✅ political party funding

MPs are paid from

• MPs are paid from general taxation ( basic annual salary from 2019= £79,468). They can also claim expenses to cover the cost of running an office, living in Westminster + their constituency, + travelling between the 2. There is also a special state provision to support the activities of the opposition in parl., known as short money.

• parties must meet most of their election costs from?

• from the voluntary subscriptions of their membership + from fundraising events in MP’s constituencies. In recent years all the major parties have struggled to fund these activities

Party funding has also been a controversial area, because of

• the suspicion that powerful interests offer financial support in return for political influence,

what has labour traditionally been funded by?

• labour has traditionally been funded by trade unions, which played a major role in founding the party + shaping its policies, during the ‘new labour’ years this was to some extent replaced by donations from successful individuals as labour became friendlier towards the business community

The financial resources of parties is also unequal- who criticises?

• the Lib Dem’s (the least well-funded of the main UK parties) often criticise their opponents for being bankrolled by the wealthy, the larger parties have been accused of offering political honours, i.e. places in the HOL, to their most generous benefactors, as practice that seems to run counter to principles of democracy + openness

Bernie ecclestone example

• E.e. Blair faced criticism within months of becoming PM in 1997 following the revelation that Bernie Ecclestone, the motor-racing boss, had donated millions to labour, it was alleged that there was a connection between this and the delay in implementing a ban on tobacco advertising in F1 racing, the money was subsequently returned

change in memberships?

• Parties have seen a decline in their memberships + with its it the subscription fees, while they have moved to a more centrally organised, media-based + expensive campaigning methods, this has meant that political parties are increasingly reliant on donations from individuals, corporations + trade unions, raising a key question for democracy: to what extent are political donors effectively buying influence + power?

long history of allegations of cronyism + money buying power in the UK?(e.g.)

• e.g. David Lloyd George, PM between 1916 + 22 was alleged to have sold around 100 peerages in return for party donations. In 2020, the SNP called for a public enquiry into cash for honours after PM Johnson raised 26 people to the HOL, including a no. Tory party donors

There are 3 main sources of funding

Membership fees

Donations

Grants

Membership fees as a source of party funding

• Parties receive funding from membership subscriptions, this has been in decline with the collapse of party membership, especially for the Conservative Party, although the surge in party memberships for labour, SNP + greens since 2015 saw their membership income come close to matching or even exceeding their income from donations

Donations as a source of party funding

• These can be donations from individuals, corporate donations from businesses + institutional donations from pressure groups such as trade unions, critics have long alleged that labour has, in effect, been controlled by the trade unions, while the conservatives are similarly open to the accusation that their major business backers exert influence over the process of policy development

grants as a source of party funding

•  

  • There is a limited amount of public money made available to the parties in the form of grants:

  • There is ‘short money’ available to opposition parties to help them w their parliamentary duties, but not w election or campaigning expense, it is calculated on the basis of the no. Seats + votes won at the last election with additional income for the leader of the opposition’s officer to assist them with their key constitutional role of holding the govt to account

  • ‘Cranborne money’ is a similar scheme that operates for the largest + 2nd largest opposition party in the HOL

  • The electoral commission has £2m in money from UK parl. to allocate to parties w at least 2 sitting MPs, to develop policies to include their election manifestos

Short money

funds paid to opposition parties in order to help them cover their administrative costs + thereby provide for proper scrutiny of the the govt, it is available to all opposition parties that win at least 2 seats, or win a single seat while also having 150K votes nationally, e.g. in 2020-21, the labour party received around 6.5mil in short money, which included £850K to support work of the leader of the opposition

Cranborne money=

funds paid to opposition parties in the HOL in order to help them cover their administrative costs + thereby provide for proper scrutiny of the govt, e.g. in 2020-21, the labour party received around 650K in Cranborne money

2000 rule around funding political parties

• In 2000 Blair govt passed the political parties, elections + referendums act (PPERA)

result of the political parties, elections + referendums act (PPERA):

• An independent electoral commission was set up to supervise party spending on election campaigns

• The amount that a party could spend was capped at £30k in a constituency

• Donations of more than 5k (nationally) or 1k (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

Cash for honours scandal 2006-7

In March 2006, several men nominated for life peerages by PM Blair were rejected but the HOL appointments commission, it was later revealed they had loaned large amounts of money to the governing Labour Party, at the suggestion of labour fundraiser Lord Levy, suspicion was raised by some that the peerages were a quid pro quo for the loans, this resulted in 3 complaints to the metropolitan police, Blair was interviewed by the police + 2 of his aides also faced questioning, altho no charges were brought, the affair cast a shadow over Blair’s last month in office, it was later decided that loans would be subject to the same rules as donations, + spending limits for parties were revised in the run-up to the 2010 election

