E-petition debate: rules for political donations

Political finance in the UK is regulated. Legislation sets out rules in two broad areas:

• who is allowed to donate money to candidates, political parties and other campaigners and how this must be reported
• how much can be spent during elections and referendums by candidates, political parties or other campaigners

The rules are principally contained in the Political Parties, Elections and Referendums Act 2000 (PPERA 2000) and the Representation of the People Act 1983 (RPA 1983).

The legislative background and the regulatory regime are complex and can be confusing. Many party workers are volunteers. Candidates from smaller parties and independents candidates, and smaller campaign groups can find compliance challenging because of the complexity.

What are the donations rules for?

The rules on donations are designed to prevent foreign money being given to political parties or being used for election and referendum campaigning. Donations can only be made by permissible donors, which are registered voters in the UK (including overseas voters) or UK-based organisations, such as companies or trade unions. The party or campaigner is responsible for checking permissibility.

Qualifying foreign citizens residing in Scotland and Wales are eligible to register to vote in local council elections and elections to the Scottish Parliament and Senedd Cymru. They are therefore permissible donors for those elections.

There are slightly different rules in Northern Ireland. Parties in Northern Ireland can also accept donations from voters and organisations in the Republic of Ireland.

The Library Insight, Foreign political donations in the UK, gives an overview of the debate about political donations.

What are spending limits for?

Spending limits help create a leveller playing field so one candidate or party cannot significantly outspend another during an election and ‘buy’ the election. Smaller candidates and parties, however, cannot always match the spending of larger parties so the playing field is rarely completely even.

Who regulates political finance?

The main regulator for political finance is the Electoral Commission. However, it does not regulate all aspects of political finance, and this also sometimes causes confusion. For example, campaign finance and spending for individual candidates is not regulated by the commission but is instead a matter for the police and prosecuting authorities.

The Electoral Commission also monitors public attitudes to elections. Confidence that elections are well run remains high but a third of respondents remained dissatisfied with the functioning of democracy in the UK. In 2024 only 15% of respondents thought spending and funding is transparent.

What has been proposed to change political finance rules?

The issue of political finance has gained more prominence since press speculation about a large donation from Elon Musk to Reform UK.

Committee on Standards in Public Life recommendations

The Committee on Standards in Public Life reviewed party and election finance most recently in July 2021. Its highlighted there remain potential areas of weakness, particularly with unincorporated associations. These are membership groups that can make political donations if they register with the Electoral Commission if they make political donations of more than £37,270. They are required to report any gifts they receive valued over £11,180 but they are not required to carry out the same level of checks on money they receive as political parties and other regulated entities.

The committee made recommendations on tightening rules to ensure foreign money does not enter British political finance and to clarify spending and donation rules. These have yet to be acted on.

The recommendations included:

• Extending permissibility checks to unincorporated associations
• Requiring that company donations should not exceed net profits after tax generated in the UK within the preceding two years
• Requiring all donations over £500 to be done through the banking system and requiring those regulated to have appropriate procedures in place to determine the true source of donations
• Clarify the law and improving guidance about when non-party campaigners become subject to PPERA 2000 controls
• Requiring more detail on campaign expenditure
• Decriminalising administrative offences in PPERA recognising that many involved in political finances are volunteers
• More alignment between the rules administered by the Electoral Commission and those currently covered by police and prosecuting authorities and increasing the investigatory powers of the commission

The then Conservative government responded to the Committee on Standards in Public Life report and said “rules that apply to political donations are already strong and based on the right principles”. It said it  would consider the recommendations saying, “further work must be done to consider the implications and practicalities”.

Other recommendations

The Electoral Commission has also recommended that the amount it can fine, a maximum of £20,000 for each breach of the rules, is too low. It says when some parties or campaigners can spend millions of pounds on campaigning, they could see a £20,000 fine as a cost it was willing to absorb.
The Committee on Standards in Public Life agrees and suggests the maximum fine should be 4% of a campaign’s total spend or £500,000, whichever is higher.

Other recommendations identified as a priority by the Electoral Commission mirror those made by the Committee on Standards in Public Life.

The All-Party Parliamentary Group (APPG) on Fair Elections published a report in November 2024. It also called for better regulation of unincorporated associations and company donations.

Government response

In its 2024 manifesto, the Labour Party said that it would “protect democracy by strengthening the rules on donations”. The Prime Minister’s spokesman has subsequently suggested that the government will “protect democracy from threats” of  foreign interference by strengthening the rules around donations to political parties”.

The Labour government has responded to the e-petition calling for tighter controls on political donations. It has said it does not think the rules are strong enough and that it was developing proposals after considering evidence from a range of stakeholders, including recommendations from parliamentary committees and the Electoral Commission.

In a recent debate on political finance the minister said:

We are considering a series of policy interventions, such as enhanced checks by recipients of donations and tighter controls on donors, including more restrictions around company donations.