The Funding of UK Political Parties Flashcards
The main ways parties are funded…
> Collecting membership subscriptions from members
> Holding fundraising events such as fetes, festivals, conferences, and dinners
> Receiving donations from supporters
> Raising loans from wealthy individuals or banks
> The self-financing of candidates for office
> Up to £2 million per party available in grants from the Electoral Commission
> Money granted to opposition parties in the Commons and Lords
Funding inequalities…
The larger parties have better access to funds that smaller ones.
Conservatives traditionally attract large donations from wealthy individuals and businesses, whereas Labour receives contributions from trade unions. These amounted to nearly 60% of the party’s total income in 2014-15 - in 2017, Labour saw its share of funds from trade unions drop to just over 11% of its total income.
In contrast, smaller parties have no such regular sources of income - in addition, they tend to have small memberships. It is understandable that these parties do not attract wealthy donors. Donors of small parties do so out of idealism, rather than financial gain.
Political Parties, Elections and Referendums Act (2000)…
Among other regulations, this act made the following stipulations:
> People not on the UK electoral roll could no longer make donations (thus reducing foreign influence)
> Limits were placed on how much could be spent on parliamentary elections
> Donations over £500 had to be declared
> Donations over £7500 were to be placed on an electoral register
This regulation stressed transparency rather than on any serious limits on the amounts donated. State funding was rejected as a solution at this time, and election spending controls were extremely generous.
Political Parties and Elections Act (2009)
Regulations were further developed in the wake of the MPs expenses scandal with this act, which gave the Electoral Commission the power to:
> Investigate and impose fines
> Restrict donations from non-UK residents
> Impose tighter regulations in the run-up to elections
Controversies over party funding…
> Funding by large donors represents a hidden and unaccountable form of political influence. Parties are not allowed to change specific policies or propose legislation as a direct result of donations, but donors must expect some kind of political return for their investment. This might be true of trade unions and the Labour Party and of business interests and the Conservatives.
> Aspects of funding may well verge on being corrupt - morally, if not legally, at least. Some donors may expect to receive an honour from party leaders, such as a peerage or knighthood, in return for their generosity. This is sometimes known as ‘cash for honours’. It cannot be proved that it exists, although between 2006 and 2007 the issue was investigated by the police. While it was not taken further by the CPS, suspicions remain.
> The steady decline of party memberships has meant that parties are even more reliant upon donors, which further opens up the possibility of corruption and the purchasing of political influence.
Examples of large donations to parties…
The Electoral Commission, which monitors the income of political parties, has reported examples of large donations, some include:
> Between 2015 and 2017, the Conservative Party received £11.3 million from prominent figures and companies in the financial sector.
> In the same period, the Conservatives received £3.6 million from property companies.
> One individual (hedge fund proprietor Angus Fraser) donated £1,137,4000 to the Conservative Party during this period.
> The Unite trade union gave £657,702 to the Labour Party early in 2017.
> At the same time, UNISON, the public service union, donated £376,242 to Labour.
Solutions to party funding structures and restrictions…
Phillips Report from 2007 concluded that state party funding based on vote share or membership size would make party politics in the UK fairer and more democratic.
There are four basic solutions:
1) Impose restrictions on the size of individual donations to parties. To be effective, the cap would have to be relatively low.
2) Impose tight restrictions on how much parties are allowed to spend. This would make large-scale fundraising futile.
3) Restrict donations to individuals, i.e. outlaw donations from businesses, pressure groups, and trade unions.
4) Replace all funding with state grants for parties, paid for out of general taxation.
State funding of parties in the UK…
There is already some state funding of parties in the UK. All main parties receive funds from the Electoral Commission.
These are called Policy Development Grants (PDGs) and can be used to hire advisers on policy. Over £2 million is available for this purpose.
Policy Development Grants, 2018-19
Conservative Party - £476,554.05
Democratic Unionist Party - £172,865.63
Labour Party - £476,554.05
Liberal Democrats - £476,554.06
Plaid Cymru - £175,137.86
Scottish National Party - £201,613.43
Total - £1,979,279.08
Short money…
Named after Ted Short, the politician who introduced it. Short money refers to funds given to opposition parties to facilitate their parliamentary work (research facilities etc.). The amount is based on how many seats and votes each party won at the previous election.
Short money heavily favours large parties as it depends on how many seats parties won at previous elections as well as how many votes they received.
In 2019, Labour received more than £8 million, while the SNP only received £825,589.25.
UKIP refused over half a million pounds in Short money after winning one seat in 2015. The party’s only MP, Douglas Carswell, suggested it was corrupt and designed to favour established parties.
Short money allocations, 2019/20
DUP - £238,266.31
Green Party - £115,256.12
Labour Party - £8,045,182.44
Liberal Democrats - £658,202.22
Plaid Cymru - £104.059.44
SNP - £825,589.25
Cranborne money…
Named after Lord Cranborne, it refers to funds paid to opposition parties in the House of Lords to help with the costs of research and administration to help them scrutinise the work of the government.
Public attitude to state funding…
There is little public appetite for state funding as taxpayers are naturally reluctant to see their taxes being used to finance parties at a time when attitudes to parties are at a low ebb.
