How are political parties funded?
Parties need money to carry out many of their activities. Fighting elections, producing literature, carrying out research, employing full-time officials and advisers, and holding conferences are all expensive These party funds are raised in a number of ways:-
a) Party members pay a membership subscription to join, though these fees are not high as the parties want to encourage people to become members. . In 2014 membership income was 23% of Green Party income, 15% of Labour Party income, 9% of Liberal Democrat Party income but just 2% of Conservative Party income. The Labour Party also introduced, in 2015, a registered supporters’ scheme by which people can pay £3 and this gives them a right to vote in the leadership and deputy leadership elections.
b) Trade unions have been linked to the Labour Party since its foundation in 1900. Most trade unions charge their members a political levy, in addition to the membership fees, which can be used for campaigns, publicity on issues they are concerned with and so on. Trade unions, if their members agree in a vote, can affiliate to the Labour Party and pay the Labour Party for the number of members that they have. This provided 27% of Labour’s income in 2014. The large unions such as UNISON, UNITE and the GMB are affiliated but also are some smaller unions such as the Musicians’ Union. At present members have to ‘contract out’ if they do not want to pay the political levy but the Conservative Government is about to change the rules so that members will now have to ‘contract in’ and this will probably reduce Labour Party funds.
c) Local parties raise funds through quiz nights, dinners, raffles and so on and this money is usually spent on local campaigning.
d) There is public funding of political parties represented in Parliament. Government Ministers have the civil service to help them develop policies and provide information and so, to provide a more level playing field, in order that the Opposition parties can also develop policies and carry out research, what has been called Short money, after the Leader of the House that introduced it, is given to them from public funds. Any party with 2 MPs or over 150,000 votes in the General election receives £16,000 per seat and £33 per 200 votes. In addition, the Leader of the Opposition, representing the largest non-Government party in Parliament, receives £700,000. As well as this funding, the Electoral Commission allocates £2m a year to the parties to help them develop policies for inclusion in their election manifestos. These sources combined provided 18% of the money that parties spent between 2001 and 2011. It is meant to be only for the party generally but there is limited information on how it is actually spent. Party MPs are publicly funded to employ staff and most have a researcher. This can only be used for Parliamentary functions and not for party activities but, in practice, MPs’ researchers may investigate issues that are important to the party.
e) The final way in which the parties raise money is through donations. Labour receives donations from the trade unions, in addition to the affiliation fees. Other donations are from individuals, often small amounts from members and supporters. More controversial have been the large donations from wealthy individuals because of the suspicion that this can buy influence with the party if it forms the Government. Each of the three main parties has had scandals. A wealthy donor who gave the Liberal Democrats half of their funds was convicted of fraud, Labour nominated wealthy donors in the 2005 election for peerages and the Conservative’s main fund raiser had to resign after it was found that he would give wealthy individuals access to Cameron for £250,000.