August The 2004 European Parliamentary elections in the United Kingdom. Campaign spending

Transcription

1 August 2005 The 2004 European Parliamentary elections in the United Kingdom Campaign spending

2 Translations and other formats For information on obtaining this publication in another language or in a large-print or Braille version please contact The Electoral Commission: Tel: publications@electoralcommission.org.uk The Electoral Commission We are an independent body that was set up by the UK Parliament. Our mission is to foster public confidence and participation by promoting integrity, involvement and effectiveness in the democratic process. The 2004 European Parliamentary elections in the United Kingdom Campaign spending Copyright The Electoral Commission 2005 ISBN:

3 1 Contents Preface 3 Executive summary 5 1 Introduction 9 The Electoral Commission 9 Information and sources 10 Expenditure controls at European Parliamentary elections 10 Scope of the report 11 The role of The Electoral Commission 11 2 Campaign expenditure by political parties 13 Regulation of campaign expenditure 13 Gibraltar 14 Controls at the 1999 European Parliamentary elections 15 Controls at the 2004 European Parliamentary elections 15 Reviewing expenditure returns 19 Party campaign expenditure at the 2004 European Parliamentary elections Great Britain 21 Party campaign expenditure at the 2004 European Parliamentary elections Northern Ireland 26 3 Controlled expenditure by recognised third parties 29 Definition of controlled expenditure 29 Regulatory controls on recognised third parties 30 Third party campaigning at the 2004 European Parliamentary elections 31 4 Election expenditure by individual candidates 33 Controls at European Parliamentary elections 33 The 2004 campaign 37 Review of the returns 38 Understanding of legislative requirements 39 Great Britain 40 5 Conclusions 43 Future work programme 43 Appendices Appendix A 45 List of parties that contested the 2004 European Parliamentary elections in Great Britain List of parties that contested the 2004 European Parliamentary elections in Northern Ireland Appendix B 46 Categories of campaign expenditure Appendix C 48 Returns of party campaign expenditure Appendix D 81 List of recognised third parties campaigning at the 2004 European Parliamentary elections and returns of controlled expenditure Appendix E 85 Returns of candidates election expenditure

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5 3 Preface In 2004 we saw the first elections to the European Parliament to be regulated by the Political Parties, Elections and Referendums Act 2000 (PPERA) and monitored by The Electoral Commission. It is pleasing to see that after three years of working within the legislation, the larger parties continued to improve their compliance with the law. However, the Commission still has a lot of work to complete in assisting new and smaller parties to understand the application of the law. These elections were the first national elections to be contested where the controls imposed by PPERA applied throughout the regulated period. The UK Parliamentary general election held in 2001 had a shorter regulated period as the new controls introduced came into force only a few months before the poll. This report supports the experience of the Commission, which is that even though some parties find working under the controls introduced by PPERA difficult, they continue to strive to comply with the legislation. The continued publication of the reports on spending at major elections provides further insights into political campaigning. The Commission, maintaining close contact with stakeholders, is working to provide well-focused support and guidance to those facing the challenge of operating in the new era of openness and transparency. Sam Younger Chairman, The Electoral Commission The 2004 European Parliamentary elections in the United Kingdom: preface

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7 5 Executive summary This report, the second published by The Electoral Commission on the 2004 European Parliamentary elections, provides information about campaign expenditure incurred for the European Parliamentary elections. It details the amount of expenditure political and third parties and individual candidates reported incurring during the regulated campaign period for the elections. It also gives an overview of the operation of the regulatory framework for campaign expenditure. The Electoral Commission s first report on the elections, published in December 2004, reported on the combined 2004 European Parliamentary and local government elections. In line with the Commission s statutory duty to report on the administration of European Parliamentary elections, 1 that report reviewed the conduct of the campaign and the administration of the elections. Spending by political parties The 2004 election was the first in which parties contesting a European Parliamentary election had to comply with the regulatory framework introduced by the Political Parties, Elections and Referendums Act 2000 (PPERA). The UK was divided into 12 for the European Parliamentary elections. Scotland, Wales and Northern Ireland were each one constituency for European Parliamentary purposes with nine regions in England comprising the remainder. The amount that a party could spend on its campaign depended on the number of Members of the European Parliament (MEPs) to be returned for the regions the party contested. No party contested all 12 regions in the UK, although five parties contested all 11 regions in Great Britain. Two parties contested all the regions in England and Wales and no remaining party contested more than five regions. Gibraltar was enfranchised for European Parliamentary elections for the first time, as part of the South West region. Different voting systems were used in Great Britain and Northern Ireland. In England, Scotland, and Wales, MEPs were elected under the closed list system, meaning that candidates did not incur 1 PPERA Section 5. The 2004 European Parliamentary elections in the United Kingdom: executive summary

8 6 individual campaign expenditure, while in Northern Ireland the single transferable vote system (STV) was used. The controls and limits on campaign expenditure in Northern Ireland were therefore different to those in Great Britain. The Commission s review of the returns submitted after the elections indicated that the guidance the Commission issued in advance of the election on the treatment of campaign expenditure, together with the experience that a number of parties had gained contesting elections to the devolved legislatures in 2003, contributed to an overall improvement in the level of compliance with controls and the quality of the statutory returns submitted to the Commission. A total of 32 political parties contested the European Parliamentary elections in the UK, 26 contesting one or more of the 11 regions in Great Britain and six contesting Northern Ireland. All parties submitted returns of campaign expenditure to the Commission; the total reported spend was 9,642,800 ( 9,600,368 in Great Britain and 42,432 in Northern Ireland). All parties spent within their campaign expenditure limits. Twenty-seven parties reported expenditure under 250,000. The five parties that contested all 11 regions in Great Britain incurred a total of 8,616,918 campaign expenditure, which represented 90% of the total spend in Great Britain. Candidates, rather than parties, incurred the majority of campaign expenditure in Northern Ireland. Only two parties reported any party campaign expenditure, totalling 42,432. The seven parties that were successful at the elections in Great Britain incurred a total of 8,922,617 expenditure on their campaigns. The largest single category of spending, comprising 45% of the total, was on unsolicited materials to electors, with a significant amount, 29%, spent on advertising. Spending by third parties The 2004 European Parliamentary elections were the first where spending by third parties was controlled. A third party not registered with the Commission as a recognised third party was limited in the amount of controlled expenditure it could incur: the limits were 10,000 in England and 5,000 in each of Scotland, Wales and Northern Ireland. A recognised third party had a higher expenditure limit. 2 Recognised third parties fall under the regulatory system of PPERA, including controls on donations received to fund spending on election material. Three recognised third parties submitted returns of controlled expenditure in respect of the European Parliamentary elections, reporting a total of 309,401. Spending by candidates In Great Britain, a closed list system was used for the election of MEPs; in Northern Ireland, MEPs were elected under STV. In Great Britain therefore, controls on candidates election expenditure only applied to individual candidates. 3 However in 2 PPERA Schedule 10: Limit for England 159,750; for Scotland 18,000; for Wales 11,259; and for Northern Ireland 6, An individual candidate is an independent candidate or one standing without a description against their name on the ballot paper. The 2004 European Parliamentary elections in the United Kingdom: executive summary

9 7 Northern Ireland both parties and their candidates incurred campaign expenditure. The nine individual candidates contesting seats in Great Britain reported total expenditure of 49,472. The seven candidates contesting seats in Northern Ireland reported total expenditure of 605,995. The 2004 European Parliamentary elections in the United Kingdom: executive summary

