The question of who funds politicians and political parties – and why they want to pay to get people elected – is a hot one. In theory, UK voters can support their elected politicians through donations or benefits, as long as those candidates and their parties stay within spending limits during the election period, which are designed to prevent powerful interests from influencing the outcome.
However, recent years have seen an increase in large donors giving large sums to political parties, leading to calls for new limits on the amount an individual or company can donate in a year. There has also been pressure for greater transparency around financial interests following the uproar over Nigel Farage’s £5m gift from Thailand-based crypto billionaire Christopher Harborne, shortly before the Reform UK leader became an MP. Rules say gifts must only be declared if they are political, and Faraz has said it was “personal” and given freely without any demands. The Parliament’s Standards Commissioner is investigating the matter. So, what are the rules on political donations and gifts?
How are political parties funded?
Donations from individuals, companies and organizations constitute the largest element of political funding, but parties also receive money from membership fees, party conference events and state funding, known as “short money” for opposition parties with MPs.
Who can donate to political parties?
Donations of over £500 to parties and £50 to candidates can be made by voters on the electoral register, UK-registered companies carrying on legitimate business, UK-registered trade unions and unincorporated associations.
Why is private donation preferred over more government funding?
The House of Commons Library states that political funding is based on the principles of “voluntariness”. It states that it protects the freedom of citizens to give away money as they wish, and avoids excessive control of political parties through state funding.
However, critics of voluntarism argue that political parties can become dependent on a small number of wealthy donors, which the Commons Library says can “give rise to suspicions and risks of undue influence”.
Politicians also know that voting to give more state funds to their parties may not be popular with the public when there are many other demands on the treasury.
How do we know who is donating?
Laws from 2000 regulate transparency regimes around donations, adding to centuries-old laws that bring spending limits to elections.
Under the rules, donors and parties are required to enter the name, size of the donation and the date it was made in a publicly available register. Donations of more than £11,180 in a year must be reported.
Why is there a push by some MPs and civil society groups to impose limits on donations?
Many MPs are troubled by the millions flowing into politics from mega-donors over the past few years. This includes £20m given to the Conservatives before the last election, as well as £15m given by Harborne to Reform UK and £4m from Ben Delo, another crypto entrepreneur. The government recently imposed a cap on donations from foreign investors, limiting it to £100,000 a year.
Research from Transparency International shows that the proportion of political donations coming from individuals and companies giving £1 million or more is set to increase from 1% in 2015 to 35% by 2024.
Labor MP Stella Creasy says it does not go far enough and is pushing for a £100,000 limit for all donors. Another Labor MP, Alex Sobel, has proposed setting a limit of £1 million.
Why has the government opposed it till now?
Number 10 has said that people should be free to give whatever they want to political parties. There is also a suspicion that Labor is reluctant to support a policy that might limit donations from trade unions, even though it might be possible to get around them. The GMB union has said it opposes the idea of setting limits because it could lead to a backlash against unions funding parties in the future.
What are the rules regarding gifts and benefits for MPs?
MPs must declare any gifts or benefits worth more than £300 if they are received in their capacity as an MP or for a political purpose. If the value of the gift exceeds £500, the person giving the gift or benefit must be a permissible source.
They must also register any gifts received by third parties – such as family members – if the gift was given because of their position as an MP.
The rules state that MPs “are not required to record benefits that cannot reasonably be assumed by others to be related to House membership or the member’s parliamentary or political activities; for example, purely personal gifts or benefits from partners or family members”. But the rules say: “Both the possible intention of the giver and the use of the gift must be considered. If there is any doubt, the gain must be registered.”
It states that MPs must declare all their existing financial interests and any profits (other than earnings) received in the 12 months before the election.
Would any limits prevent Farage from accepting the £5million gift?
It depends. Faraz has argued that the gift is personal, not political, and does not need to be declared. All gifts or benefits in excess of prescribed limits are required to be registered if they are made within 12 months of an MP being elected – but only if they are political. The Standards Commissioner will take the decision.
Setting a cap would certainly reduce political party funding from Harborne and the Dells, and would also impact the Conservatives and Labor to a lesser extent.
