Clauses 10-15 (Public funding and restrictions on its use)

Clauses 10 to 14 each provide for schemes which permit financial support for political parties, on the basis of their support at elections or their capacity to engage their supporters to give a small donation.  Each Clause is ‘detachable’ so that it would be possible to choose not to pursue a given scheme.  Clause 15 sets out the restrictions which would apply to the use of this funding.

Amount-per-vote scheme

10.—(1) For each financial year there is to be paid to each represented registered party out of money provided by Parliament amounts the total of which for any such year is equal to the aggregate of—

(a)     50 pence multiplied by the total number of votes cast for persons standing for election in the name of that party at the most recent parliamentary general election;

(b)     25 pence multiplied by the total number of votes cast for persons standing for election in the name of that party at the most recent ordinary or extraordinary general election to a devolved legislature;

(c)     25 pence multiplied by—

(i)    in relation to England, Wales or Scotland, the total number of votes cast for the party itself at the most recent European Parliamentary election;

(ii)    in relation to Northern Ireland, the total number of votes cast for persons standing for election in the name of that party at that election.

(2) Any amount payable under subsection (1) is to be paid in such manner and at such times as the Treasury may determine.

Matched funding for registered supporters

11.—(1) A represented registered party is entitled to a payment (a “matched payment”) from the Secretary of State in respect of each individual who—

(a)     is registered in an electoral register; and

(b)     makes a gift of money in any tax year to the party under a registered subscriber scheme.

(2) A registered subscriber scheme is a scheme which is maintained by or on behalf of a represented registered party which—

(a)     invites individuals who support the party to make a gift of money to the party;

(b)     provides for the maintenance of a register of all individuals who make such a gift and the amount received; and

(c)     complies with such other requirements as may be specified by regulations made by the Commission.

(3) The amount of the matched payment to be made in respect of each individual in any tax year is £5.

(4) In this section, “electoral register” means any of the following—

(a)     a register of parliamentary or local government electors maintained under section 9 of the Representation of the People Act 1983;

(b)     a register of relevant citizens of the European Union prepared under the European Parliamentary Elections (Franchise of Relevant Citizens of the Union) Regulations 2001; or

(c)     a register of peers prepared under regulations under section 3 of the Representation of the People Act 1985.

Gift aid to apply to gifts of money made to eligible represented registered parties

12.—(1) The provisions of Chapter 2 of Part 8 of the Income Tax Act 2007 (gift aid) apply to gifts of money which are made to represented registered parties by individuals as the provisions of that Chapter apply to gifts of money made to charities by individuals.

(2) In their application by virtue of subsection (1), those provisions have effect—

(a)     as if references to “charity” included references to represented registered parties (see subsections (9) and (10)); and

(b)     subject to the following modifications.

(3) In section 413(5) (overview of Chapter)—

(a)     omit “and”; and

(b)     after “section 505 of ICTA” insert “ and sections 13 and 14 of the Democratic Political Activity (Funding and Expenditure) Act 2013”.

(4) In section 416 (meaning of “qualifying donation”)—

(a)     in subsection (1)(a), for “conditions A to G” substitute “conditions A to H”; and

(b)     after subsection (8) insert—

(8) Condition H is that any amount of one or more gifts received from any individual which exceeds £1,000 in any tax year is disregarded..

(5) In section 418 (restrictions on associated benefits), omit paragraph (c) of subsection (2).

(6) Omit sections 420 and 421 (which make provisions about rights of admission to premises or property without payment of an admission fee).

(7) The power of the Commissioners for Her Majesty’s Revenue and Customs under section 428 (meaning of “gift aid declarations”) extends to making regulations for the purposes of this section; and regulations under that section which are in force on the date this section comes into force are to have effect in relation to gifts of money which are made to represented registered parties by individuals, with such modifications as are necessary for those purposes.

(8) In section 429(3) (giving through self-assessment return), for “conditions A to G” substitute “conditions A to H”.

(9) For the heading to section 430 substitute—

“Charity” to include exempt bodies and represented registered parties

(10) In that section—

(a)     omit “and” at the end of paragraph (c); and

(b)     after paragraph (d) insert

and

(e)   a represented registered party within the meaning of the Democratic Political Activity (Funding and Expenditure) Act 2013.