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11 9 1 Introduction The Electoral Commission has a statutory duty to report on elections. 4 In December 2004 it published its report on the conduct of the European Parliamentary elections held in the UK on 10 June This second report provides details of the campaign expenditure incurred by political parties, third parties and candidates in relation to those elections. 4 Section 5 of PPERA. The Electoral Commission 1.1 The Electoral Commission is a UK-wide independent body established on 30 November 2000 under Section 1 of the Political Parties, Elections and Referendums Act 2000 (PPERA). The Commission is independent of the Government and political parties and is directly accountable to the UK Parliament through a committee chaired by the Speaker of the House of Commons. The Commission is headed by a Chairman and four other Commissioners, none of whom has connections with any political party. It is responsible for: registering political parties; monitoring and publishing significant donations to parties; regulating spending by parties on election campaigns; reporting on the conduct of elections and referendums; reviewing electoral law and procedures, and advising the Government on changes; advising those involved on the conduct of elections and referendums; promoting public awareness of UK electoral systems; and reviewing electoral boundaries. 1.2 The Commission s mission is to foster public confidence and participation in the democratic process in the UK. We aim to promote integrity, involvement and effectiveness in the democratic process. Seeking and achieving the right balance among these three aims which are The 2004 European Parliamentary elections in the United Kingdom: introduction

12 10 inter-related is an important challenge for all who believe in a vibrant and healthy democracy. We aim to reflect this in our corporate planning and in the implementation of our work programme. 1.3 We aim to place the interests of voters at the centre of our considerations in all our work, but we also need to consider the political parties and candidates standing for election and those who administer the electoral process. We believe that it is in the interest of voters that electoral arrangements enable elections to be conducted effectively and efficiently. They should also provide the right opportunities for political parties and candidates to engage with the electorate. 1.4 We take pride in our independence. We are passionate about the quality of our work. We are open and honest about what we do. We respect stakeholders and each other. We value equality and diversity in everything we do. We believe it is important to listen and work with others. 1.5 The Commission has a statutory duty to report on elections to the UK Parliament, the European Parliament, the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly. Unlike other electoral commissions outside the UK, the Commission does not have a responsibility for maintaining and updating electoral rolls, employing electoral services staff or conducting elections. 1.6 While the Commission s main office is located in London, it has three other offices: one each in Scotland, Wales and Northern Ireland. The three devolved offices are responsible for ensuring that Scotland, Wales and Northern Ireland are fully represented in the work of the Commission. Information and sources 1.7 This report has been informed by a number of sources, which include the political parties campaign expenditure returns, recognised third parties controlled expenditure returns, candidates election expenditure returns and previous reports published by the Commission relating to campaign expenditure and policy reviews. Expenditure controls at European Parliamentary elections throughout the UK 1.8 A different voting system was used in Northern Ireland than in England, Scotland and Wales. Controls on expenditure incurred by parties and candidates therefore applied differently in Northern Ireland than in the rest of the UK. 1.9 The single transferable vote system (STV) was used to elect MEPs in Northern Ireland, while in the rest of the UK a closed list system operated. A vote under the closed list system is in effect a vote for a registered party or an individual candidate, 5 rather than a named party candidate. As such, party list candidates did not have individual expenditure limits and all expenditure incurred on promoting the party or the party list was subject to the controls and limits applied to party campaign expenditure under PPERA. 5 An individual candidate is an independent candidate or one standing without a description against their name on the ballot paper. The 2004 European Parliamentary elections in the United Kingdom: introduction

13 Because of the small number of MEPs to be elected from Northern Ireland, no party put forward more than one candidate; under STV, voters indicated their order of preference for the candidates. 6 Expenditure could be incurred on the promotion of a specific candidate and as such candidates standing for election in the name of a registered party in Northern Ireland were subject to limits on and controls over their election expenditure. Parties could also incur expenditure on promoting the party at the election, which was subject to the limits and controls imposed by PPERA. Scope of the report 1.11 This report is divided into three main sections. The first two deal with the expenditure incurred by political and third parties and the third focuses on expenditure by individual candidates Each section outlines the legislative requirements regulating campaign finances and describes the patterns of campaign spending. The report also deals with related issues that arose during the campaign, as the Commission undertook its statutory role in providing advice and guidance to stakeholders. 7 Finally, the report draws on the Commission s work in undertaking its responsibility to monitor compliance with the controls on campaign and candidate spending and donations accepted by candidates and third parties. 8 6 Section 3(a) of the European Parliamentary Elections Act Section 10 of PPERA. 8 Section 145 of PPERA. The role of The Electoral Commission 1.13 PPERA gives the Commission the statutory duty of monitoring compliance with: Parts V and VI of PPERA which deal with campaign spending by registered political parties and third parties; and the restrictions and other requirements imposed by relevant enactments in respect of candidates election expenses and donations The first election at which the Commission undertook this monitoring role was the 2001 UK Parliamentary general election. 9,10 Following that election, party campaign expenditure reports were submitted to the Commission and copies of candidates election expenses returns submitted to Returning Officers were forwarded to the Commission. The Commission completed a review programme that examined the extent to which parties complied with the law. Through an analysis of the candidates returns, the Commission identified a number of candidates who had failed to submit expenditure returns or had spent in excess of the statutory maximum permitted limits In 2002 the Commission established a dedicated candidates compliance team, which enabled a full review programme to be completed to assess the compliance with the regulatory controls of all individual candidates who contested the devolved elections; the review programme was developed for the devolved elections in Scotland, Wales and Northern Ireland. 9 Hereafter referred to as a general election. 10 Controls on donations to candidates were not in force at the time of the 2001 general election; they came into force on 1 July The 2004 European Parliamentary elections in the United Kingdom: introduction

14 The Commission s compliance focus has in the past been primarily concerned with raising awareness amongst parties and candidates to ensure they fully understand the legislative requirements to which they are subject. At the 2004 European Parliamentary elections, the focus of compliance reviews moved more to securing compliance with legislative controls and providing advice on best practice to political and third parties, and candidates standing at elections. The 2004 European Parliamentary elections in the United Kingdom: introduction

15 2 Campaign expenditure by political parties 13 The 2004 European Parliamentary elections were the first contested under the regulatory framework introduced by the Political Parties, Elections and Referendums Act 2000 (PPERA) and saw 32 parties incur a total campaign expenditure of 9,642,800 across the UK. Regulation of campaign expenditure 2.1 The electoral system in place determines how the expenditure at that election is regulated. At elections to the UK Parliament, all candidates are subject to an individual expenditure limit and controls on that expenditure. Additionally, parties that contest the election are subject to campaign expenditure limits determined by the number of constituencies they contest in each of Scotland, England, Wales and Northern Ireland, and controls on their expenditure. 2.2 However at European Parliamentary elections, a closed list voting system is used in the regions of England, and in Scotland and Wales. Unlike the first past the post system in use at general elections, the closed list system allows voters to cast a single vote for a party (rather than a particular named party candidate), or a vote for an individual candidate. 11 Seats are then awarded proportionally, according to the number of votes cast for each party or individual candidate. 2.3 To reflect the fact that under the closed list system, votes are cast for a party or individual candidate rather than particular named party candidates, party candidates were not subject to individual expenditure limits. Party campaign expenditure therefore consisted of two elements: national campaign expenditure and expenditure incurred in promoting party list candidates on a regional basis. 2.4 In Northern Ireland the single transferable vote system (STV) was used. Electors indicated 11 An individual candidate is an independent candidate or one standing without a description against their name on the ballot paper. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

16 14 their preferences amongst candidates who had individual candidates election expense limits and who were required to submit returns. Parties that campaigned in Northern Ireland also had a party campaign expenditure limit. Gibraltar 2.5 The European Parliament (Representation) Act 2000 provided for Gibraltar to be enfranchised for elections to the European Parliament. 2.6 Gibraltar had fewer than 20,000 electors and was not a separate electoral region. Under the procedure set out in the Act, the Commission was asked to identify an existing European Parliamentary electoral region in England or Wales with which Gibraltar could be combined. After consultation, the Commission recommended that Gibraltar should be combined with the South West region. This recommendation was approved by Parliament and came into force in February The effect of the combination of Gibraltar with the South West region for parties contesting the election was in fact minimal, despite some apprehension, particularly about voter confusion. Parties that intended to contest the combined region had to submit a statement of intent to that effect to the Commission. This statement of intent enabled parties to accept funds from permissible Gibraltarian donors. Gibraltarian parties, i.e. those that are established in Gibraltar and that made a statement of intent to contest the 12 The European Parliamentary Elections (Combined Region and Campaign Expenditure)(United Kingdom and Gibraltar) Order European Parliamentary elections, were able to accept donations from Gibraltarian permissible donors at any time. British parties that made such a statement were only able to accept donations from permissible Gibraltarian donors during the regulated period for the European Parliamentary elections. Additionally, donations that British parties intending to contest the combined region were allowed to accept were limited to 315,000, the same as the campaign expenditure limit for the South West region; donations accepted in excess of this limit would have been deemed to be impermissible and would have had to be returned. The controls and limits on campaign expenditure were not affected in the combined region. A party registered in Great Britain could contest the South West of England region without a statement of intent but this meant that they could not accept donations from Gibraltarian sources. 2.8 Neither the Labour Party nor any Gibraltarian party submitted a statement of intent to accept otherwise impermissible donations while contesting the combined region. A total of eight British parties submitted a statement of intent to contest the combined region: Common Good; Conservative and Unionist Party; Green Party; Liberal Democrats; Operation Christian Vote; Pensioners Party; Radical Party of Great Britain; and United Kingdom Independence Party. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

