Read the tabloids and anyone would think corporate slush funds are rife around Westminster. Briefing takes a look at what the law says and finds there’s little room for brown paper envelopes any more.
What is the relevant legislation on political donations?
The Political Parties, Elections and Referendums Act 2000 provides the most up-to-date statement from the UK government on political donations. The Act outlines requirements on the disclosure of political donations and expenditure. Meanwhile, the Act also introduces new measures requiring prior shareholder opinion for any political expenditures.
What is a political donation?
A company is to be treated as giving money for political purposes if it gives a donation or subscription to any of the organisations regulated by the Electoral Commission. These include:
– political parties
– ‘registered third parties’ with a declared interest in campaigning in elections or referendums
– a range of party membership associations and holders of official offices defined as ‘regulated donees’
The legislation covers non-cash donations which must be given a cash value by the donor, but does not cover gifts valued at less than £200.
What are common non-cash donations?
Common examples of non-cash donations that must be valued include:
– the secondment of staff;
– the provision of office space at or other property at a discounted rate or for free;
– the provision of free travel/use of vehicles;
– discounted rates for printing election materials or other literature;
– the selling of tickets to companies for fundraising dinners, where the cost of the ticket costs more than the actual cost of ‘the plate’;
– a discount offered when purchasing new office equipment.
How do you value a donation?
A non-cash donation is made where property, services or facilities are provided other than on commercial terms for the use or benefit of the registered party or other regulated organisation or individual. It is the responsibility of the recipient of the donation to calculate the value of such non-cash donations. How the donation is valued will depend on the nature of the donation given.
What disclosure requirements apply?
In most cases it is up to the recipient to register each donation received with the Electoral Commission, which displays records of all political donations to the public via its website. During elections political parties have to submit a weekly donations report covering any contribution of more than £5,000 accepted by party headquarters, and any contribution of more than £1,000 accepted by local party organisations. Different thresholds apply for individuals and campaign groups. The exception is that where a company makes a large number of small donations (less than £200) adding up to certain thresholds, it is their responsibility to declare this.
Can companies make whatever donations they like?
Company law places the responsibility for all financial decisions ultimately on the board of directors, and their authority in acting for the good of the company is usually enough to justify a political donation. However for donations or political expenditure above £5,000 it is necessary to get the authorisation of shareholders at the company’s annual general meeting. Furthermore directors must make all donations above the £200 threshold known, by publishing a breakdown in the annual report showing the amount given and the name of the recipient.
Is there a cap on political donations?
The law does not set a limit for donations from individuals, companies or organisations. The 1998 Committee on Standards in Public Life, under Lord Neill of Bladen, recommended an annual cap of £5,000, but this was not adopted into law.
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