The Funding of Political Parties in the United Kingdom

Donations to the funds of political parties from one source which total £5,000 or more in one year must be publicly disclosed. (p 53)

Donations to party constituency organisations or to regional organisations of political parties from one source which total £1,000 or more in one year must be publicly disclosed. (p 53)

Audited annual accounts of income and expenditure of political parties should be delivered to the Election Commission within three months of each year’s end. (p 54)

The Election Commission should have power to prescribe a standard year and a standard form for such accounts. (p 54)

State funds should be made available to political parties for the purpose of meeting the start-up costs of complying with the new disclosure regulations. (p 54)

The term ‘donation’ should be broadly defined and should include sponsorship and donations in kind. (p 55)

The published information concerning donations should clearly identify the donor, specify the amount of the donation or its cash value, state the date when made (or, in the case of a series of donations exceeding the statutory limit, the date of the last one) and whether made to the central funds of the party or to a constituency association etc. (p 56)

Anonymous donations of £50 or more should be refused. (p 56)

There should be an obligation on a political party’s central office to designate a responsible officer whose duty would be to report to the Election Commission all disclosable donations received by any part of the party’s organisation. (p 57)

The Election Commission should publish as soon as possible after receipt the information concerning disclosable donations reported to it by the political parties. It should also maintain a public register of all disclosed donations. (p 57)

In periods between elections each political party should report quarterly to the Election Commission the relevant information concerning disclosable donations received. (p 58)

In an election period (a term to be defined in legislation) each political party should report to the Election Commission the best available information concerning donations received within seven days of receipt. (p 58)

The Election Commission should have wide powers to call for information and to investigate the financial affairs of political parties. (p 59)

There should be criminal sanctions for a deliberate failure to report to the Election Commission a disclosable donation and for the supply of false information to the Commission. (p 59)

In any case of a failure to report to the Election Commission a disclosable donation (whether such failure is deliberate or inadvertent) the court should have power to order the defaulting political party to forfeit a sum not exceeding the unreported donation. (p 59)

Prosecutions should be brought by the Director of Public Prosecutions and not by the Election Commission. (p 59)

It should be made a criminal offence to take intimidatory or discriminatory action against any person or body in consequence of any donation made or proposed to be made by any person or body to any political party. (p 59)

It should be made a criminal offence to attempt to evade or render nugatory the statutory reporting requirements relating to disclosable donations. (p 60)

Any person or organisation transmitting to a political party any consolidated donation which consists of contributions received from two or more persons should supply a list of any individual donations received which are at or above the disclosure threshold. (p 60)

The Government should consider in the context of the development of the peace process whether it would be expedient to introduce a short term and reviewable exemption from the reporting requirements in respect of donations made to political parties in Northern Ireland. (p 61)

Blind trusts should be prohibited as a mechanism for funding political parties, party leaders or their offices, Members of Parliament or parliamentary candidates. (p 62)

Open trusts designed to fund party leaders or their offices, Members of Parliament or parliamentary candidates should be permitted but on condition that the trustees are bound to report to the Election Commission any donations which would be disclosable if made to a political party. The recommendations made earlier in this chapter should apply with appropriate modifications. (p 62)

Donations of £5,000 or more given to an individual party member or group, in connection with political activity within the party or publicly, should be made through the creation of an open trust or be subject to similar provisions and should be reported to the Election Commission. (p 63)

Political parties should in principle be banned from receiving foreign donations. (p 71)

Political donations should be receivable by political parties only if originating from a permissible source (as defined). (p 71)

The definition of a permissible source should cover: As to individuals: registered UK voters and those entitled to register as UK voters As to corporations: companies incorporated in the United Kingdom As to partnerships: partnerships based in and having their principal sphere of operations in the United Kingdom As to trade unions: trade unions registered here pursuant to statute As to other organisations: organisations, voluntary associations and trusts etc. genuinely based in and having their principal sphere of operations in the United Kingdom (but excluding branches of foreign organisations of whatever character). (p 74)

It should be made a criminal offence to attempt to evade or render nugatory the statutory provisions which confine political parties to donations received from a permissible source. A specific provision should be made to cover possible abuse by the utilisation of UK subsidiaries of foreign corporations. (p 74)