Gifts qualifying for gift aid relief: income tax treated as paid

13.—(1) This section applies if a gift is made to a represented registered party by an individual and, by virtue of section 12 of this Act, the gift is a qualifying donation for the purposes of Chapter 2 of Part 8 of the Income Tax Act 2007 (gift aid).

(2) The represented registered party is treated as receiving, under deduction of income tax at the basic rate for the tax year in which the gift is made, a gift of an amount equal to the grossed up amount of the gift.

(3) References in this section to the grossed up amount of the gift are to the amount of the gift grossed up by reference to the basic rate for the tax year in which the gift is made.

(4) The income tax treated as deducted is treated as income tax paid by the represented registered party.

Gifts qualifying for gift aid relief: corporation tax liability and exemption

14.—(1) If a represented registered party receives a gift from an individual and, by virtue of section 12 of this Act, the gift is a qualifying donation for the purposes of Chapter 2 of Part 8 of the Income Tax Act 2007 (gift aid), the grossed up amount of the gift is treated as an amount in respect of which the represented registered party is chargeable to corporation tax, under the charge to corporation tax on income.

(2) But the grossed up amount of the gift is not taken into account in calculating total profits so far as that grossed up amount is applied to any of the purposes listed in section 15(a) to (d) of this Act.

(3) References in this section to the grossed up amount of the gift are to the amount of the gift grossed up by reference to the basic rate for the tax year in which the gift is made.

(4) The exemption under subsection (2) requires a claim.

(5) A represented registered party is treated as having made a claim for any exemption to which it may be entitled under subsection (2) if—

(a)     it receives a gift as a result of a direction under section 429(2) of the Income Tax Act 2007 (giving through self-assessment return); and

(b)     as a result of section 429(4) of that Act, the gift is treated as a qualifying donation for the purposes of Chapter 2 of Part 8 of that Act.

Funding obtained under sections 10 to 14 to be used for certain purposes only

15. Any amount obtained by a represented registered party in accordance with any of sections 10 to 14 must not be used for any purpose other than—

(a)     assisting the party with the development of policies for inclusion in any manifesto on the basis of which—

(i)    candidates authorised to stand by the party will seek to be elected at a relevant election;

(ii)    the party itself will seek to be so elected (in the case of a relevant election for which the party itself may be nominated);

(b)     the promotion of policies adopted by the party;

(c)     meeting expenses reasonably incurred by the party in connection with activities engaged in for the purposes of electing candidates at a relevant election (such as advertising, transport, public meetings, sending election addresses etc);

(d)     ensuring that the public duties of persons elected at a relevant election are carried out effectively and efficiently;

(e)     meeting accommodation, administration and staff expenses reasonably incurred in connection with any of the activities set out in paragraphs (a) to (d).

Explanatory Notes

Clause 10 sets out the amount-per-vote scheme proposed by the Sir Christopher Kelly and the CSPL.  The draft Bill contains the full amounts suggested by the CSPL, but these could be moderated (by virtue of Clause 17(3)(b)) if the overall cost could not be met from the current financial envelope spent on political parties.  The amounts are, for each financial year, 50p per vote for candidates standing at the last general election, and 25p per vote for candidates and party lists standing at the last devolved legislature or European Parliament elections.

Clause 11 would provide for matched funding for registered supporters, a scheme proposed by Sir Hayden Philips.  This would encourage parties to engage with those who support them, and to seek small financial contributions to their campaigning.  If an individual gives a donation of £5 or more in registering their support, the state would provide an additional maximum of £5 to the party in matched funding.  A £5 contribution from a supporter, would therefore be worth £10 to the party.  However, the annual state contribution would be capped at £5, so a £10 contribution to a supporter would be worth £15, a £100 contribution worth £105, and so on.  As with clause 10, the £5 maximum can also be moderated under clause 17(3)(a) subject to parliamentary approval. It would also be adjustable for inflation under clause 17(3)(b), subject to the negative resolution procedure..

