Democratic deficit? The rules on election spending

Election law prevents political parties and individual candidates from spending more than specified amounts on campaigning—even if it’s their own money. Accounts and receipts must be produced to ensure compliance.

The restrictions that cover spending on individual candidates are different from the rules that apply to national campaign spending. A party treasurer could be fined or even imprisoned for giving false information. An MP convicted of breaking the rules on individual spending must leave parliament and cannot stand again for three years.

All this is meant to ensure that voting is fair. But election expenses law is “extremely complex”, according to a report last year from the government’s law reform advisers. Even experts get it wrong.

In March 2017 the Conservatives were fined £70,000 by the Electoral Commission for various breaches of the law on spending at the 2015 general election and by-elections the previous year. The Crown Prosecution Service announced in May 2017 that there would be no criminal charges.

What does the law say?

Much of the law can be found in two acts of parliament:

• Political Parties, Elections and Referendums Act 2000

This imposes restrictions on campaign spending by political parties.

The act also set up the Electoral Commission to regulate political funding and spending.

• Representation of the People Act 1983

This act updated long-standing restrictions on spending by individual candidates at elections. It consolidated legislation dating back a century or more—but made no mention of political parties.

Both acts have been amended by subsequent legislation.

Spending by political parties

At national level, the treasurer of a registered political party must report campaign expenditure to the Electoral Commission. Failure to do so is an offence, as is knowingly or recklessly making a false declaration of the expenditure. The treasurer is also under a duty to keep accounting records to “show and explain the party’s transactions”.

Campaign expenditure is broadly defined and normally covers spending in the year before a general election. The requirements also cover spending at a by-election.

At national level, a registered political party can spend £30,000 for each constituency that it contests at a general election. So a party fighting 650 seats could spend up to £19.5 million across the UK.

However, campaign expenditure does not include spending designed to enhance the prospects of an individual candidate.

Spending by individual candidates

At local level, election expenses include advertising, leaflets sent to voters, transport, public meetings, staff, and accommodation and administrative costs. There are exceptions for personal and basic expenses.

All spending must be channelled through a candidate’s agent, who must keep within prescribed limits and report the amount spent to the returning officer.

The maximum permitted local expenditure at a UK parliamentary by-election  is £100,000.

In a general election, the maximum a candidate can spend in the 25 days before polling day is much lower: roughly between £10,000 and £16,000, depending on the number of voters and whether it is a borough or county constituency.

Election agents are required to provide a statement of election spending no more than 35 days after the result is declared.

If more than the maximum has been spent, any candidate or election agent who incurred or authorised the expenses—and who knew or should have known of the breach—is guilty of an illegal practice.

A person found guilty of an illegal practice can be fined and disqualified from election to the House of Commons for three years. An MP found guilty of an illegal practice must stand down.

Where illegal practices committed to promote the election of a candidate have “so extensively prevailed that they may be reasonably supposed to have affected the result” of the election, that candidate’s election is void and the candidate cannot stand for re-election.

However, a court must grant relief to a candidate for an act or omission of the election agent if it was without the “sanction or connivance” of the candidate and the candidate took all reasonable steps to prevent it.

It may be difficult to establish that an MP should have known that local spending limits had been breached. Candidates normally leave such matters to their agents or party headquarters. So the chances of a Conservative MP being forced to stand down were seen as remote by some commentators.

What were the Conservatives accused of doing?

The Electoral Commission announced on 18 February 2016  that it was investigating whether the Conservative Party had met its reporting obligations in respect of the general election in 2015. Its investigation was focused on whether spending on hotels in South Thanet during the general election should or should not have been included in the party’s national return, an issue raised by Channel 4 News in January 2016.

On 1 March 2016, the commission announced that it was extending the scope of its investigations to cover spending at parliamentary by-elections in three constituencies: Newark, Clacton, and Rochester and Strood. Again, this followed allegations reported by Channel 4.

The party was accused of not declaring hotel bills for campaign staff working for its candidates. Including those bills would have taken total spending above £100,000 in each case. It was alleged that failure to include these bills is an illegal practice under the Representation of the People Act 1983.

The Conservatives were also accused of sending teams of volunteers into marginal seats in coaches branded as “battle buses”. It was alleged that they were campaigning for individual candidates rather than the party as a whole during the 10 days before the general election last year and that the costs of the buses should also have been included in the candidates’ returns.

The Conservatives said this was national expenditure and was included in its return to the Electoral Commission. However, the party said that, as the result of an administrative error, it had “omitted to declare the accommodation costs of those using the vehicles”. It promised to correct this.

What were the consequences?

In March 2017, the Electoral Commission concluded that the Conservatives had failed to keep accounting records of how staff time was allocated at the 2014 by-elections, reported 2015 spending on the battle bus and in the South Thanet constituency incorrectly, and left out some receipts. It fined the party £70,000 and reported the party treasurer to the police over evidence of a false declaration.

The commission has no power to investigate illegal practices relating to individual candidates. As it says, “decisions on the investigation and prosecution of these offences are a matter for the police and the C[rown] P[rosecution] S[ervice]; and allegations [of] non-compliance are for them to consider”.

So it co-ordinated its investigation of the national picture with those of various police forces looking into the local spending element. Officers passed 15 files to the CPS, which “considered whether candidates and election agents working in constituencies that were visited by the Party's 'Battle Bus' may have committed a criminal offence by not declaring related expenditure on their local returns”.

On 10 May 2017, the CPS announced that there would be no criminal charges in 14 out of the 15 cases, saying that “although there is evidence to suggest the returns may have been inaccurate, there is insufficient evidence to prove to the criminal standard that any candidate or agent was dishonest”.

It’s still considering the evidence in relation to South Thanet. This was the constituency in which the Conservatives defeated Nigel Farage in 2015.