17 15 None of the parties that submitted statements reported accepting any donations from Gibraltarian donors. Controls at the 1999 European Parliamentary elections 2.9 At the 1999 elections, the expenditure of individual candidates and political parties was subject to controls under the European Parliamentary Elections Regulations The 1999 Order imposed a limit for each party or individual candidate contesting a region of 45,000 multiplied by the number of MEPs to be elected from that region. A political party s total limit was the sum of the limits for all regions it contested. There were also controls placed on: who could make payments on behalf of political parties and individual candidates; the time allowed for receiving claims for and making payments to meet election expenses; and the deadline for submission of a return of campaign expenditure (this had to be within 50 days of the date of the election). Controls at the 2004 European Parliamentary elections 2.11 By the time of the 2004 elections, PPERA had introduced campaign expenditure limits and controls to regulate expenditure incurred by political parties at relevant elections throughout the UK, including European Parliamentary elections. The European Parliamentary Elections Regulations 2004, introduced in advance of the election, were therefore amended to apply only to individual candidates (apart from the requirement for candidates on a party s list to submit returns of the amount of personal expenses they incurred). Definition of campaign expenditure 2.12 Under PPERA, campaign expenditure is defined as expenditure incurred on any of the items below in order to promote electoral success for the party: party election broadcasts; advertising; unsolicited material to electors; manifestos and other documents; market research; press conferences and dealings with the media; transport; and rallies and other events The Commission advised parties that, in its view, the definition of campaign expenditure includes the cost of overheads and administrative costs that could be attributed to the list of items above. The parties agreed with the Commission s position and these costs were included in their campaign expenditure returns By law, the definition of campaign expenditure also includes notional expenditure. Notional expenditure is incurred when any goods, services, property or facilities are provided to a party free of charge, or at a discount of more than 10% from ordinary commercial terms, for the purpose of the party s election campaign. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

18 16 Incurring campaign expenditure 2.15 Campaign expenditure can be incurred only by certain registered party officers, 13 or by individuals authorised by them. The registered treasurer of a party is legally responsible for managing the party s campaign expenditure, unless a campaigns officer has been appointed. Where a campaigns officer has been appointed, that person is responsible for managing campaign expenditure. 14 The registered party treasurer, or, if one has been appointed, the campaigns officer, can appoint up to 12 deputies who are also authorised to incur campaign expenditure to help them manage the party s campaign. In addition, anyone authorised in writing by the treasurer or one of their deputies can also incur campaign expenditure up to an authorised sum. Paying campaign expenditure 2.16 There are also controls on paying claims for campaign expenditure. Claims for payment of campaign expenditure can be made only by the registered party treasurer, one of their deputies, or by a person authorised in writing by the treasurer or a deputy officer. Such claims must be paid within specified time periods. It is a legal requirement that all claims for payment of campaign expenditure are received no later than 21 days after the date of the election; and also that such claims are paid within 42 days of the date of the election Claims received later than 21 days after the election, unpaid claims, 15 can be paid only where a court order giving leave to pay the claim has been granted. Claims received within 21 days that are not paid within the 42-day period are referred to as disputed claims. 16 Disputed claims can be paid after the relevant time period only if a court gives leave to pay the claim. Details of such payments must be included in the party s campaign expenditure return, or otherwise submitted to the Commission within seven days of the date on which the payment was made if the return has already been submitted. Campaign expenditure limits 2.18 PPERA dictates that parties can incur campaign expenditure up to certain limits. For the 2004 European Parliamentary elections, these limits were determined by multiplying 45,000 by the numbers of MEPs to be returned in those regions contested by the party in each of England, Scotland, Wales and Northern Ireland. Table 1 provides details of the number of MEPs returned from each region of the UK, together with the expenditure limit for that region. A party that contested all the regions in Great Britain would have a campaign expenditure limit of 3,375,000m. 13 Section 75 of PPERA. 14 References to the treasurer or deputy treasurer in this document are references to the party campaigns officer or deputy campaigns officer if one has been appointed. 15 Section 77 of PPERA. 16 Section 78 of PPERA. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

19 17 Table 1: Regional campaign expenditure limits at the 2004 European Parliamentary elections Region Number Expenof MEPs diture to be limit returned ( ) Scotland 7 315,000 Wales 4 180,000 Eastern 7 315,000 East Midlands 6 270,000 London 9 405,000 North East 3 135,000 North West 9 405,000 South East ,000 South West 7 315,000 West Midlands 7 315,000 Yorkshire & the Humber 6 270,000 Total (Great Britain) 75 3,375,000 Northern Ireland 3 135, Limits applied to the campaign expenditure incurred by parties during the regulated period prior to the election. The regulated period for European Parliamentary elections is four months ending with the date of the poll; the regulated period for the 2004 election therefore ran from 11 February to 10 June Expenditure incurred before the start of the regulated period on goods and services used for the purposes of the campaign during the regulated period was also counted against the party s campaign expenditure limit. Reporting campaign expenditure 2.20 Following the election, parties were required to submit a return detailing the campaign expenditure they had incurred. The following details were required: all payments made in relation to campaign expenditure; all notional expenditure incurred; and any unpaid or disputed claims relating to the campaign The return also had to be accompanied by a declaration by the registered party treasurer stating that, to the best of their knowledge, the return was complete and correct and that all expenditure had been incurred by individuals authorised to do so Returns and declarations had to be submitted to the Commission within three months of the date of the election, or within six months if the campaign expenditure incurred was more than 250, Campaign expenditure returns reporting expenditure of more than 250,000 were required to be accompanied by a report prepared by an independent qualified auditor stating that the summary of expenditure return was a true and fair representation of the expenditure incurred by the party. Non-compliance with the controls 2.24 PPERA specifies a number of offences in relation to the campaign expenditure controls on parties. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

20 Issues of non-compliance identified through the Commission s review programme were dealt with according to the Commission s formal processes and procedures. This involved Commission staff meeting with the party concerned to discuss the findings of the Commission s review of the party s submitted return, and, where necessary, agreeing corrective action. The 2004 campaign 2.26 Parties contesting the 2004 European Parliamentary elections faced challenges that they had not previously experienced. These were the first elections in Great Britain operated solely under a closed list system since the introduction of PPERA, and in parts of the country the European Parliamentary elections took place on the same day as local government elections. In London the election was also combined with elections for both the Greater London Assembly and the Mayor of London As the election approached, the Commission received a number of queries regarding the treatment of expenditure. Parties particularly asked how to account for expenditure incurred promoting party list candidates The majority of queries relating to party list expenditure were concerned with whether or not candidates on a party list were subject to their own expenditure limits or whether spending on their campaigns was the responsibility of the party. The Commission advised that party list candidates were not subject to an individual campaign expenditure limit and that all expenditure incurred in promoting party list candidates counted against the party s campaign expenditure limit The Commission was also asked how to treat expenditure incurred promoting the party, rather than specific candidates, at local government elections. This question and other matters were addressed in the Commission s guidance document, Campaign Expenditure: Guidance for political parties (February 2004). This advised that expenditure incurred by a party promoting itself at local government elections during the regulated period for the European Parliamentary election also had to be reported as part of its campaign expenditure and counted against its campaign expenditure limit The Commission s guidance document was issued prior to the start of the regulated period to help parties prepare for and manage their election campaign spending. The document had first been issued after the Commission s review of the campaign expenditure returns submitted by parties that contested the 2001 general election, and provided advice on the provisions of the legislation and examples of best practice. It had subsequently been revised in consultation with political parties and reissued to take into consideration issues noted and lessons learnt following other elections Additionally, in order to help parties with the legislative requirements for the European Parliamentary elections, the Commission ran a series of presentations to parties across the UK. For the first time the Commission also issued its guidance to parties in the form of a CD-ROM information pack for candidates, agents and political parties. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