Response to the cash for honours scandal 2006-7

• In march 2006, former civil servant Sir Phillips was charged with setting up an inquiry to come up with reform proposal, it was reported a year later, he recommended capping individual donations at 50k + capping spending for political campaigns, he also suggested increasing state funding by £25 mil + expanding its reach, however, no subsequent government has acted on their recommendation, pressure to make public spending cuts under the coalition govt meant that this was not the time to place an additional burden on the tax payer

Political parties + elections act 2009

• PPEA built upon the regulations established under the PPERA: imposing tighter regulations on spending by candidates in campaigns, allowing the electoral commission to investigate cases + impose fines, restricting donations from non-UK residents + reducing the thresholds for the declaration of donations

Conservative spending in 1997 + what it shows

• In 1997 the conservative party spent £28 mil, whilst unsuccessful, the figure shows the 'arms race'  in party spending since 1994, in which the party spent less than £100k on national campaigns (in 1997 terms)

What does conservative spending in 1997 illustrate

the value that parties can put on spending

What happened after the conservatives’ spending in 1997?

• Later a legal maximum of £19.5m (£30K per constituency) came to be

the effect of a legal maximum on spending

• This legislation's effect was opposite to what was intended, spending continued to accelerate, especially since the national limit only applied to the year before a general election, meaning parties spent a lot in the years prior

Panama papers

• Donations made by wife of a former Russian minster, giving more than 1.8m in 2021, her winning auction bids at tory fundraisers resulted in her playing tennis with Johnson + dining with May

rule changes ahead of the 2024 election

• The limit to spending on general elections increased by 80%

• In the 6 general elections after the prior spending limit was introduced, only the conservatives came close to the maximum,

• The change has not been supported by the electoral commission,

• The changes are a reversal to Cameron's pledge to 'take the big money out of politics' in 2010,

• It is now raised to £36 mill

Reasons why the state should fund political parties

• State money would be 'clean' w/out the dependency on wealthy donors + interest groups who would expect something in return

• It would enable politicians to focus on representing constituents rather than donors

• Would provide a greater sense of equality between parties

• Make it easier to limit overall spending on elections

Reasons why state shouldn't fund political parties

• Voters shouldn't fund parties with which they disagree, + there are better areas to spend taxpayers' money on

• If funding was instead matched to small donations, it would encourage parties to seek more money from all their supporters, not just the wealthiest

Case study: Frank Hester

• Tory party kept over £15mil in donations from Frank Hester, who is alleged to have called a staff member a 'token Muslim', intimidates people of Chinese descent + claims a woman was attractive for a black woman + over a dozen former staffers said e repeatedly made comments about race + religion in the workplace, including in recent years, during Saunaks time in govt he donated a further £5mil , meaning he gave more than 40% of the total national spending limit for each party

• Sunak refused to return any money Frank donated

Case study: Lord Alli

• Starmer accepted £20K to help his son study for GCSEs, which he declared to parl. As an accommodation

• He had accepted £107K in gifts since 2019, more than 2.5x more than any other MP

• Lord Alli received an unrestricted pass to access downing street, leading to allegations of cronyism + 'cash for access'

New Labour and party funding

• Historically the Labour Party was mainly funded by trade unions.

• There were efforts made by previous Labour leaders such as Tony Blair to decrease trade union influence within the party.

• Under New Labour, the Party was increasingly funded by large donations from a small number of wealthy individuals such as Lord Sainsbury and Bernie Ecclestone.

Jeremy Corbyn and party funding

• Under Jeremy Corbyn, there has been a move towards a large amount of party funding coming from smaller donations made by ordinary members of the party with over £18 million received in 2017.

• There has also been a rise in income from trade unions under Corbyn, with the trade union Unite donating £4.5 million in the 2017 general election.

Conservative Party funding

• The Conservatives receive the majority of their funding from wealthy donors such as Ehud Sheleg and Lord Bamford.

• In 2017 it was revealed that large amounts of party funding for the general election came from hedge funds and bankers.

Have funding reforms worked?

• Regulations have increased the transparency of party funding

• But, there are still issues with funding and transparency:

  • Parties have encouraged supporters to give long-term ‘loans’ instead of donations to get around the regulations set out by the PPERA.

  • The main political parties still receive large donations from wealthy individuals - these donors have not been deterred.

Three types of state party funding that already exist in the UK

• policy development grants

• Short Money

• Cranborne Money

Modern examples:

• 2025 Richard Harpin paused donations after giving £3.8 million since 2008

• A secretive group that donated £130,00 to labour + claimed to be 'merely a platform for people' is in fact funded by property developers as discovered in 2025

• Labour declared more donations than all other parties combined during the general election campaign, taking more than £9.5 mil in total