Political funding in the United Kingdom

Political funding in the United Kingdom has been a source of controversy for many years.^[1] There are three main ways a political party is funded. The first is through membership subs; the second is through donations; the third is through state funding.^[2]

History

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.^[3]

The 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^[4] 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.^[4] 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.^[5]

Membership subs

Membership subs provide one source of funding for political parties. However, in recent times membership has declined and campaign costs have grown.^[2]

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 Democrat party received £816,663 ^[6]. Donations typically peak before elections. Between the 6th of April and the 6th of May 2010 (a general election campaign month) the Conservatives took £7,317,602, Labour £5,283,199 and the Liberal Democrats £724,000 ^[7].

State funding

Opposition parties receive state funding to pay administration cost; Short Money^[2][8] in the House of Commons starting in 1975, and Cranborne Money in the House of Lords starting in 1996.

In addition there is a general policy development grant available to parties with two MPs or one MP and one MEP.^[9]

Transparency

Donations worth over £5,000 or more to national parties must be declared,^[2] as must be donations worth £1,000 or more to local associations.^[6]

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

This section requires expansion.

See also

• Campaign finance
• Political finance
• Political donations in Australia
• Federal political financing in Canada
• Party finance in Germany
• Political funding in Japan
• Campaign finance in the United States

References

Further reading

• J. Rowbottom, Democracy Distorted. Wealth, Influence and Democratic Politics; Cambridge University Press, Cambridge, 2010; 9780521700177
• K. Ewing, The Cost of Democracy. Party Funding in Modern British Politics; Hart Publishing, Oxford, 2007; 9781841137162