21 19 Reviewing expenditure returns 2.32 The Commission s review of the campaign expenditure returns not only provided a level of assurance that parties were complying with the law, it also aimed to help parties address any weaknesses in their corporate governance framework Understanding and complying with the controls at the European Parliamentary elections was a demanding task for some parties; they had to correctly record, apportion and report expenditure relating to the European Parliamentary, London Mayoral, GLA and local government elections, each with different electoral systems and different systems of regulation, and all held on the same day For parties that had previously contested the 2001 general election and the 2003 devolved elections in Scotland, Wales and Northern Ireland, the 2004 European Parliamentary elections would have been the third or fourth election that they had contested under the regulatory framework introduced by PPERA. These parties were experienced in dealing with the controls on incurring and reporting expenditure, and this was identified in the findings of the Commission s review of their campaign expenditure returns Prior to the election a number of political parties made changes to registered and key appointment holders, which resulted in the loss of detailed knowledge in these organisations regarding the application of the law. The loss of this knowledge and experience meant that issues that had previously been discussed and agreed with parties recurred. To secure parties compliance with the law, the Commission is working closely with the relevant staff in these parties to assist them to build up their level of knowledge and experience regarding the application of PPERA As well as reviewing campaign expenditure, Commission staff also undertook more detailed reviews, including meeting with those parties that reported campaign expenditure in excess of 5,000, to establish how they managed their campaigns, how their expenditure returns were compiled, and to discuss any issues arising from the Commission s review of their returns. As a result, some adjustments to the reported expenditure were agreed with parties; these are reflected in the returns in Appendix C Overall, the compliance reviews demonstrated an improvement in the quality and accuracy of the returns compared to those submitted in 2001 and A few areas remain, which are discussed below, that continue to cause issues for parties; these have been raised with the parties as part of the Commission s review process to ensure future compliance with the law Finally, the Commission continued to work with parties on improving the quality of statutory returns submitted to the Commission by providing training for parties and issuing an updated CD-ROM information pack for political parties, agents and candidates for the 2005 elections. This took into consideration the feedback received from parties and other stakeholders on the 2004 version. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

22 20 Submission of returns 2.39 Parties that incurred less than 250,000 of campaign expenditure had to submit their returns to the Commission within three months of the date of the election, i.e. by 9 September Parties that spent more than 250,000 were required to submit with their campaign expenditure return a report prepared by an independent qualified auditor stating that the summary of expenditure return was a true and fair representation of the expenditure incurred by the party. These parties had a further three months to submit their returns, with a due date of 9 December Twenty-seven of the parties reported incurring campaign expenditure less than 250,000, and 19 submitted their returns within the prescribed timescale. Of the five parties that reported spending more than 250,000 only one party failed to meet the six-month deadline Of the eight parties that reported campaign expenditure of less than 250,000 late, three parties submitted their returns within one month of the due date; one party within two months; two within three months; and two within four months. The two parties that contested Northern Ireland and submitted their returns after the deadline stated that they were unaware that there was a requirement to submit a party campaign expenditure return, whether or not expenses had actually been incurred at the party level, when they had already submitted returns for candidates expenditure None of the parties that submitted a late return in this election had committed the same breach previously. The failure of the parties to comply with the statutory requirement to submit returns by the due deadline has therefore been discussed with the relevant parties at the Commission s review meeting. In line with the Commission s policy the parties have been reminded of their reporting obligations and have been advised that the Commissioners may take action in case of a repetition of the same breach The majority of registered treasurers work for parties on a voluntary basis and meeting the statutory deadlines proved to be difficult for them. The Commission, in its review of the returns and subsequent meetings with the parties, endeavoured to assist parties to comply with the legislative requirements as much as possible, by giving advice and guidance not only on the controls, but also best practice and systems for achieving compliance. Reporting of expenditure 2.44 The majority of the returns did not require any adjustments following the Commission s review. Those that did require amendment faced similar issues Parties were required to submit, with their return, copies of invoices for each item of reported expenditure valued at more than 200. A comparison between these invoices and reported expenditure identified errors in three returns that resulted in these returns being adjusted. A further five parties failed to include copies of all the required invoices, although the expenditure had been correctly reported Furthermore, PPERA excludes the cost of full time staff directly employed by a party to work on an election campaign. Some parties included these costs. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

23 Despite some parties having submitted a number of campaign returns, some are still finding it difficult to deal with the reporting of notional expenditure. This led to a number of errors being made on the returns, including: reporting notional expenditure as actual payments and vice versa; reporting the cost of additional overheads incurred due to campaign activity as notional expenditure rather than actual payments; notional expenditure correctly included in the summary of payments reported but with no breakdown of expenditure across categories; notional expenditure being omitted from the return; and inclusion of items of notional expenditure of less than 200 in value (only notional expenditure of more than 200 need be reported) Other adjustments that had to be made to parties returns related to incomplete sections and minor arithmetical errors. One party that stood in Northern Ireland included its candidate s expenditure in its party campaign expenditure return. Authorisation of expenditure 2.49 Campaign expenditure may be incurred and paid for only by the registered party treasurer, one of their deputies, or a person authorised in writing by the treasurer or a deputy treasurer. A number of the smaller parties and those new to this requirement failed to understand this fully, which resulted in some expenditure not being correctly authorised at the point of it being incurred and paid for. Payment of expenditure 2.50 Claims for campaign expenditure had to be received within 21 days of the date of the poll and paid within a further 21 days. Parties that received claims for payment after the 21-day period, or which needed to pay expenditure after the 42-day period, needed to apply to the court for an Order to be able to pay the claims. Late claims and late payments have caused problems for a number of parties in previous elections. The ability to identify and track campaign expenditure on a national scale is a demanding task; however, it appears that parties are now understanding this requirement and only two parties received and paid claims for campaign expenditure after the statutory deadlines without seeking the necessary court Order. These failures have been brought to the attention of the responsible officers to ensure that they are not repeated. Party campaign expenditure at the 2004 European Parliamentary elections Great Britain 2.51 Twenty-six parties contested seats at the 2004 European Parliamentary elections in England, Scotland and Wales, and submitted campaign expenditure returns to the Commission reporting total campaign expenditure of 9,600,368. The returns reported the expenditure of a diverse group of parties, from those that contested every seat in Great Britain, to those standing in just one region The permitted expenditure for each party was limited to 45,000 multiplied by the total number of MEPs to be returned in all regions the party contested. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

24 Table 2 summarises the parties campaign expenditure limits together with the total of agreed campaign expenditure incurred. Table 2: Campaign expenditure incurred as a proportion of the party s expenditure limit for parties contesting one or more regions in Great Britain Party (by area/s contested) Total Expenditure Expenditure Expenditure expenditure incurred ( ) as % as % of total limit ( ) of limit expenditure incurred by all parties All of Great Britain Conservative and Unionist Party 3,375,000 3,130, United Kingdom Independence Party 3,375,000 2,361, Labour Party 3,375,000 1,707, Liberal Democrats 3,375,000 1,188, British National Party 3,375, , Wales and all regions in England Green Party 3,060, , Respect The Unity Coalition 3,060, , English regions English Democrats Party 1,845,000 61, Alliance for Green Socialism 270,000 12, Countryside Party 720,000 12, Common Good 315,000 10, Christian Peoples Alliance 855,000 7, ProLife 1,170,000 4, Senior Citizens Party 450,000 4, Peace Party Non-Violence, Justice, Environment 450,000 4, Liberal Party 405,000 2, Pensioners Party 315,000 1, Peoples Party for Better Government 405, The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