Clause 12 to 14 reflect the CSPL’s recommendations that there should be tax relief at the basic rate on donations up to £1,000 and on membership fees.  The CSPL recommended that parties be eligible for this relief only if they meet minimum qualifications for Policy Development Grants, or any equivalent in the devolved legislatures.  The Bill abolishes Policy Development Grants, but broadly achieves the objective set out by the CSPL by making eligibility for public funding align with whether or not a Party is covered by the donation cap.  (See Clause 2).

Clause 15 sets out the restrictions that apply to parties when spending re-allocated public funds (see clauses 10 to 14).  The funds can only be spent in a) the development of policy for election manifestos; b) the promotion of such policies; c) meeting expenses incurred during elections (advertising, transport, public meetings, sending election addresses etc); d) ensuring that public duties of elected representatives are carried out effectively and efficiently; (e) meeting accommodation, administration and staff expenses in connection with any of the above.

9 thoughts on “Clauses 10-15 (Public funding and restrictions on its use)

  1. I think we should scrap amount-per-vote (clause 10) and keep just amount-per-member (clause 11). For as long as we have FPTP, votes won’t reflect true allegiances and so it doesn’t make sense to donate on this basis.

  2. Clause 10: Is it worth trying to account for by-elections? Limiting the allocation to General Election results would make it easier to budget the support payments, but wouldn’t be able to account for potentially large mid-term changes in voting patterns.

    I disagree with Stephen Reid’s suggestion that the distortions inherent in FPTP make money-per-vote invalid. If anything, surely FPTP’s well-documented failures of representation are more of a case for money-per-vote rather than money-per-member? For example, the Conservative Party and SNP got similar numbers of votes in Scottish constituencies (~20% if I remember correctly; I can’t find the figures at present), but won one and six seats respectively. In terms of rewarding support, which funding criterion gives the best representation?

    • Found some numbers to go with my second paragraph!
      It seems my memory was a bit off: the Conservatives got their one Scottish seat with 17% while the SNP got their six with 20%. But meanwhile the Lib Dems got 11 seats with only 19% overall; compare their numbers with the SNP’s and I believe my point stands. If anything, it’s reinforced more by the national figures:
      Overall % Votes Seats
      Conservative 36 47
      New Labour 29 40
      Lib Dem 23 9
      UKIP 3 0
      SNP/PC 2 1

    • (Very) Postscript:
      One of the main criticisms of money-per-vote is that FPTP encourages voters to abandon their true preference in favour of influencing a perceived two-horse race, and that the voting money would therefore follow this warped distribution.
      But why do voters do this?
      Under the current system, there is no marginal loss to consider: neither the individual voter nor their favourite loses anything if they ignore a “hopeless case”. By tying funding to votes cast, tactical voting actively harms the favourite, as the 50p that would have gone to them instead goes to an immediate rival. Assuming this fact can be made clear and understood to the electorate, could it lead to more honesty in the ballot box?

  3. I think all of these clauses suffer from the same problem, that the budgets of the parties will be weighted too heavily towards the major parties. While I like the incentive to engage with the public, the biggest parties won’t have to; their budgets will be so large in comparison to the others’ that the small parties won’t stand a chance.

    A simple way round this would be to vary the amount per vote or per pound donated logarithmically. This means that while each vote (or pound donated) means more money for the party how much money depends on how many votes they already have, decreasing with number of votes. I think this would fulfil the desire to “not disproportionately disadvantage any one party” stated on the homepage of this website.

  4. I think the whole concept is wrong. If trade union members can opt out of paying a political levy, why can’t taxpayers? If I thought a political party was worth anything then I’d be donating on my own and avoiding the inefficient state middleman.

    I can just about accept the gift-aid idea, although the idea of a political party being equivalent to a charity is an interesting concept. I assume the proposed £1000 limit includes all membership fees as well as separate donations?

    I am also uncomfortable with the implied vested interests where those who stand to benefit most from an increase in the amounts are those who get to approve it. It’ll be like MP pay rises, 20% here, 24% there, all approved by themselves with no real influence from those who foot the bill.

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