Political funding in the United Kingdom

Political funding in the United Kingdom has been a source of controversy for many years.[1] Political parties in the UK may be funded through membership fees, party donations or through state funding, the latter of which is reserved for administrative costs.[2] The general restrictions in the UK were held in Bowman v United Kingdom[3] to be fully compatible with the European Convention on Human Rights, article 10.

History

The first effort to regulate the financial dimension of political competition was the Corrupt and Illegal Practices Prevention Act 1883. Although this landmark legislation was concerned with constituency candidates, their campaign expenses and their agents only, all other efforts to create a political finance regime started from here. The next legislative step to deal with the subject was the Honours (Prevention of Abuses) Act 1925 that sought to end the selling of titles in exchange for donations to political parties.

In August 1976 the Committee on Financial Aid to Political Parties, chaired by Lord Houghton of Sowerby, proposed that financial aid to political parties should be given in two forms: (a) general grants to the central organisations for their general purposes and (b) a limited reimbursement of election expenses to parliamentary and local government candidates.[4]

Starting in 2006, political funding came under scrutiny as concerns grew that the largest British political parties were too dependent on a handful of wealthy donors. Furthermore, during the Cash for Honours scandal, concern grew even more.[2] A concern of the 1970s had been that the major parties were unable to raise sufficient funds to operate successfully.[5]

The Political Parties, Elections and Referendums Act 2000
Main article: Political Parties, Elections and Referendums Act 2000

The Political Parties, Elections and Referendums Act 2000 (PPERA) was an act that established the Electoral Commission and required all political parties to register with it, set down accounting requirements for political parties, and introduced controls on donations.[1]

2006 Sir Hayden Phillips inquiry

In March 2006, former civil servant Sir Hayden Phillips was charged with setting up an inquiry to come up with proposal for reform. It reported a year later. He recommended capping individual donations at £50,000[6] and capping spending for political campaigns. He also suggested increasing state funding by £25m and expanding its reach.[2]

2008 Ministry of Justice report

In June 2008, the Ministry of Justice released a white paper analyzing party finance and expenditure.[6] The paper proposed to tighten controls on spending by parties and candidates, substantially strengthen the powers of the Electoral Commission, and increase the transparency of donations.[7]

2011 Committee on Standards in Public Life report

In November 2011 the Committee on Standards on Public Life, chaired by Sir Christopher Kelly, published a Report on "Political Party Finance. Ending the big donor culture". It is their 13th report, Cm. 8208. The report made five main recommendations:

  1. Contribution limit of £10,000 per donor, party and year;
  2. this limit should not apply to affiliated trade union affiliation fees if such fees are raised by an "opt in";
  3. existing limits for campaign spending should be cut by about 15 percent;
  4. in addition to the present "policy development grant" eligible parties should be granted public funding at the rate of £3.00 per vote in Westminster elections and £1.50 per vote in devolved and European elections;
  5. income tax relief should be available for donations up to £1,000 and membership fees to political parties.[8]

Membership subscriptions

Membership subscriptions ("subs") provide one source of funding for political parties. However, in recent times membership has declined and campaign costs have grown.

The Green Party is the only major political party in the UK which receives the majority of its funding through membership fees and these are what cover the running costs of the organisation. Membership subs have become a more significant source in income for both the SNP and Labour in recent years, as both have seen substantial increases in membership.[2][9]

Donations

The Conservative Party relies on donations mostly from individuals and companies; as well as these sources the Labour Party receives a significant portion of its donations from trade unions. For example, in the third quarter of 2009, eighteen political parties reported donations totalling £9,532,598 (excluding public funds). The Conservative Party received £5,269,186, the Labour party received £3,045,377 and the Liberal Democrats received £816,663.[10] Donations typically peak before elections. Between 6 April and 6 May 2010 (a general election campaign month) the Conservatives took £7,317,602, Labour £5,283,199 and the Liberal Democrats £724,000.[11]

Quarter-by-quarter aggregates of donations above reporting thresholds are available from the UK Electoral Commission. The following table shows the sum of donations above the reporting thresholds for UK parties with seats in the House of Commons. These figures would not include e.g. a large number of small donations.