25 23 Table 2 (continued): Campaign expenditure incurred as a proportion of the party s expenditure limit for parties contesting one or more regions in Great Britain Party (by area/s contested) Total Expenditure Expenditure Expenditure expenditure incurred ( ) as % as % of total limit ( ) of limit expenditure incurred by all parties Scotland Scottish National Party 315,000 93, Scottish Green Party 315,000 27, Scottish Socialist Party 315,000 22, Scottish Wind Watch 315,000 9, Operation Christian Vote 315,000 8, Wales Plaid Cymru Party of Wales 180,000 37, Forward Wales 180,000 19, Christian Democratic Party 180,000 1, Total 9,600, The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

26 Returns 1 26 in Appendix C show the information contained in the campaign expenditure returns submitted to the Commission by each party that contested the election in Great Britain. In some cases the original figures reported by the party have been amended, by agreement with the relevant party, following the compliance process. Where amendments have been made to the figures, the return shown includes both the original reported figures and the agreed amended figures Two parties (The Green Party and Respect The Unity Coalition) contested all the regions in England and Wales. Spending patterns by party 2.55 Table 2 provides information on the spending of each party in Great Britain as a proportion of their expenditure limit Five parties accounted for almost 90% of the total campaign expenditure incurred by all parties contesting seats in Great Britain at the election. The spending by these parties across England, Scotland and Wales is shown in Table 3. Table 3: Actual campaign expenditure incurred across Great Britain Expenditure ( ) Party England Scotland Wales Great Britain (total) Conservative and Unionist Party 2,716, , ,583 3,130,266 United Kingdom Independence Party 2,124, ,577 88,444 2,361,754 Labour Party 1,358, , ,786 1,707,224 Liberal Democrats 1,098,916 57,964 31,981 1,188,861 British National Party 197,099 19,280 12, ,813 Total 7,496, , ,228 8,616,918 The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

27 25 Spending patterns by category 2.58 For each of the seven parties that had MEPs elected, Table 4 provides the proportion of expenditure incurred on each category of reported campaign expenditure. Table 4: Percentage of campaign expenditure incurred by category by parties with elected MEPs Conserv- Labour Liberal United Green Scottish Plaid All ative and Party Demo- Kingdom Party National Cymru seven Unionist crats Indepe- Party Party parties Party ndence of Wales Party (%) (%) (%) (%) (%) (%) (%) (%) A. Party political broadcasts B. Advertising C. Unsolicited material to electors D. Manifesto/ party policy documents E. Market research/ canvassing F. Media G. Transport H. Rallies and other events I. Overheads and general administration The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

28 26 Party campaign expenditure at the 2004 European Parliamentary elections Northern Ireland Controls at European Parliamentary elections 2.59 Unlike Great Britain where elections took place under the party list system, in Northern Ireland MEPs were elected under STV, where electors vote for a particular candidate instead of voting for a party. The two different systems create significant differences in the way that spending controls apply in Northern Ireland compared to Great Britain, because both parties and candidates are subject to their own limits and controls The party controls under PPERA on campaign expenditure applied for the first time in 2004 at the European Parliamentary elections in Northern Ireland. They were the same as in Great Britain, with a limit of 135,000 on party expenditure, calculated on the same basis of 45,000 for each of the three MEPs to be elected for Northern Ireland As electors in Northern Ireland were voting for a particular candidate rather than for a party, there were also controls on candidates, imposed by the European Parliamentary Elections (Northern Ireland) Regulations The controls on candidates at the European Parliamentary elections in Northern Ireland were basically the same as those for individual candidates who contested the election in Great Britain, which are discussed in Chapter The expenditure limit for candidates was calculated on the same basis as for individual candidates in Great Britain. In Northern Ireland this meant that, based on the three MEPs to be returned for Northern Ireland, each candidate had an expenditure limit of 135,000, the same as the party campaign expenditure limit. The 2004 campaign 2.63 Six parties contested the European Parliamentary elections in Northern Ireland and each party fielded one candidate due to the small number of seats to be filled. As both each party and its candidate had an expenditure limit of 135,000, there was a potential combined limit of 270,000 available to promote the party and its candidate. It was necessary however to ensure that great care was taken to distinguish between and separate party campaign expenditure and a candidates election expenditure In addition, there was one individual candidate who stood in the election To gain an overview of the expenditure incurred in the election of MEPs in Northern Ireland, it is necessary to look at expenditure by both parties and their candidates. Total party campaign expenditure in Northern Ireland was 42,432, of which 34,799 was reported by the SDLP (Social Democratic & Labour Party), and 7,633 by Sinn Féin. Details of spending by party as a percentage of the expenditure limit can be found in Table The other four parties that contested seats in Northern Ireland did not report any party campaign expenditure, as all expenditure had been incurred and reported by their candidates. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

29 27 Table 5: Campaign expenditure incurred as a percentage of the party s expenditure limit Party Actual Actual Actual expenditure expenditure expenditure incurred ( ) as % of limit* as % of total expenditure incurred by all parties Democratic Unionist Party (DUP)** Green Party (Northern Ireland)** Sinn Féin 7, SDLP (Social Democratic & Labour Party) 34, Socialist Environmental Alliance** Ulster Unionist Party** Total 42, Notes: *Campaign expenditure limit for each party was 135,000. **All relevant expenditure was incurred by the candidate; the party reported no expenditure. Party and candidate spending 2.67 Seven candidates (six party candidates and one individual) contested the election in Northern Ireland, all with an expenditure limit of 135,000. Each candidate submitted an election expenditure return and the total reported candidates expenditure was 605,995, as shown in Table 6, overleaf. The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

30 28 Table 6: Northern Ireland: Proportion of candidate s expenditure limit incurred Candidate Party Total reported Expenditure expenses ( ) incurred as % of limit Jim Allister Democratic Unionist Party (DUP) 126, Lindsay Whitcroft Green Party (Northern Ireland) 4,680 3 John Gilliland Independent 117, Bairbre De Brun Sinn Féin 117, Martin Morgan SDLP (Social Democratic & Labour Party) 114, Eamonn McCann Socialist Environmental Alliance 11,468 8 Jim Nicholson Ulster Unionist Party 113, Total 605, Table 7 details combined party and candidate expenditure. The combined amount spent ranged from 4,680 by the Green Party (Northern Ireland) to 149,436 by the SDLP. The total combined limit for each party and candidate was 270,000; the proportion of the combined limit spent ranged from 1.7% to 55%. Table 7: Combined party and candidate expenditure Party Expenditure Expenditure Total incurred by incurred by expenditure party ( ) candidate ( ) incurred ( ) Democratic Unionist Party (DUP) 126, ,788 Green Party (Northern Ireland) 4,680 4,680 Sinn Féin 7, , ,031 SDLP (Social Democratic & Labour Party) 34, , ,436 Socialist Environmental Alliance 11,468 11,468 Ulster Unionist Party 113, ,170 Total 42, , ,573 The 2004 European Parliamentary elections in the United Kingdom: campaign expenditure by political parties

