Regulated Campaign Spending, and can Companies and Charities unknowingly be in

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11 November 2014
Practice Group(s):
Global Boardroom
Risk Solutions
Global Government
Solutions
Public Policy and
Law
Regulated Campaign Spending, and can
Companies and Charities unknowingly be in
Breach of the UK Lobbying Act?
UK Global Boardroom Risk Solutions Alert
By Piers Coleman and Laura Atherton
The Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration
Act 2014 (the “Act”) began to bite for the first time on 19 September 2014 (at least those
parts relating to election campaigning). The ramifications it will have on public life will
begin to be felt between now and the next General Election. 1 The Act is frequently
referred to as the “Lobbying Act” but it does not just deal with lobbying.
Control of non-party campaigning (i.e., the activities of those who may convey a soft
political message in the lead up to an election) is now subject to strong regulation with
which many are not familiar.
The Act will apply to a controlled period for non-party campaigning in advance of future
UK elections. For these purposes, we are looking at the next General Election, which is
fixed to take place on 7 May 2015. The controlled period on this occasion began on 19
September 2014.
In many cases, the charitable sector is more informed and more prepared. Companies
who have been accustomed to providing soft support or promoting a soft message may
find their activities constrained in ways they were not expecting.
What sort of activities? Many companies like to be politically aware and to show support
for issues of the day. This could relate to anything from teenage alcoholism, school
meals, personal tax and allowances, to international aid (e.g., against Ebola), human
rights, energy prices, road safety, immigration and benefits, to name only some. There
are many other examples, but the way in which an issue is tackled may involve a political
solution, for which individuals, candidates or political parties may have differing views—
and there is the rub.
Who Is Subject to the Act?
Restrictions on campaign spending were already in place under the Political Parties,
Elections and Referendums Act 2000 (“PPERA”) but the Act extends the range of time
and activities that count as campaign spending beyond that in PPERA.
“Non-party campaigners” can include campaigning groups, special interest groups,
single-issue campaign groups and private individuals (among others) who all seek to
promote a particular cause (or causes) in the period prior to an election. Less obviously
but equally caught are those companies and charities who have felt free to make
comments and to support or oppose issues, or indeed those who did not even realise
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On 7 May 2015. The Act will have effect in relation to other elections in the future, including the European
Parliamentary elections, Scottish Parliamentary elections, Welsh Assembly elections and the Northern Ireland
Assembly elections.
Regulated Campaign Spending, and can Companies and
Charities Unknowingly be in Breach of the UK Lobbying
Act?
that the financial support that they were providing could be treated as campaign
spending. Importantly, the limits imposed by the Act restrict campaign spending
regardless of a company or group’s jurisdiction. Only companies and organisations
based in the UK, or European Union companies or organisations with business interests
in the UK, are able to register for higher spending thresholds.
With the growth of social media, easy communication and accessible content comes
greater sharing of opinions and opportunities to influence. The purpose behind the
legislation is to try to maintain a level playing field: in elections, political parties are
already subject to strict campaign spending limits, and the idea is that other campaigners
(single issue or multiple issues) should be subject to the same controls. In doing so, and
because influence can sometimes be unintentional or part of a greater agenda, the
controls have arguably become quite draconian.
What does the Act do?
Among other items, the Act regulates and restricts 2 election campaign spending by those
not standing for election or registered as political parties (i.e. “non-parties”). It creates a
register for non-party campaigners who exceed certain low thresholds for spending on
campaign material and obliges those who are registered to comply with various reporting
and other obligations.
What does registration involve? Why register?
If you register, your maximum spending limits during election periods will be higher.
Moreover, and provided that you do not spend too much (there are limits even when
registered), by registering you can avoid inadvertently incurring civil or criminal penalties.
Registration is a simple process and can be done online or by submitting a Form (“Form
TP1”) by post or email to the Electoral Commission.
Although only basic information needs to be supplied in order to register, the
consequential reporting obligations are more onerous. You may have to submit accounts
and/or report your activities to the Electoral Commission regularly in the lead up to the
election.
What counts as election campaigning?
The Electoral Commission has provided some guidance on what constitutes election
campaign material. A sensible starting point is to assume that any medium through which
you communicate with the public may be classed as election campaign material if it can
reasonably be regarded as intended to influence people’s voting choice.3
An item can be election campaign material even if you actually intend it to achieve
something else - to raise awareness of an issue, provide support for a cause or seek a
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If you intend to spend more than £20,000 in England, or £10,000 in Scotland, Wales or Northern Ireland on
regulated campaign activity during the “regulated” period, including campaigning at the UK Parliamentary general
election, you must register as a recognised non-party campaigner and follow the rules on campaign spending,
donations and reporting.
If you do not register, or are not eligible to register, you cannot spend more than £20,000 in England or £10,000 in
any of Scotland, Wales or Northern Ireland on regulated campaign activity during a regulated period.
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Examples given by the Electoral Commission include leaflets, websites, press conferences and advertising.
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Regulated Campaign Spending, and can Companies and
Charities Unknowingly be in Breach of the UK Lobbying
Act?
purely commercial (as opposed to a political) benefit. This is because the test of intention
is what the reasonable bystander would think rather than what you think.
