Brexit and electoral law: campaign spending controversies highlight pressing need for reform

Ruth Green, IBA Multimedia Journalist

In July 2018, the Electoral Commission, the UK’s official elections regulator, imposed a £61,000 fine on Vote Leave – the official campaign group for the Leave side – for multiple breaches of electoral law. It also issued significant fines against two other Leave campaigners, Leave.EU and BeLeave, as well as three individuals and referred its evidence to the police. Tom Brake MP says the investigation is in the public interest and ‘foot-dragging’ by the police was unacceptable ‘when investigating claims relating to the integrity of our democracy.’

This legal action comes as the attention turns to the regulator itself as it prepares to appeal a September 2018 High Court ruling that it ‘misinterpreted’ the definition of EU referendum expenses. A strict spending limit of £7m was set for each official referendum campaign group: Britain Stronger in Europe for Remain and Vote Leave. However, The Good Law Project claims the Commission erred in taking the view that donations to other campaigners did not count towards each side’s individual spend.

This, it argues, allowed Vote Leave to circumvent electoral spending rules by donating thousands of pounds to Darren Grimes, the founder of BeLeave. Vote Leave initially contested the fine and claimed it had acted according to the Commission’s guidance. Jolyon Maugham QC, who runs The Good Law Project, argues that the same guidance was not issued to the other side and this ‘unlawfully tilted the playing field against Remain.’ In March, Vote Leave announced it did not have ‘the financial resources to carry forward’ the appeal. Notwithstanding its withdrawal, the case will proceed to the Court of Appeal on 4 July.

Gerald Shamash is an expert on electoral and parliamentary law at Edwards Duthie Shamash. He says the case could have huge ramifications for the UK’s electoral spending laws. ‘It could be a very important decision,’ he says. ‘It raises the question of whether lots of separate organisations acting in concert can spend up to the limit and whether the Electoral Commission has interpreted this correctly,’ he says.

Tom Price is a partner at Gowling WLG and Co-Chair of the IBA Litigation Committee. Although he acknowledges that the Commission has already issued several fines for spending offences, he believes this ruling could have wider implications. ‘In granting permission to appeal, the Court of Appeal signalled that it considers the issues raised are of wider public importance in relation to the conduct of elections generally,’ he says.

Price says the outcome could also prompt the courts to re-examine a related challenge that was dismissed by the High Court earlier this year. ‘If the Electoral Commission loses its appeal, The Good Law Project has indicated its intention to pursue similar judicial review proceedings concerning the Commission's refusal to investigate campaign spending by the Democratic Unionist Party,' he says.  

In March, Justice Stuart-Smith rejected The Good Law Project’s calls to investigate spending by the DUP – which props up the Conservative Party in the House of Commons – during the EU referendum campaign, saying it was ‘premature’ pending the outcome of the Commission’s appeal. He added that if the Court of Appeal upheld the ruling the Commission would be obliged to review its position and any inaction could be open to legal challenge.

A Commission spokesperson told Global Insight that ‘it wouldn’t be appropriate to discuss’ any of the ongoing court cases, but said it continued to put forward ‘recommendations for reform to electoral law, including the regulation of campaigners at elections and referendums.’

The contentious issue of campaign spending resurfaced recently after the regulator raised concerns that the Brexit Party had left itself open to ‘a high and ongoing risk of receiving and accepting impermissible donations’. Under UK law, donations of more than £500 to a political party must be made by an individual listed on the UK’s electoral roll or a company that is registered in the UK. However, there are no such restrictions on donations of £500 or below.

On 18 June, Louise Edwards, the Commission’s director of regulation, told the disinformation subcommittee of the House of Commons’ Digital, Culture, Media and Sport committee that the party would ‘need to go back and look at the payments they have received, over or under £500, and they need to satisfy themselves that they are sure those amounts of money are permissible.’ If not, she said they would ‘need to forfeit those amounts of money.’

Under the Political Parties, Elections and Referendums Act 2000 (PPERA), the Commission has powers to impose a maximum fine of £20,000 per offence. Maugham says this isn’t enough to discourage some parties from pushing the limits of electoral spending laws. ‘Financial penalties must be ‘swingeing to create a real deterrent,’ he says. ‘If you were to criminalise it, rather than attaching a financial penalty, then they might take a real interest’

Shamash says it’s not unusual for parties to make spending mistakes, such as with election returns, but too little is being done to monitor party donations. ‘The fact is [the Brexit Party] may be right on the letter of the law, but not the spirit,’ he says. ‘There are allegations that they may be receiving foreign donations via PayPal and that’s what the Commission is investigating. Ultimately, it’s up to Parliament to tighten this up.’