31 29 3 Controlled expenditure by recognised third parties Under the Political Parties, Elections and Referendums Act 2000 (PPERA), not only political parties and candidates, but also those campaigning to promote or disparage parties or groups of candidates, are subject to controls on their expenditure. The 2004 elections were the first European Parliamentary elections at which third parties were required to operate under the PPERA regulatory framework. 3.1 Under Part VI of PPERA, limits are imposed on the amount of controlled expenditure that can be incurred during the regulated period by individuals or organisations that are not fielding candidates themselves, but nonetheless wish to campaign at an election. Third parties that do not register with the Commission are restricted by the legislation to spending no more than 10,000 in England or 5,000 in each of Scotland, Wales and Northern Ireland. 3.2 Organisations that registered with the Commission as recognised third parties could spend up to 159,750 in England, 18,000 in Scotland, 11,259 in Wales and 6,750 in Northern Ireland on election materials at the European Parliamentary elections. All recognised third parties are subject to the regulatory requirements of PPERA relating to the controls on and reporting of expenditure and donations. 3.3 The European Parliamentary Elections (Combined Region and Campaign Expenditure) (United Kingdom and Gibraltar) Order 2004 applied PPERA third party controls to Gibraltarian third parties campaigning in respect of the combined Gibraltar and South West of England region. No Gibraltarian third parties registered with the Commission. Definition of controlled expenditure 3.4 Controlled expenditure is expenditure incurred by or on behalf of a third party in connection with the production or publication of election material that is made available to the public at large or any section of the public. The 2004 European Parliamentary elections in the United Kingdom: controlled expenditure by recognised third parties

32 PPERA defines election materials as any materials that can reasonably be regarded as intended to promote or procure electoral success for political parties or a group of candidates, or otherwise enhance the standing of any such parties or candidates with the electorate in connection with future relevant elections. This includes doing so by prejudicing the electoral prospects of other candidates or parties. PPERA broadens this definition by specifying that material can be regarded as election material even though it can be reasonably regarded as intended to achieve any other purpose as well. 3.6 Expenditure incurred by third parties that does not relate to the production or dissemination of election materials, for example the costs of hiring a hall in which to hold a rally, does not constitute controlled expenditure and is not required to be reported by third parties or counted against their expenditure limits. Regulatory controls on recognised third parties 3.7 In addition to the spending limits imposed on them, recognised third parties are also obliged to comply with further regulatory controls laid down by PPERA. Incurring and paying controlled expenditure 3.8 Controls on incurring expenditure and making payments are similar to those on political parties. Expenditure can be incurred and paid for on behalf of a recognised third party only if it is incurred by the responsible person, 17 or someone authorised by them. 3.9 As with political parties paying campaign expenditure, claims for controlled expenditure must be submitted within 21 days of the election and paid within 42 days of the election. Donations to recognised third parties 3.10 Recognised third parties are also subject to controls on the donations that they can legally accept. Cash and non-cash donations of more than 200 that are made for the purpose of meeting controlled expenditure can be accepted only if they are from permissible donors, which are: individuals registered on a UK electoral register; UK registered companies; building societies; limited liability partnerships; friendly societies; trade unions; and unincorporated associations based in the UK. 18 Gibraltarian third parties would have been allowed to accept donations from Gibraltarian permissible sources, but none registered with the Commission When an individual or body submits a notification to the Commission that they wish to register as a recognised third party they must inform the Commission who will act as their responsible person. The responsible person is legally responsible for ensuring that the recognised third party complies with the financial requirements of PPERA. 18 For full definitions of permissible sources refer to Section 54 of PPERA. Registered political parties are not permissible donors in respect of recognised third parties. 19 The Schedule to the European Parliamentary Elections (Combined Region and Campaign Expenditure) (United Kingdom and Gibraltar) Order The 2004 European Parliamentary elections in the United Kingdom: controlled expenditure by recognised third parties

33 31 Reporting requirements 3.11 After an election recognised third parties are required to submit a return of controlled expenditure to the Commission. Unless the recognised third party is also a registered political party, this return must also provide details of relevant donations received. Appendix D shows the information that is required to be submitted As with campaign expenditure returns submitted by political parties, the information submitted within these returns is made public, both within this report and on the Commission s website, allowing the public the opportunity to build up a holistic view of those engaged in campaigning during the election. Third party campaigning at the 2004 European Parliamentary elections 3.13 Three recognised third parties submitted returns for the 2004 European Parliamentary elections; Searchlight Information Services Ltd, UNISON and Unite Against Fascism. None of the other 10 third parties that were registered with the Commission at the time of the election reported any controlled expenditure during the regulated period Table 8 provides details of the actual controlled expenditure incurred by each recognised third party that campaigned during the European Parliamentary elections, together with the proportion that each third party spent of the available limit. Table 8: Controlled expenditure limits and actual expenditure incurred by recognised third parties Recognised third party Controlled Actual Actual Actual expenditure expenditure expenditure expenditure limit ( ) incurred ( ) as % of limit as % of total expenditure incurred by all third parties Searchlight Information Services Ltd 195,759 78, UNISON 195, , Unite Against Fascism 195,759 62, Total 309, The 2004 European Parliamentary elections in the United Kingdom: controlled expenditure by recognised third parties

34 Table 9 provides details of the apportionment of controlled expenditure across the UK. Table 9: Controlled expenditure incurred by third parties in UK areas Recognised third party Total Expenditure Expenditure Expenditure Expenditure expenditure in England in Scotland in Wales in Northern ( ) ( ) ( ) ( ) Ireland ( ) Searchlight Information Services Ltd 78,774 77,581 1,193 UNISON 167, ,808 12,945 8,097 4,854 Unite Against Fascism 62,923 54,442 5,126 3, , ,831 18,071 12,645 4, Third parties do not have to provide a breakdown of expenditure by category, as is required of registered political parties in their campaign expenditure returns, although the invoices submitted with the returns enable an apportionment to be estimated. The most common item of expenditure related to the design, printing and distribution of leaflets A total of 21,873 in notional expenditure was reported. There were no reported unpaid or disputed payments Third parties are also required to report donations received that were used to fund controlled expenditure. Searchlight Information Services Ltd and Unite Against Fascism reported donations made to them. UNISON did not report any donations. The 2004 European Parliamentary elections in the United Kingdom: controlled expenditure by recognised third parties

35 33 4 Election expenditure by individual candidates The election expenses of individual candidates standing for election to the European Parliament were controlled under the European Parliamentary Elections Regulations This legislation reflects the controls applied to candidates at other elections within the UK under the Representation of the People Act Controls at European Parliamentary elections Candidates subject to individual expenditure controls 4.1 As explained in Chapter 2, the 2004 European Parliamentary elections in Great Britain were held under the list system, under which all parties contesting the election submitted a closed list of candidates standing on behalf of the party. In addition to candidates standing for election on the party list, some candidates chose to contest the election as individual candidates, standing either as an Independent or under no description on the ballot. 4.2 In Great Britain, only those candidates who stood as individuals were subject to separate candidates election expenditure controls. 4.3 All other candidates stood for election on a registered party list. Any expenditure incurred by candidates standing on a party list was required to be accounted for within the party s campaign expenditure return. Candidates standing on a party list were however required to provide an individual return of their personal expenses. 20 Date a person becomes a candidate 4.4 A person became a candidate at the European Parliamentary elections on the last date of publication of notice of the election if on, or before, that date they had been declared as a candidate (whether by themselves or by others). Where a person had not been declared a candidate by that date, they became a 20 Regulation 53 of the European Parliamentary Elections Regulations The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

36 34 candidate on the date on which they were declared or nominated as a candidate (whichever was the earlier). 21 This meant that the earliest date a person could have become a candidate at the 2004 election, and thus the earliest date from which they could have been required to report their election expenses, was 5 May 2004 or, in those regions where postal vote pilots were undertaken, 30 April Defining and classifying election expenditure 4.5 Election expenses are defined as any expenses incurred in respect of any property, goods, services or facilities, used for the purposes of the candidate s election after the date on which they become a candidate for election. 22 It does not matter whether expenditure was incurred on these items before or after that date. 4.6 Election expenses include: expenditure incurred prior to the date a person becomes a candidate; 23 expenditure incurred on items for purposes other than the election, but then used for the candidate s campaign or on items not used exclusively for the purposes of the candidate s campaign; 24 and notional expenditure of over Regulation 31(2) of the European Parliamentary Elections Regulations Regulation 60 of the European Parliamentary Elections Regulations Regulation 60 of the European Parliamentary Elections Regulations Regulation 61 of the European Parliamentary Elections Regulations Regulation 62 of the European Parliamentary Elections Regulations As with political parties, notional expenditure is incurred when any goods, services, property or facilities are provided to a candidate or their election agent free of charge or at a discount of more than 10% of the commercial rate, for the purpose of the candidate s election. The value of notional expenditure is the difference between the commercial cost of an item and the amount the candidate, or election agent, actually paid for the item. Personal expenses 4.8 Personal expenses are expenses that have been incurred on account of or incidental to the election campaign, such as travel expenses incurred on journeys to and from the region a candidate is contesting, and the cost of living in hotels or elsewhere during the election period. Personal expenses did not count against candidates statutory expenditure limits. 4.9 All candidates (both individual candidates and party list candidates) at the European Parliamentary elections were required to submit a declaration as to their personal expenses to the appropriate returning officer within 50 days of the declaration of the election result. Donations 4.10 All donations of more than 50 made to individual candidates for the purpose of meeting their election expenses must be reported in the candidate s return. Candidates must report whether the donation came from a permissible source, and if not, the manner in which it was returned Schedule 6, paragraph 4 (2) to the European Parliamentary Elections Regulations The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

