Party Funding

• Short Money: First introduced in 1974 by Labour, money paid to opposition parties to ensure they can properly fund their parties. Depends on number of MPs, not votes.
• Cranbourne Money: same as short money but for Lords in opposition
• Cash for Honours: Fear that donors will be made Lords, fears began after revelations over the 2006/2007 Honours scandal. Essentially you can buy a peerage
• Party membership

  • Party members pay a subscription to join a party and so funds are generated in this way. 
  • In 2014 membership income was 23% of Green Party income, 15% of Labour Party income, 9% of Liberal Democrat Party income but just 2% of Conservative Party income.  
  • In 2015, the Labour Party also introduced a registered supporters’ scheme – people could pay £3 and this gives them a right to vote in the leadership and deputy leadership elections.
• In 2014 membership income was 23% of Green Party income
• In 2014 membership income was 15% of Labour Party income
• In 2014, membership income was 9% of Liberal Democat Party income
• In 2014 membership income was just 2% of Conservative Party income
• In 2015, the Labour Party also introduced a registered supporters’ scheme – people could pay £3 and this gives them a right to vote in the leadership and deputy leadership elections.
• In 2014 membership income was 23% of Green Party income, 15% of Labour Party income, 9% of Liberal Democrat Party income but just 2% of Conservative Party income.  
• If their members agree in a vote, Trade Unions can affiliate to the Labour Party and pay the Labour Party for the number of members that they have.  This money comes from a political levy that they charge members as well as union fees.
• The Conservative government’s 2016 Trade Union Act obliged new trade union members to choose whether to ‘opt in’ to paying this levy (previously they had to ‘opt out’). This was expected to lead to a significant drop in funding received by the Labour Party from Trade Union
• Local parties raise funds through quiz nights, dinners, raffles and so on and this money is usually spent on local campaigning.
• The Electoral Commission allocates £2m a year to the parties to help them develop policies for inclusion in their election manifestos.
• Short Money is given to the opposition from public funds; Government Ministers have the civil service to help them develop policies and provide information. Short Money ensures that opposition parties can also develop policies and carry out research.
• Party MPs are publicly funded to employ staff and most have a researcher. This can only be used for Parliamentary functions and not for party activities but, in practice, MPs’ researchers may investigate issues that are important to the party.
• 1. The Blair government passed the 2000 Political Parties, Elections and Referendums Act to overcome perceptions that party funding had been undemocratic. As a result: 

  • An independent electoral commission was set up to supervise party spending on election campaigns. 
  • The amount that a party could spend was capped at £30,000 in a constituency. 
  • Donations of more than £5,000 (nationally) or £1,000 (to a constituency party) had to be declared, and parties had to publish details of donations at regular intervals. 
  • Donations from individuals not on the UK electoral roll were banned.
• The 2009 Political Parties and Elections Act, gave the electoral Commission the power to investigate and impose fines, restricted donations from non-UK residents and imposed tighter regulations in the run-up to elections.
• The Trade Union Act 2016 changed the laws regarding trade unions membership so that a new union member must now opt in if they wish their membership fee to go to Labour Party. 
• Blair faced criticism within month of becoming prime minister in 1997 following the revelation that Bernie Ecclestone, the motor racing boss, had donated 1 million to Labour. It was alleged that there was a connection between this and a delay in implementing a ban on tobacco advertising in Formula One racing. Blair was forced to justify himself in a TV interview, in which he famously described himself as a ‘pretty straight sort of guy’ and the money was subsequently returned. 
• In the ‘cash for peerages’ scandal in 2006, it transpired that several wealthy individuals who had loaned money to the Labour party had been nominated for honours.  The party was exploiting a loophole in the law, which only regulated outright gifts.  It was later decided that loans would be subject to the same rules as donations.
• 2014-15

  • Labour receives contributions from trade unions. These amounted to nearly 60% of the party’s total income
• November 2013, former Labour MP for Rotheram, Denis MacShane, pleaded guilty at the Old Bailey to false accounting, after submitting false receipts for 129,00 and was sentenced to six months in prison
• Between 2015 and 2017

  • Conservative party received 11.3 million from prominent figures and companies in the financial sector.
  • They also received 3.6 million from property companies.
  • One individual hedge fund propertier (Angus Fraser) donated 1,137,400 to the conservative party
  • 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
• In 2016 Labour was fined 20,000 by the EC for breaching finance rules. The investigation was launched after 7614 was found missing from the party’s election return costs of Ed Miliband’s ‘tombstone’. The investigation went on to identify 24 other undeclared election expenses, totalling 109,777.