Some countries, like Sweden, rely very heavily on public funding of political parties within their democratic system. In Sweden, political parties rely on the state for up to 90% of their national funding.
However, most countries have private funding of political parties by individual, groups and corporations at the heart of their party funding models. Generally, however, most countries have attempted to place some limits on party funding to encourage transparency and lessen the risk of cronyism. For example:
Germany – Any individual or organisation donating over 10,000 Euros has to have it publicly declared.
France – Donation are capped at 7,500 Euros per year and only French citizens or residents can contribute to a political party.
In the UK, private funding of political parties is regulated by the Political Parties, Elections and Referendums Act (2000). This Act of Parliament established the Electoral Commission as an independent monitor and auditor of the UK political system. Under the law, UK political parties are only able to accept donations above £500 from ‘permissible donors’. These include individuals on the electoral register, companies, trade unions or other similar organisations.
In addition, the law capped spending for General Elections by any political party to £30,000 per constituency.
To make the system more transparent, donations over £7,500 to any political party had to be declared publicly.
The idea behind these law was that if people were forced to declare their donations, they would be more likely to moderate them. This has not worked, prior to the 2019 General Election the biggest individual donors to each party were:
Conservatives – Peter Hargreaves (Banker) £1 Million Pounds
Labour – Unite (Trade Union) £3 Million Pounds
Liberal Democrats – Noel Hayden (Businessman) £100,00 Pounds
Although there are spending limits per constituency, there is no overall limit on spending for General Elections. This means that significant amounts can be spent on advertising, which is increasingly important on social media.
The argument for public financing of UK political parties has never advanced far. This is perhaps unsurprising. The two political parties that would benefit the least under this system, the Conservative and Labour, have been the two parties that have been in power for the last 97 years.
Yet, there is some form of public financing in the UK through the existence of Short Money and Cranborne Money. These are funds paid to opposition parties in the House of Commons and House of Lords to carry out their parliamentary roles. In essence, this money is designed to counteract the fact that the government had the enormous resources of the Civil Service at its disposal.
Short Money was introduced in 1974 and is named after the then Leader of the House of Commons, Edward Short.
It allocates money to opposition parties depending on both the number of seats they hold in parliament and the number of votes that they the received at the last General Election. Short Money is available to any party that:
- Secured at least two seats.
- Secured one seat, but also received more than 150,000 votes nationally.
The sums paid are reviewed regularly. Currently, payments are:
£18,044.80 for every seat won by a party at the last General Election.
£36.04 for every 200 votes gained by a party.
Almost £198,231 is also available travel for claim as opposition travel expenses. The amount available for each party is in proportion to the formula above.
The Leader of the Opposition is given £840,712.01 to run their office.
In total, the amount of Short Money awarded in 2019/2020 was:
Notably, Sinn Fein are missing from this list. Despite having won 7 seats and 181,853 votes at the 2019 election, Sinn Fein currently receive no Short Money. This is because Sinn Fein follow a policy of abstentionism and do not take their seats in Parliament. Since 2006, MPs who do not swear the Oath of Allegiance of the Queen (and therefore cannot take their seats) can not be given Short Money.
Cranborne Money (named after the former Leader of the House of Lords) was introduced in 1996. It is the Lords’ equivalent of Short Money. The sums of backbench money were set in 1996, but have risen in line with inflation. In March 2019, financial reports show that the following was given per year:
Labour (Official Opposition) – £614,917
Liberal Democrats (2nd Opposition Party) – £312,203
In addition to these amounts, the salaries of the Lords Leader of the Opposition and Opposition Chief Whip are also paid through public funds.
Both Short Money and Cranborne money are essential for the opposition parties in being able to carry out their functions in parliament. Although major parties like the Liberal Democrats and Labour are able to raise vast amounts of money, this money is required for the political campaigning. It is important to note that although General Elections may only happen every five years, there is a constant cycle of elections, normally every year, whether it be Local, National or, until recently, European. Therefore, Short Money is their main stream of funding for carrying out their parliamentary roles, including scrutinising the government.