Donations above reporting threshold[12]
YearConservative PartyLabour PartyLiberal DemocratsScottish National Party
2013£16,358,446£20,945,689£4,372,1880
2014£29,366,474£26,388,844£8,796,956£4,151,337
2015 (GE)£33,620,578£28,678,161£7,784,137£2,171,696
2016£18,031,645£21,321,339£7,686,6570
2017 (GE)£37,775,223£23,126,548£7,864,244£2,019,202
2018£22,067,325£16,664,422£4,562,0070
2019 (GE)£52,919,571£24,886,998£20,017,7270
2020£15,562,333£14,536,760£4,767,3400
2021£20,128,172£17,061,396£4,539,942£1,917,301

State funding

Opposition parties receive state funding to pay administration cost; Short Money[2][13] in the House of Commons starting in 1975, and Cranborne Money in the House of Lords starting in 1996 however, there is no state funding available to parties for campaign purposes.

In addition there is a general policy development grant available to parties with two MPs.

Transparency

Donations worth over £7,500 to national parties must be declared, as must be donations worth £1,500 or more to local associations.[14] Donations to members' associations – groups whose members are primarily or entirely members of a single political party – also need to be declared above £7,500. This produces a loophole where donors can donate larger sums to local candidates while remaining anonymous, by channeling those donations through a members' association such as the United and Cecil Club.[15]

For a while, as a loophole, loans did not have to be declared.[2]

Northern Ireland political parties are exempt from revealing the identity of party donors due to security reasons.

See also

National

References
  1. Gay, Oonagh; White, Isobel (10 April 2007). Kelly, Richard (ed.). The Funding of Political Parties (PDF). House of Commons Library. p. 7.
  2. "Q&A: Political party funding". BBC. 20 July 2007. Retrieved 1 February 2009.
  3. [1998] ECHR 4
  4. Report of the Committee on Financial Aid to Political Parties, chaired by Lord Houghton of Sowerby, London: H.M.S.O, 1976, Cmnd. 6601, p. xv.
  5. Report of the Committee on Financial Aid to Political Parties (Chairman: Lord Houghton of Sowerby), London: H.M.S.O., 1976, Cmd. 6601; Michael Pinto-Duschinsky, British Political Finance, 1830–1980. Washington, DC: AEI, 1981.
  6. "Party Finance and Expenditure in the United Kingdom Report" (PDF). Ministry of Justice. 16 June 2008. Retrieved 1 February 2009.
  7. "Party Finance and Expenditure in the United Kingdom". Ministry of Justice. 16 June 2008. Retrieved 1 February 2009.
  8. Committee on Standards in Public Life (November 2011). Political party finance: Ending the big donor culture (PDF). Thirteenth Report. pp. 8–9. ISBN 9780101820820.
  9. "Greener Tomorrow | Green Party Members' Website". greenparty.org.uk. Retrieved 13 October 2016.
  10. "Political parties' latest donations and borrowing figures published". UK Electoral Commission. 25 November 2009. Retrieved 22 January 2010.
  11. "Party donations and borrowing in final week of general election campaign published". UK Electoral Commission. 14 May 2009. Retrieved 15 May 2010.
  12. "Donations accepted". www.electoralcommission.org.uk. UK Electoral Commission. Retrieved 15 April 2023.
  13. Gay. The Funding of Political Parties. pp. 9.
  14. "Donations and loans reported every quarter by political parties". UK Electoral Commission. Retrieved 23 February 2017.
  15. Oliver Wright (16 May 2014). "Tory dining club secretively channels hundreds of thousands of pounds of funding by anonymous wealthy donors". The Independent. Retrieved 22 February 2017.

Further reading
  • Houghton Report - Report of the Committee on Financial Aid to Political Parties (Chairman: Lord Houghton of Sowerby), London: H.M.S.O, 1976 (Cmnd. 6601)
  • Michael Pinto-Duschinsky: British Political Finance, 1830-1980, Washington, DC: American Enterprise Institute, 1981
  • Neill Report - The Funding of Political Parties in the United Kingdom (Fifth Report of the Committee on Standards in Public Life, Chairman: Lord Neill of Bladen), London: H.M.S.O., 1998 (Cm. 4057)
  • Johnston, Ronald J./ Pattie, Charles J.: 'The Impact of Spending on Party Constituency Campaigns at Recent British General Elections', in: Party Politics, vol. 1, 1995, no. 1, pp. 261–274.
  • Keith D. Ewing, The Cost of Democracy. Party Funding in Modern British Politics; Hart Publishing, Oxford, 2007; 9781841137162
  • Kelly Report - Committee on Standards in Public Life, Chair: Sir Christopher Kelly KCB, Thirteenth Report, Political party finance. Ending the big donor culture, Cm. 8208,
  • A. Mell, S. Radford, S. Thevoz, "Is There a Market for Peerages", Oxford Discussion paper , 2015
  • J. Rowbottom, Democracy Distorted. Wealth, Influence and Democratic Politics; Cambridge University Press, Cambridge, 2010; 9780521700177
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