Clause 3 (Cap on donations and loans)

Cap on total of relevant benefits received from any person

3.—(1) In respect of any represented registered party, the relevant benefits which may be accepted from any person (“P”) in respect of a year must not exceed the maximum amount.
(2) In subsection (1)—
“the maximum amount” is to be understood in accordance with in subsections (3) and (4);
“relevant benefits”, in relation to P, means the aggregate of—
(a) all donations connected with the represented registered party (see section 4) which are accepted from P;
(b) all transactions connected with the represented registered party (see section 5) which are entered into by P;
“year” means—
(a) any period of 12 months which starts on 1 January 2014; and
(b) each subsequent 12 month period.
(3) The maximum amount, in relation to the year commencing on—
(a) 1st January 2014, is £50,000;
(b) 1st January 2015, is £40,000;
(c) 1st January 2016, is £30,000;
(d) 1st January 2017, is £25,000;
(e) 1st January 2018, is £22,500;
(f) 1st January 2019, is £20,000;
(g) 1st January 2020, is £18,500;
(h) 1st January 2021, is £15,000;
(i) 1st January 2022, is £12,500.
(4) In relation to the year commencing on 1st January 2023 and each subsequent year, the maximum amount is £10,000.
(5) The Secretary of State may by order vary the sum specified in subsection (4) where the Secretary of State considers that the variation is expedient in consequence of changes in the value of money.
(6) Any order made under subsection (5) is subject to annulment in pursuance of a resolution of either House of Parliament.

Clause 3

Clause 3 defines a cap on a party’s income from a single source, to be introduced over ten years. The cap covers both donations and loans (see clauses 4 and 5).  The source could be a trade union acting corporately, a business, or an individual.  However, Clause 6 (see below) permits trade union affiliation fees to be treated as individual donations, in certain limited circumstances.  The cap itself would begin at £50,000 in January 2014, reduce to £40,000 in January 2015, £30,000 in January 2016, £25,000 in January 2017, £22,500 in January 2018, £20,000 in January 2019, £18,500 in January 2020, £15,000 in January 2021, £12,500 in January 2022 and finally to £10,000 in January 2023.  The graphs on page 23, based on figures used by the CSPL, show that caps of £50,000 and £25,000, with the modifications made by Clause 6, would have had a roughly equal effect on the Conservative and Labour parties if they had applied in 2010.  There would be a greater disparity of effect at £10,000 if it were introduced straight away.  This report therefore recommends a reduction toward that target in slow increments of £2,500 from 2017, after the initial progress over four years to £25,000.  By setting this path out in legislation, parties would have time to foster a changed, more diverse donation profile, but would not be able to defer the ‘removal of big money from politics’ indefinitely.  The slow reduction in the donation cap would also allow public funding to remain at current levels for the foreseeable future.

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