2.1.2 Party Funding in the UK: Methods and Debates

How Political Parties are Funded

The funding of political parties in the UK is a highly debated issue. Unlike some countries where the state funds political parties, UK parties primarily rely on private funding, although there are limited public funds available for policy development and parliamentary scrutiny.

Sources of Funding:

• Short Money: Named after Labour politician Ted Short, it is allocated to opposition parties for their work in the House of Commons based on the number of seats held. For example, from June 2017 to March 2018, the Labour Party received £6,222,106.
• Cranborne Money: Named after Lord Cranborne, it subsidizes opposition parties' work in the House of Lords.
• 2000 Political Parties, Elections and the Referendums Act: This made sure political party funding was regulated. For example, donations over £500 had to be declared and donations over £7500 were to be placed on an electoral register

Private Funding:

These public subsidies do not cover all campaign and election expenses. Therefore, parties depend heavily on subscriptions from party members and donations from benefactors. The Conservative Party, for instance, has traditionally received significant donations from large businesses.

Criticism of Current Funding Methods:

Critics argue that the reliance on private funding gives an unfair advantage to the Conservative Party due to its ability to attract large-scale donations from the business sector. In contrast, the Labour Party's strong relationship with trade unions provides it with significant financial support, which disadvantages smaller parties like the Liberal Democrats and the Greens.

Legislation and Reforms:

• Political Parties, Elections and Referendum Act 2000: This Act aimed to increase transparency and fairness in party funding by:
  • Establishing an independent electoral commission to monitor campaign expenditures.
  • Capping constituency spending during elections at £30,000.
  • Requiring political parties to declare large donations (over £5,000) and prohibiting donations from non-UK citizens.

Should the State Fund Political Parties?

Supporters of state funding argue:

• Financial support for political causes should be voluntary, similar to charities. People should have the right to express their views in the forms of donations if they wish, preventing this is to deny peoples freedom of expression and restrict their political beliefs.
• State funding could lead to controversial decisions on funding allocations, how would you decide which party gets what?
• State funding might imply that parties are beholden to the state, compromising their independence.
• Funding extremist parties could be contentious and socially divisive.

Supporters of state funding argue:

• Funding by large donors represents a hidden and unaccountable form of influence. Parties may change supposed legislation to suit the donor, which is undemocratic
• Some donors may expect to receive some sort of honour, like they may want to become knighted or become a "Sir". The cronyism by Boris Johnson is representative of this.
• Decline of party memberships meant that parties are more reliant on donors, between 2015 and 2017, the Conservative Party received £11.3 million from donors
• Having state funding would prevent political parties from relying on these big donors for support and even out the playing field to allow all political parties to have a chance at success.