The responsibility for ensuring that donations are received only from a permissible source should be placed on each political party. The designated responsible officer of the party would be required to certify the position to the Election Commission annually when reporting on the donations received. (p 75)

In relation to donations to political parties in Northern Ireland, the definition of a permissible source should also include a citizen of the Republic of Ireland resident in the Republic subject to compliance with the Republic’s Electoral Act 1997. (p 77)

The Election Commission should have wide powers to call for information and to institute investigations into any suspect foreign donations received by a political party or a sub-unit. (p 77)

Criminal sanctions should attach to a deliberate acceptance of a donation from a source falling outside the definition of a permissible source. There should be a power for the court to order a defaulting political party to forfeit a sum of up to ten times the donation wrongfully accepted. (p 77)

No limit should be introduced on the amount which an individual, company or institution may contribute to a political party. (p 80)

No change should be made in the law relating to trade unions and their political funds. (p 83)

Legislative provision should be made to require any company intending to make a donation (whether in cash or in kind, and including any sponsorship, or loans or transactions at a favourable rate) to a political party or organisation to have the prior authority of its shareholders. This authority could be in the form of a broad enabling power, valid for no longer than four years, and typically conferred by a resolution passed at an annual general meeting giving the board of directors discretion about the making of such donations up to a prescribed limit. (p 86)

The provision of free postage (for Parliamentary and European elections) and free rooms (for Parliamentary, European and local elections) should be continued and extended to elections to the Scottish Parliament, to the National Assembly for Wales and to the Northern Ireland Assembly. (p 89)

No new system should be introduced whereby the state is obliged for the indefinite future to provide financial support for the political parties. (p 93)

There should be established a Policy Development Fund, initially of no more than £2 million per annum, to enable the political parties to engage more fully in policy development. The fund should be administered by a politically neutral body, to which the parties should be accountable for the monies spent. (p 93)

Tax relief by deduction at source should be introduced, limited to the basic rate, on donations of up to £500 a year to eligible registered political parties. (p 99)

Political parties should be eligible to claim under the tax relief scheme if at the last general election two members of the party were elected to the House of Commons or one member was elected and the party won at least 150,000 votes. (p 99)

The political parties in the House of Commons should review the amount of Short money now made available to the opposition parties, with a view to increasing it substantially, perhaps by as much as three times. (p 103)

The political parties in the House of Commons should review the allocation of Short money to ensure that the Official Opposition’s allocation is fixed and does not depend on the outcome of the previous general election and also to ensure that the allocation of Short money to all opposition parties is sufficient to enable them to perform their functions adequately. (p 104)

The political parties in the House of Lords should review the amount of money now made available to the opposition parties under the Cranborne money scheme, with a view to increasing it. (p 105)

The political parties in House of Commons should assess the reasonable cost of running the Leader of the Opposition’s Office and then, as part of the review of the Short money scheme, should specifically earmark a portion of the Short money, additional to that in recommendation 40 above, for funding that Office. (p 106)

The political parties within the Scottish Parliament and the new national Assemblies should consider making provision for their financial support from the available parliamentary or assembly funds for the purpose of the better performance of their parliamentary or assembly functions. (p 109)

Power should be taken to set a higher maximum permitted limit for a parliamentary candidate’s expenditure at a by-election. A sum in the order of £100,000 seems appropriate to the Committee, but the Government should establish the figure after appropriate consultation. (p 112)

The Government should undertake the revision of Schedule 3 to the Representation of the People Act 1983 so that it contains a full and up-to-date list of items of expenditure which should be declared by candidates at parliamentary elections. The contents of the schedule should be kept under review by the Election Commission. (p 113)

A limit should be placed on the campaign spending of political parties in respect of elections to the House of Commons. The operation of this limit, both in principle and in practice, should be kept under review by the Election Commission. (p 122)

The new national spending limits should be separate from, and additional to, those that now apply to candidates in individual constituencies. (p 123)

On the assumption that a national spending limit is in place for the next general election, the limit for parties that contest more than 600 seats at that election should be set at £20 million. That limit should then be index-linked. It should not be varied in future except on the recommendation of the Election Commission. (p 124)

The limits in a general election for parties that contest fewer than 600 seats should be lower and should be based on a formula taking account of the number of seats they are contesting. (p 124)