37 Donations are defined as any of the following: any gift (including a bequest) of money or other property to the candidate or election agent; any sponsorship provided in relation to the candidate; any money spent (other than by the candidate or election agent or any sub-agent) in paying any election expenses; any money lent to the candidate or agent other than on commercial terms; or the provision for the use or benefit of the candidate of any property, services or facilities (including the services of any other person) other than on commercial terms Examples of donations to candidates may include: a cheque for 500; the provision of free stationery supplies; or office space provided at a 50% discount Permissible sources 27 from which donations may be accepted, are defined as: an individual registered on a UK electoral register; a GB registered political party (UK registered political party for candidates in Northern Ireland); a UK registered company; a UK registered trade union; a UK building society; 27 For full definitions of permissible sources refer to Section 54 of PPERA. a UK registered limited liability partnership; a UK registered friendly and industrial or provident society; and a UK based unincorporated association Individual candidates contesting the combined Gibraltar and South West of England seat could also have received donations from: an individual registered on the Gibraltar register of electors; a company registered under the Companies Ordinance, and incorporated within Gibraltar, the UK or another member State, which carries on business in Gibraltar; a Gibraltarian party whose entry in the register includes a statement that it intends to contest one or more elections to the European Parliament in the combined region; a Gibraltarian trade union within the meaning of the Trade Union and Trade Disputes Ordinance; a Gibraltarian building society within the meaning of the Banking (Extension to Building Societies) Ordinance 1997; a limited liability partnership registered under the Limited Partnerships Ordinance, which carries on business in Gibraltar; and any unincorporated association of two or more persons which does not fall within any of the preceding definitions but which carries on business or other activities wholly or mainly in Gibraltar and whose main office is there Paragraph 12 of the Schedule to the European Parliamentary Elections (Combined Region and Campaign Expenditure) (United Kingdom and Gibraltar) Order The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

38 36 However, no individual candidates contested the combined Gibraltar and South West England region Donations received from sources other than those listed above (such as foreign nationals or companies registered outside the UK) are impermissible donations and should be returned to the donor. Donations from unidentifiable sources should be returned to the financial institution or person through which the donation was transmitted (if known), or otherwise sent to The Electoral Commission for payment into the Government s Consolidated Fund Any donation of more than 50 received from unidentifiable or otherwise impermissible sources, even though not accepted, must be reported within an individual candidate s election expenses return. Returns 4.17 Following the election, the election agents of all individual candidates were required to prepare a statement of all election expenses and relevant donations. This had to be submitted to the Regional Returning Officer in the region in which the candidate stood, together with written declarations by both the candidate and the election agent verifying that the return was correct. 29 Returns had to be submitted within 50 days of the declaration of the election result. For all regions this meant the returns were due by 4 August Regulations 51 and 52 of the European Parliamentary Elections Regulations The results in each Great Britain region for the European Parliamentary elections were declared on Monday 14 June The legislation requires that the returns provide the following information: 31 all election expenses incurred; all payments made by the election agent; expenses incurred before an election agent was appointed; petty and personal expenses; 32 expenses incurred by a person authorised by the election agent; 33 any disputed and/or unpaid claims; amount of expenses incurred before a person became a candidate; declarations of value in relation to items purchased for purposes other than the election but subsequently used for that purpose; declarations of value in relation to notional expenditure of more than 50; all relevant donations of more than 50 (made to the candidate or agent); and all monies contributed by the candidate from their own resources to meet the costs of the election. 31 Regulation 51 of the European Parliamentary Elections Regulations Petty expenses are expenses such as stationery and postage etc. Personal expenses are expenses incurred by the candidate, e.g. travel, food etc. 33 Regulation 46 of the European Parliamentary Elections Regulations The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

39 Upon receipt of a candidate s expenses return, the appropriate Regional Returning Officer was required to supply a copy to The Electoral Commission. 34 They were also required to make it available for public inspection for the next 12 months. 35 Any person has the right to inspect the returns Under electoral law there are a number of offences pertaining to non-compliance with the statutory requirements regarding election expenses. The Commission is responsible for reviewing candidates returns to ensure that they comply with the relevant legal requirements. The Commission works closely with the relevant authorities to ensure that breaches of electoral law are dealt with appropriately. Non-compliance with the controls 4.21 Those alleged to have breached electoral law may be prosecuted through the judicial system. The Director of Public Prosecutions (in England and Wales), the Lord Advocate (in Scotland) and the Director of Public Prosecutions for Northern Ireland have the authority to direct the police to investigate alleged breaches of electoral law, and to institute prosecutions where they decide it is appropriate. 36 The 2004 campaign 4.22 There were nine individual candidates contesting seats in Great Britain during the European Parliamentary election campaign. 34 Regulation 57 of the European Parliamentary Elections Regulations Regulation 59 of the European Parliamentary Elections Regulations Regulation 119 of the European Parliamentary Elections Regulations There were seven candidates contesting the three seats in Northern Ireland, of whom six represented political parties. Each candidate had an individual expenditure limit of 135,000 in Northern Ireland, which was in addition to the 135,000 limit for party campaign expenditure Prior to the election, the Commission received only a few queries from individual candidates contesting regions in Great Britain. There were also a limited number of queries in respect of candidates in Northern Ireland, possibly because the parties were familiar with the regulations following the Northern Ireland Assembly elections held in November There was both party campaign expenditure and candidates election expenditure at the Assembly elections; the only difference for the European elections was that each party fielded one candidate for the whole of Northern Ireland, rather than fielding multiple candidates in each of 18 constituencies for the Assembly elections The controls on individual candidates at the 2004 European Parliamentary elections were very similar to the controls under the Representation of the People Act 1983 which apply to candidates at local government and general elections. These controls have been in place since 1983 but were significantly amended in 2001 by PPERA. Amendments included the introduction of controls on donations to candidates, a change in the regulated period for candidates expenditure and more extensive reporting requirements. The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

40 A number of queries were received from party list candidates. While these candidates were not subject to separate controls on election expenditure and all expenditure incurred in respect of their election was controlled and reported by the party for which they stood, they were required to submit a return of any personal expenses they had incurred. A number of candidates found this requirement confusing and understood this return to be the same as a candidate s election expense return. There was also some confusion over the difference between personal and election expenditure, and some party candidates did not understand why they had to, or were not aware they were required to, provide details of their personal expenses when they had no responsibilities in regard to election expenditure. Review of the returns 4.27 The expenditure returns of all individual candidates who contested seats at the election were reviewed by the Commission. The purpose of these reviews was: to monitor compliance with the relevant legislative requirements in order to draw lessons on the issues encountered by candidates and agents in complying with the controls, and then provide guidance in respect of these issues; and to identify problem areas and draw attention to them The review of these returns highlighted a number of areas where there appears to be some continuing confusion relating to current legislative requirements. Completion of returns 4.29 A number of the returns received were in some way inaccurate or incomplete. Inaccuracies included reporting expenditure under the wrong category, duplicating a figure in more than one category or providing the wrong total expenditure figure. Such inaccuracies in the completion of the returns made it more difficult to ascertain definite figures regarding individual candidates spending at the election Omissions included signatures needed to verify declarations of value, supplier details, the dates on which expenditure was incurred or payments were made, and supporting invoices or receipts required to verify expenses. Some candidates and election agents had not reported all relevant donations, or money provided by the candidates to fund their campaigns, within the returns as required The complete and accurate reporting of spending by candidates is an important element in ensuring the integrity of the electoral process. However it would appear that the inaccurate reporting of election expenditure may have been mainly due to the complexity of the reporting requirements. The list of items required to be included in the return is extensive, and according to feedback received by the Commission at this and previous elections, many candidates and agents feel overwhelmed by the requirements To address this concern, the Commission has recommended that the current legislation specifying the contents of election expenditure returns should be amended with a requirement for the return to include details of all election The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

