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The Government is preparing to allow more donors to go hidden from the public eye and massively increase parties’ spending limits at elections.
In an announcement snuck out just before Parliament went into recess for the summer, Levelling Up Secretary Michael Gove said the government would be increasing party spending limits at elections in line with inflation since 2009. In that time, prices have risen by 52% – suggesting a multi-million pound hike in what parties are able to spend during elections.
The government is also set to provide a similar increase in the amounts that people can donate to parties without having to identify themselves on the Electoral Commission website – with the minimum threshold for being published set to rise from £7,500 to over £11,000.
Michael Gove said: “It has been more than a decade since these thresholds were last uprated by the last Labour Government in 2009, following their introduction in 2000. If these limits are not uprated the effect is to cut the thresholds in real terms.”
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However, the government is refusing to increase the amount that so-called “third parties” can spend during elections in line with inflation – instead keeping the current limit frozen.
This effectively penalises groups like trade unions and charities who sometimes campaign on policy issues during elections. It could amount to a 34% real-terms cut since 2009.
The Electoral Commission is understood to be highly concerned about the changes, which are likely to come into effect as parties gear up for the next General Election – of which only the government knows the date.
Willie Sullivan, Senior Director of Campaigns for the Electoral Reform Society, said: “The public has a fundamental right to know who is giving money to politicians and potentially influencing their decisions.
“Yet this move could see more money coming into our politics without revealing who it is behind it. We need to be making donations more transparent, not less as too much dark money is already flowing into politics and this threatens to open the floodgates even wider.”
Donations over £500 have to come from so-called “permissible sources” – in other words, those on the electoral roll or companies which operate in the UK. This rate will remain the same, with parties needing to know the identity of the donor. However, donations under £11,300 are unlikely to be published by the Electoral Commission to the wider public, if the increase in the reporting threshold goes ahead.
The Electoral Commission is awaiting the full proposals from ministers to understand more about the changes the Government wants to implement. They will be keen to know why increasing spending limits for parties is necessary for voters and parties.
The official watchdog is worried that the changes will result in fewer donations being reported, which could have a detrimental impact on the transparency of political finance and on voters’ trust in the system.
Ministers recently rejected calls for an enhanced duty on parties to conduct due diligence checks and a risk assessment of donations to ensure they are not coming from foreign donors via proxies.
The Electoral Commission also wants to see the introduction of laws to ensure parties cannot accept money from companies that have not made enough money in the UK to fund their donation or loan
The Committee on Standards in Public Life has recommended addressing weaknesses in the transparency regime for “unincorporated associations” such as private members’ clubs, which do not tend to publish where their cash comes from. But the government has accepted less than half of the CSPL calls alongside two other recent transparency reports’ recommendations on lobbying.
Dr Susan Hawley, Executive Director of Spotlight on Corruption, told Byline Times Gove’s changes are the “wrong direction of travel at a time when trust in political financing and the integrity of democracy is at a historic low.”
“Many politicians across the political spectrum want tighter caps and stronger rules on transparency in election financing rather than looser ones. This seems to be a backdoor way of the government decreasing transparency and allowing more money into politics,” she added.
And Louise Edwards, Director of Regulation and Digital Transformation at the Electoral Commission, said that public confidence in the transparency of the political system has seen a steady decline over the past few years.
Research published at the start of this year shows that only 24% of people think our political finance system is transparent.
She warned: “Changes to the law need to strike a balance between transparency and proportionality. We have recommended for some time that the UK Government and Parliament consider with us how to address the gaps in the current political finance regime and the reforms we propose would be more effective in increasing transparency for voters.
“This includes introducing enhanced due diligence, similar to anti-money laundering requirements that are commonplace in many industries.”
She called for the “right laws” to be implemented so those accepting donations have the tools they need to make informed decisions about the identity of the donor and the source of their funding. “Without these reforms, our system will continue to lose voters’ confidence and be vulnerable to unlawful influence,” Edwards said.
Update: This piece was amended to correct a statistic (52% cut to 34% cut) on 25th July.
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