News 30th Nov 2020

Happy Anniversary PPERA!

Rose Whiffen

Research Officer

Rose is a Research Officer specialising in political corruption. Her work covers issues of money in politics, access to influence and lobbying accountability as well as open governance. She previously worked as a Project Officer for Transparency International UK's 'Promise to Practice' project, where she led on the global anti-corruption pledge tracker. Before joining Transparency International, she worked for Democracy Club and previously interned for Corruption Watch UK, a precursor to Spotlight on Corruption.

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Today marks the 20th anniversary of the Political Parties, Elections and Referendums Act 2000 (PPERA), which sets the UK’s rules on political contributions and how much can be spent on national election campaigns. It would be an understatement to say that electoral law was due for a refresh; two decades ago prior to PPERA, there had been no substantive reform since the Corrupt and Illegal Practices (Prevention) Act of 1883. Given the occasion, it seems opportune to reflect on the dramatic changes it made, what has happened since, and where there remains room for improvement.

 

Celebrate good times… of PPERA, 2000

PPERA was born out of a series of scandals afflicting both of the largest parties in Parliament. The cash for questions saga dogged the Conservatives during the mid-90s, whilst the 1997 Bernie Ecclestone affair rocked the incoming Labour administration. In response to the scandal and having promised to clean up the ‘sleaze’ of the previous Conservative government, Tony Blair instructed the Committee on Standards in Public Life (CSPL) to look into political party funding.

The Committee’s subsequent report heavily influenced the formation of PPERA, with almost all of the 100 recommendations included in the Act. It was a landmark piece of legislation, with many of the measures introduced now being so established that we take them as a given. Pre-PPERA, all of the following were legal:

  • Donations from foreign sources and allegedly rife.
  • Secretive donations – parties did not have to declare who gave them what money and when.
  • Unlimited national campaign spending at major elections.

To top it all off, there was no independent referee to oversee the conduct of political parties or other campaigners at elections.

PPERA changed all of this. Most foreign donations are now banned; large donations are published for public scrutiny; there is a level ceiling on how much political parties and others can spend at national polls; and there is a non-partisan body, the Electoral Commission, responsible for ensuring compliance with these rules.

 

Cha-Cha-Changes

However, just as the Bernie Eccelstone scandal brought political financing onto the agenda, so did a number that followed. The cash for honours scandal prompted the Government to introduce the Electoral Administration Act 2006, which sought to close the loophole that allowed loans to parties to go undeclared.

Fallout from cash for honours and increasing concern over the relationships between donors and political parties led Tony Blair to ask Sir Hayden Phillips to review the whole party funding system. This produced bold recommendations to take big money out of politics, such as a £50,000 cap on donations, and came close to securing cross-party consensus on a package of reforms in 2007, but just fell short.

Despite a lack of consensus over donation caps, the Government still sought some improvements through the Political Parties and Elections Act. This aimed to bring greater transparency over secretive donor clubs (called Unincorporated Associations), introduce new controls on spending by candidates before the dissolution of Parliament at general elections (the ‘long’ campaign), and award the Electoral Commission with new civil sanctions and investigatory powers for PPERA offences (prior to this, its sanctions and powers were limited).

Two years later, with concerns over the dominance of big donors in politics, the CSPL recommended a package of changes, echoing Sir Hayden Phillips’ proposals for donation caps. Yet the Deputy Prime Minister shot this down before the report’s publication.

Within two years of the 2011 CSPL report, calls for reform erupted again after a second ‘cash for questions’ affair. Government introduced a draft Bill before the 2013 summer recess, ostensibly to address these latest revelations. The Bill introduced the UK’s lobbying register, which was a step in the right direction towards transparency. However, critics argue that it does not cover the full extent of lobbying in the UK, with only around 4% of organisations who meet with the UK government on the register. The Bill also became mired in controversy after it became clear the Bill would have a ‘chilling effect’ on voluntary sector campaigning around election time, with little meaningful reforms for political parties themselves.

No substantive legislation has been forthcoming since this 2014 ‘gagging law’.

 

What do Slovakia and the UK have in common? Room for Improvement

Whilst attempts to clean-up money in politics have come a long way in the past twenty years, there are still major gaps.

The UK is one of only six other countries (Slovakia, Austria, Italy, Hungary and New Zealand) to have limits on spending for political parties but not on donations. Consequently, big money is still very much a part of our democracy, with donors able to contribute as much as they possibly want. This leads to some parties relying heavily on a small number of big financial backers, which leaves the door open to corruption.

Foreign actors are still able to seek influence in our democratic system by sponsoring our politicians on overseas trips and engaging them to lobby on their behalf. The recent suspension of Ian Paisley Junior MP makes a case in point, whilst our research shows this issue is more widespread than this one incident.

It is also still possible for money of unknown provenance to enter our political system through opaque company donations. To contribute to a political party, politician or other political campaign, companies only have to be registered and ‘carrying on business’ in the UK – a very low threshold that does not require contributions to come from actual profits made here. Whilst not new, this loophole came to prominence during the 2016 EU referendum.

Thankfully, the solutions are well-known, if not yet adopted.

Firstly, we need to end the dominance of big money in UK politics. Caps on donations, lower national spend limits, and greater transparency over the source of funds over £500 would go a long way to achieving this.

Second, we need to prevent foreign entities being able to influence our parliamentarians by more closely controlling and monitoring who pays for their overseas visits.

And thirdly, we need to shine a light on dark money in our political system. Companies should only be able to contribute to political parties if their donations come from genuine business activity.

It is an unfortunate fact that scandal often drives reform in politics – it was perhaps appropriate that the CSPL’s current review into political finance began shortly after the Westferry Printworks debacle. This reactive lurch from crisis to crisis does nothing for public confidence in our democracy. Our leaders now have over twenty years of hindsight to draw from. Let us hope they use it.