To be campaign material, the item must meet two tests: the purpose test (i.e., does it,
looked at objectively, promote or oppose a party, candidate or category of candidates, or
a policy or issue closely associated with a party) and the publicity test (i.e., are you
communicating with the public). There is no need for material to name a particular party
or candidate to count as election campaign material.
How might you (consciously or not consciously) be election campaigning?
Depending upon their exact nature and the circumstances at the time, the following are a
few illustrations of activities that might be treated as election campaigning by a non-party:
• A campaign that seeks views about individual candidates’ support for a particular
issue.
• An advertising campaign that mocks or satirises a political party or candidate.
• An open letter published (as an advertisement) in a national newspaper that
advocates staying in or leaving the European Union. 4
• A conference or a seminar designed to seek or promote views about economic issues
such as levels of personal taxation or the level of the minimum wage.
• A rally designed to address rural issues such as the ban on hunting or the culling of
badgers, including the production of give-away material or leaflets for that rally.
• An initiative promoted through your website (or through a video feed on or linked to
your website) that advocates a particular stand on an environmental issue.
• Use of images and/or video of senior corporate representatives with members of
political parties in advertising and PR, which could imply that you are aligned with
those parties, or the use of symbols or images closely associated with a party or
candidate.
• A public announcement on a corporate initiative, which may be viewed as advocating
a social policy (e.g., parental leave, discrimination, donations to overseas
development and foreign aid programmes).
• Allowing facilities or premises to be used by an organisation such as a charity or nongovernmental organisation with an overtly political agenda (e.g., animal testing, nuclear power campaigns).
• Sponsoring an event or conference that has a political agenda.
These are only illustrations. Each will depend on its own facts and the particular political
alignment that may be supported or opposed.
What is not caught?
The Electoral Commission’s guidance suggests that if a political party adopts a policy
that reflects a viewpoint that you are already communicating to the public, this will not
make your communications into election campaign material. However, if you publicise the
4
The definition of election spending could include not just the cost of placing the letter/advertisement in the
newspaper but paying someone to write it and the associated PR and press conference activities that go with it.
3
Regulated Campaign Spending, and can Companies and
Charities Unknowingly be in Breach of the UK Lobbying
Act?
political party’s support for your viewpoint in subsequent communications to the public, or
alter or increase activity on the policy as a result of this support, you could then bring
your activity within the definition of election campaigning.
Offences and Penalties, Criminal and Civil Sanctions?
There are a number of criminal offences under PPERA as amended by the Act. Most
importantly, under section 94, a person will commit an offence if they exceed permitted
expenditure on regulated campaign activity and they knew or ought to have known that
such expenditure on regulated activity would exceed the permitted limits. If the person is
an organisation, then individuals within the organisation may also be guilty of the same
offence if they personally knew or should have known.
One of the most important offences is the exceeding of the permitted expenditure limit on
election campaigning. Senior officers of a company who had responsibility (or should
have had responsibility) for the campaigning and for accounting for the cost may also be
guilty of the same offence.
Individuals convicted may face a fine and/or a custodial sentence.
If you register with the Electoral Commission, the permitted limit of expenditure is
£319,000 for England, £35,400 for Scotland, £24,000 for Wales and £10,800 for Northern
Ireland.
You can still commit an offence if you exceed the permitted limit, even if registered. The
difference is that registration allows you to incur substantially greater expenditure on
election campaigns without being subject to investigation.
There are also several penalties for other breaches, such as making a false declaration
to the Electoral Commission and failing to comply with reporting obligations.
There are also civil penalties for other breaches. Companies that do not comply with the
new regulations could be required to pay a fine and to take steps to ensure that the
offence of contravention does not recur and/or no longer carry on the activity.
If you have been consciously election campaigning, or unconsciously
campaigning and not appreciating that you were in breach of the rules, what
should you do?
• Was the campaigning that you have been doing election campaigning under the Act?
• How much have you spent? How much do you plan on spending?
• Consider whether to cease the campaigning with immediate effect and not have to
register, or whether or not to register. Consider whether the compliance risks and
general public exposure of registration is warranted. Consider speaking to the
Electoral Commission to obtain their views.
• Make an assessment of whether you could be considered to be involved in regulated
campaign activity.
• If so, look at your likely spending. Will it breach or be close to the permitted limits?
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Regulated Campaign Spending, and can Companies and
Charities Unknowingly be in Breach of the UK Lobbying
Act?
• Consider your risk; is it worth registering with the additional reporting and other
compliance burdens that it will bring or would it be better to modify your behaviour or
educate your relevant workforce to avoid infringement?
• If a political party adopts a policy or position you already hold, consider carefully
ensuring that you make no changes in response.
• Ensure that those responsible for creating and implementing corporate
communications with the public of all kinds receive some level of awareness training
to ensure that any potential issues can be identified and addressed.
• Take advice generally—this is a new, untested and difficult area.
Authors:
Piers Coleman
[email protected]
+44.(0)20.7360.8206
Laura Atherton
[email protected]
+44.(0)20.7360.8322
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