41 39 expenditure (including notional expenditure, unpaid and disputed claims) and donations, with the Commission determining the format through which it can best monitor compliance with the legislation. 37 Understanding of legislative requirements Invoices 4.33 All payments of over 20 made by the election agent had to be accompanied by an invoice or receipt supporting the claim. 38 Invoices were also required to accompany any petty expenses incurred by an authorised person and any payments made by the candidate prior to the date the agent was appointed Within a number of returns relevant invoices were not included to support items of expenditure; therefore in some cases the Commission could not confirm accurate reporting of expenses without contacting the candidate or their election agent for further information. Time limits for claims and payment 4.35 All claims for payment had to be received within 21 days of the date the election result was declared. 39 Where the claim for payment was not made within the statutory time limit, 37 Full details of this recommendation can be found in the Commission s paper Political Parties, Elections and Referendums Act 2000: Recommendations for change available on our website 38 Regulation 43 of the European Parliamentary Elections Regulations Regulation 48 of the European Parliamentary Elections Regulations payment of the claim was barred and could not be made. The claimant, candidate or agent would have to apply to court in order to be granted leave to make the payment. Such payments would be categorised on the return as an unpaid claim All claims had to be paid within 28 days of the date the election result was declared. 40 Where the payment was not made within the prescribed time limits, it was deemed a disputed claim. The payment was barred and could not be made. The claimant, candidate or agent would have to apply to court in order to be granted leave to make the payment Review of the returns demonstrated that there was some confusion in regard to the nature of disputed claims. Donations 4.38 There were also misunderstandings about the reporting of donations in the returns for individual candidates in Great Britain. In a number of returns no details were provided about the funding of the candidates election campaign Failure to report relevant donations of more than 50 is a breach of the legislative requirements, and reduces the accountability and transparency of candidate finances. To address this issue, the Commission has produced enhanced guidance and training materials emphasising that any money or services provided to a candidate must be reported even where such donations are 40 Regulation 49 of the European Parliamentary Elections Regulations The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

42 40 provided by a candidates own party, support group, organisation, or family Analysis of the returns highlighted a common mistake in the reporting of donations. Where notional expenditure of more than 50 is incurred, it will in most circumstances also constitute a notional donation (a donation in kind) to the candidate and the candidate s election agent will need to confirm that the person or organisation making the donation is a permissible donor. All accepted donations of more than 50 must be reported within the candidate s election expenses return. However, where individual candidates reported notional expenditure often no donation of equivalent value was reported in the relevant section of the return. Form and submission of return 4.41 Under the European Parliamentary Elections Regulations the form of election expense return for candidates is not prescribed. However, the Regulations detail the categories of expenditure that must be included when reporting election expenses. The Commission developed and issued a form of return that in its view fulfils all the requirements of the legislation Two individual candidates in Great Britain did not submit returns in the form recommended by the Commission or a substitute form which met the requirements of the legislation. The candidate or their agent was notified of the legal requirements and advised by the Commission to use the correct form in the future. Expenditure limits 4.43 Each individual candidate was allowed to incur expenses on their campaign up to a prescribed limit during the regulated period in advance of the election. 41 The legal limit covered all election expenses incurred that would be used within the regulated period. As mentioned in paragraph 4.8, the limit did not have to cover candidates personal expenses The statutory maximum limit for an individual candidate at the 2004 European Parliamentary elections was 45,000 multiplied by the number of MEPs to be returned for the electoral region in which the candidate was standing. Great Britain The limits available for each of the individual candidates at the elections were the same as those for the parties contesting the region and were based on the number of MEPs to be returned for the region. Table 10 summarises the limits available to each individual candidate together with the actual expenditure they reported incurring. 41 Regulation 47 of the European Parliamentary Elections Regulations For analysis of spending by individual candidates in Northern Ireland please see Chapter 2. The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

43 41 Table 10: Candidates in Great Britain Region (number of Candidate/s Expenditure Reported Expenditure MEPs to be returned) limit expenditure incurred as % of limit East Midlands (6) Shadmyraine Halliday 270, Russell Rogers 270, East of England (7) Martin Bell 315, John James (Jim) Naisbitt 315,000 8, North East (3) Neil Herron 135,000 17, North West (9) Ronald Alan Neal 405,000 3, Scotland (7) Fergus Tait 315,000 5, South East (10) Phillip Rhodes 450,000 11, Yorkshire & the Humber (6) Robert William Ellis 270,000 2, Total expenditure 49, Income and expenditure 4.46 Table 10 also shows the proportion of their expenditure limit that each individual candidate spent Only two candidates reported having received relevant donations, and a total of 18,769 was declared as having been donated to these candidates. Three candidates declared a total of 9,551 provided by themselves to fund their campaigns. This leaves 21,153, or 43% of all expenditure declared, unaccounted for in terms of income or provided in non-reportable donations of 50 or less. Following reviews of the returns it was identified that a number of candidates who had provided no income details within their returns had funded their campaigns themselves, but failed to realise that they needed to report those details The candidates election agents paid the majority of the expenditure incurred; this constituted 70% of total expenditure Only one candidate reported having incurred any notional expenditure The small number of individual candidates who contested these elections may be indicative of the financial restrictions placed on them or, as one independent candidate subsequently stated, that the current deposit system is prohibitive for individuals wishing to stand as candidates. The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

44 Each party in Great Britain submitting a party list had to submit a deposit of 5,000 in respect of that list. 43 A candidate wishing to contest the election as an individual also had to submit a 5,000 deposit and this requirement may have deterred individual candidates from participating in the elections. 43 A full list of the party list and independent candidates can be found on the Commission s website, The 2004 European Parliamentary elections in the United Kingdom: election expenditure by individual candidates

45 43 5 Conclusions These were the first European Parliamentary elections at which parties were required to operate under the PPERA regulatory framework, and candidates were subject to amended, more extensive controls on the treatment and reporting of their election expenditure and donations. The review of returns highlighted the fact that, while the main parties are increasingly adapting to PPERA with each successive election, smaller parties and those new to the controls on elections still appear to have difficulties in complying with the requirements. Future work programme 5.1 The Commission will continue to develop and enhance its guidance documents in light of the experiences of both the Commission and those regulated by PPERA at each successive election as well as keeping possible simplifications and enhancements to the current rules and frameworks under review. The areas that cause parties, third parties and candidates difficulties will be reviewed and further advice and guidance provided as necessary. 5.2 The Commission will also continue to review the effectiveness of the methods of delivery of its guidance to the target audiences. The success of the publication of the information on CD-ROM will be built on, to ensure that the information is provided in a more useable and focused manner. The Commission will continue to provide training seminars and workshops for parties, agents and candidates who also provide valuable direct feedback as to the issues that those participating in the elections have to manage. 5.3 Through working with stakeholders and identifying the key skills and core competencies required by those regulated by PPERA in order to comply with the legislation, the Commission is developing a training framework which will assist in providing the required tools to understand the requirements and achieve compliance. 5.4 Recommendations made by the Commission following the compliance reviews of parties and third parties returns will be followed up. This will help to ensure that those that are regulated by PPERA continuously improve their compliance with the legislation. The 2004 European Parliamentary elections in the United Kingdom: conclusions

46 44 The 2004 European Parliamentary elections in the United Kingdom: XXXX