 million of property in the City of Westminster alone.
Total UK-Russia trade stood at £15.9 billion in 2021, with Russia selling billions of pounds of oil and metals into the UK.
Economic Crime (Transparency and Enforcement) Act 2022
The Economic Crime (Transparency and Enforcement) Bill was introduced in the House of Commons on 1 March 2022. It was fast-tracked due to the Russian invasion of Ukraine, so received Royal Assent in the early morning of 15 March. Our briefing on the Act explains the policy background and measures in more detail.
During the passage of the Act, the Government committed to introduce a further economic crime bill early in the upcoming (2022-23) parliamentary session.
Countering hostile state activity
Hostile activity by those acting on behalf of foreign states or entities has been a growing security concern.
After the poisoning of Sergei and Yulia Skripal in Salisbury in March 2018, which was attributed to the Russian state, the Government committed to introducing legislation to “harden our defences against all forms of hostile state activity”, including a power to detain those suspected of it at the border. The Government said it would also look at the need for new counter-espionage powers “to clamp down on the full spectrum of hostile activities of foreign agents” in the country.
The Government subsequently passed the Counter-Terrorism and Border Security Act 2019. The Queen’s Speech in May 2021 promised further legislation to counter hostile activity by foreign states that would “provide the security services with the tools they need to tackle the evolving threat from hostile activity by states and actors”, including reform of the Official Secrets Acts and the creation of a Foreign Influence Registration Scheme.
The Government has said that counter state threats legislation will be introduced “as soon as parliamentary time allows”.
Closure of Tier 1 (Investor) visa scheme
On 17 February, the Government announced the immediate closure of the Tier 1 (Investor) visa to new applicants. The visa offered up to five years’ permission to stay in the UK and a route to permanent residence, in return for a minimum £2m investment. A review of all investor visas granted between 2008 and April 2015 was announced in 2018. The Government has said results will be published “imminently”.
Russians are the second most common nationality granted investor visas since 2008, although they accounted for a much smaller proportion of applicants since 2015. Just over 2,500 investor visas have been issued to Russians since 2008 (roughly one fifth of all such visas issued). People granted investment visas before 2015 may have now completed the residence requirement for permanent residence (and possibly British citizenship).
Election finance
The Intelligence and Security Committee of Parliament (ISC) 2020 report on the Russian threat to the UK (PDF) noted that attempts at broader political influence and disinformation have been widely reported and that Russian oligarchs had used their business interests, donations to charities and political parties for broad Russian influence in the UK.
Donations to political parties and elected representatives are regulated. The main piece of legislation used is the Political Parties, Elections and Referendums Act 2000, as amended, (PPERA). The system of regulation is designed to prevent foreign money entering the political system and elections.
However, the current permissibility checks have been criticised. The Committee on Standards in Public Life (CSPL) recommends PPERA should be updated to require parties and non-party campaigners to have appropriate procedures in place to determine the true source of donations. The CSPL’s most recent report on party finance, from July 2021, also included recommendations to limit foreign money entering political finance and campaigns.
The Government’s Elections Bill, currently before Parliament, includes measures to fulfil the Government’s commitment to strengthen the integrity of UK elections. Measures include tightening rules on how much foreign third-party campaigners can spend on UK elections. Opposition amendments to the Bill have been introduced in the House of Lords to require 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. The Labour Party argue it would “close the loophole allowing the use of shell companies to hide the true source of donations to political parties by foreign actors”.
Review of RT (formerly Russia Today)
Calls were also made for the TV network Russia Today to be stripped of its broadcasting licence in the UK. The Government made clear that it is for Ofcom, as the independent regulator, to decide which media organisations to ban, and not politicians.
On 28 February 2022, Ofcom announced that it had opened 15 investigations into the impartiality of news programmes on the RT news channel. A further 12 investigations were announced on 2 March 2022.
Following those investigations, on 18 March 2022, Ofcom announced that it had revoked RT’s licence to broadcast in the UK with immediate effect.