1. Expert Forum Money & Politics – linking public resources to the illicit financing of political parties
Regulating money & politics: administrative & criminal tools
What works better?
Peter Wardle
Former chief executive
United Kingdom Electoral Commission
Bucharest, 7-8 September 2017

2. United Kingdom regulations on political party finances
Key dates

3. Key dates (i)
Pre-2000 – no effective regulation (historically – since the mid-1800s – the focus was on candidates)
Late 1990s – growing concern about sources of political parties’ income:
Donations from overseas
Donations from wealthy individuals/corporations who expected parties to implement favourable polices when in government
(Perception as well reality)

4. Key dates (ii)
2000 – Political Parties, Elections and Referendums Act (following recommendations of a committee of eminent citizens with the role of reviewing standards of ethics and behaviour in public life)
Extensive new rules for political party finances, and a new Electoral Commission as regulator
Changes came soon after Tony Blair’s significant election victory for the Labour party in 1997 – regarded as a turning-point in British politics after 18 years of Conservative party government. Broadly, cross-party support for the new regulations in Parliament

5. United Kingdom regulations on political party finances
Key provisions

6. Published on Electoral Commission website
Party registration
Political parties – and other campaigners at elections – must be registered with the Electoral Commission before spending any significant money on election campaigning
Parties cannot stand individual candidates under their party name, unless they are registered with the Electoral Commission
Electoral Commission must approve party name, symbol and any other material that is used by candidates on ballot papers
Published on Electoral Commission website

7. Published on Electoral Commission website
Party income
Parties must not accept donations or loans from foreign sources
No limit on the amount that may be given or lent to a party
Every 3 months, parties must provide the Electoral Commission with a report of all donations and loans they receive which are worth more than GBP 7,500/EUR 8,130
Lower-value donations and loans not reported in these regular reports must be included in the annual report to the Electoral Commission
Published on Electoral Commission website

8. Party election spending
A party that stands candidates in all 650 UK constituencies may spend up to GBP 19m/EUR 20.6m during a Parliamentary election campaign
(Separate limits for individual candidate spending – around GBP 8,700/EUR 9,430 per candidate)
Parties (and candidates) must provide a detailed report on their election spending to the Electoral Commission
Reports of spending above GBP 0.25m/EUR 0.27m must be independently audited before they are sent to the Commission
Commission checks all reports against its own monitoring of election campaigns
Published on Electoral Commission website

9. Published on Electoral Commission website
Party accounts
Every year parties must provide the Electoral Commission with a statement of their income and spending (not just during election campaigns)
Statements involving annual income or spending above GBP 0.25m/EUR 0.27m must be independently audited before they are sent to the Commission
Commission checks accounts against separate income and spending reports, and investigates inconsistencies
Published on Electoral Commission website

10. Other (non-party) campaigners
Similar rules apply to others campaigning at an election
For example – trade unions, charities
Published on Electoral Commission website

11. Securing compliance
Electoral Commission aims for maximum voluntary compliance through:
Advice & guidance
Written guidance
Telephone/ help service
Regular meetings with political party officers
Training sessions
Advisory opinions

12. Monitoring and intelligence
Electoral Commission monitors election campaigning to spot what parties are doing – then checks that the costs of these campaign activities are declared in parties’ spending reports to the Commission
Online campaigning has become much more significant
Social media can also help the Commission to monitor campaign activity…

13. Checks and audit
Electoral Commission checks parties’ reports of income and spending
For example, all donations are checked to ensure that the source is a British citizen registered to vote in the UK
Electoral Commission has powers to conduct audits of a party’s internal systems and records, to ensure that parties’ reports are accurate

14. Investigation & Enforcement
Electoral Commission has powers to require parties and others with relevant information to hand it over – failure to do so can lead to criminal sanctions imposed by a court
Criminal sanctions:
fines and imprisonment
imposed by a court
Administrative sanctions:
Fixed penalty (GBP 200/EUR 216)
Variable penalty (GBP ,000/EUR ,675)
Compliance/restoration notice
‘Stop’ notice
Imposed by the Electoral Commission (can appeal to a court)

15. Transparency

16. Online reporting
Since it was first established, the Electoral Commission has used an online tool on its website
All reports from political parties are published and can be searched (eg – “what donations did Mrs X give to the Labour Party in the years ?”)
Parties can also submit their reports to the Electoral Commission online

17. Impact of transparency
Electoral Commission’s reports of political party donations and loans, and campaign spending, are usually covered widely in the UK media
Common for the media to use the information when they are writing about individuals or companies – for example, they will report whether a person in the news is a donor or lender to a political party, and if so, how much they have given or lent.

22. Issues

23. Loans
Despite the 2000 rules requiring parties to report all their donations for publication by the Electoral Commission, the legislation failed to apply the same rules to loans
In the run-up to the 2005 Parliamentary election both the Labour and Conservative parties were reported to be accepting large loans, often at very low interest rates, which did not have to be reported
The Electoral Commission secured a change in the law, extending the transparency requirement to cover loans as well as donations

24. Foreign donations
The legislation banning foreign donations requires that donations must come from:
An individual registered to vote in the UK
A company carrying on business in the UK
This leaves a loophole whereby a wealthy individual who is not registered to vote in the UK, but can invest their money in a company they control and which is carrying on business in the UK, can effectively donate to a party via their company
Electoral Commission carried out a number of complex investigations during the late 2000s, using expert lawyers and accountants to ‘follow the money’. It was not possible to demonstrate that such donations were unlawful.
Electoral Commission continues to call for a change in the law

25. Criminal and administrative sanctions – what works? (i)
In 2000, the only sanctions available for breaches of the party finance regulations were criminal – fines or imprisonment, imposed by a court
On the face of it, tough sanctions
But in practice, the police and public prosecutor were unwilling to mount prosecutions for relatively minor offences (eg failure to submit reports to the Electoral Commission on time)
Also, the criminal standard of proof was high, and a common defence was that the regulations were too difficult to understand

26. Criminal and administrative sanctions – what works? (ii)
In 2009, the Electoral Commission secured a change in the law giving them powers to impose administrative sanctions (fines, compliance notices, “stop” notices) – and also new monitoring and investigation powers
Since then, all breaches of the regulations can be punished with an administrative sanction
Criminal sanctions are still available for the most serious offences – the Electoral Commission has developed partnerships with police and prosecutors, to ensure that roles are clear and that there is a shared understanding of the legal requirements and the potential offences.

28. Recent cases
Following the 2015 Parliamentary election, the Electoral Commission investigated various breaches of the campaign finance regulations.
Between October 2015 and March 2016, the Commission fined both the Labour Party and the Liberal Democrats were both fined the maximum available amount of GBP 20,000/EUR 21,675, for submitting incomplete reports on their campaign expenditure; and the Conservative Party was fined a total of GBP 70,000/EUR 75,860) for a series of separate reporting failures.
The Commission has called for an increase in the maximum fine of GBP 20,000 that they can impose.

29. Conclusion
The Electoral Commission has developed an approach involving:
extensive guidance & training – so parties cannot say they were unable to understand the rules
careful monitoring of election campaigns, to provide intelligence against which to assess the reports that parties provide
detailed checks and cross-checks of all the information that parties provide in their reports
a range of administrative sanctions – so parties know that there will be consequences for failures to follow the law
partnership with police and prosecutors, to ensure that the most serious offences can be investigated and prosecuted by teams that understand the legal requirements

30. Thank you!