What is the largest source of funding for political parties?

Whether they are in government or opposition, most political parties receive the bulk of their funding through membership fees and donations by individuals, corporations and trade unions.

However, public funds are also an important source of income for opposition parties, especially for smaller parties. For example in the 2020/21 financial year, the Democratic Unionist Party received £352,000 in public funds from Westminster[1], and £151,000 from the Northern Ireland assembly[2]. Meanwhile, its other income totalled £98,000 in 2020.[3]

How much funding do political parties receive? 

During the 2020 calendar year, the Labour Party reported a total of £34.5m in income from membership fees, donations and other forms of non-public funding[4]; the Conservative Party £23.4m[5] and the Liberal Democrats £5.2m[6]. These amounts were all much larger than the amounts of public funding they received.

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Sources of income of parties with seats in the House of Commons (Updated: 25 Apr 2022)

Notes: Not all parties’ annual financial statements appear to be comprehensive. For example, the Labour Party does not list the Cranborne Money[7] (funds to support the main opposition party in the Lords) it receives and Plaid Cymru makes no mention of its Short Money (funds to support opposition parties in the Commons)[8]. To ensure our figures were as accurate as possible for the chart, we used House of Commons Library briefings to work out how much Cranborne Money and Short Money Labour and Plaid Cymru respectively received in 2020.[9] Because political parties release their annual financial statements by calendar year, and the Houses of Parliament sort public funds allocated to political parties by financial year, this involved adding together 25% of the funds allocated in 2019/20 and 75% of the funds allocated in 2020/21.

To calculate the public funds received by the DUP in 2020, we added together income from its General Account and its Westminster Parliamentary Account.[10] However, there is no clear way of knowing that the income listed in the Westminster Parliamentary Account has not already been included in the General Account.

Funds provided by devolved parliaments are not included in our data (e.g. a grant from the Scottish parliament listed in the Conservative Party’s Annual Report[11]). The Green Party listed Covid-19 Job Retention scheme grants as one of their sources of income[12], but this is also not included in our data.

What are the rules on party donations? 

There are no limits on how much can be donated to a political party or politicians. 

Donations and loans to politicians must be from a ‘permissible source’. In Great Britain, only individuals on a UK electoral register can make donations. UK-registered companies, and some UK-registered organisations (like trade unions) are also permissible sources. In Northern Ireland, ‘permissible sources’ also include Irish citizens and Irish-registered companies. 

Political parties are responsible for checking the source of loans and donations to ensure they come from permissible sources. They must return donations and loans if they are uncertain of the identity of the donor or lender. 

Can non-UK citizens and companies donate to political parties? 

Foreign companies and individuals who are not on the UK electoral register cannot make political donations. The only exception is for overseas visits. Foreign organisations and individuals can pay for ‘reasonable costs’ of an overseas visit for politicians.

What are the requirements for reporting donations? 

Political parties and politicians must record details of loans and donations. Donations or loans over £7,500 to the central party must be reported to the Electoral Commission. Party sections whose finances aren’t managed by the central party must report donations over £1,500.   

MPs must report loans and donations over £500 made in connection with their activities as an MP to the parliamentary commissioner for standards. 

Political parties and MPs must also report any impermissible loans and donations that they return to the donor to the Electoral Commission and the parliamentary commissioner for standards, respectively. 

What are the different kinds of public funds available to political parties? 

The main source of public funding for political parties is ‘Short Money’, named after the Labour MP Edward Short, a minister in the Wilson government. It was introduced in 1975 to support opposition parties carry out parliamentary business, including policy research. 

Parties primarily use Short Money to cover the salaries of researchers in their central offices. In 1993, additional funds were made available to cover travel expenses, and then again to cover the cost of running the office of the leader of the opposition in 1999. 

Short Money is available to opposition parties that have won either two seats in the House of Commons at the previous general election, or one seat and more than 150,000 votes in total from all seats contested. Independent MPs – those without a party affiliation – are not eligible for any public funds. 

Parties that cross the two-member threshold as a result of a by-election or a defection from another party mid-way through a parliamentary session are not eligible for Short Money. This means that if MPs break away to form a new political party between elections, as happened during the 2017–19 parliament, that party is not eligible for public funding. 

Short Money is also not available to Sinn Féin, the Irish republican party, because its members do not take an oath of allegiance to the Crown (or take their seats in Westminster). Since 2006, ‘Representative Money’, an analogous scheme to Short Money calculated using a similar funding formula, has been paid to the party. 

Parties in government do not receive Short Money. When the Liberal Democrats went into coalition with the Conservative Party in 2010, they no longer qualified for Short Money and were forced to reduce their central office research staff. The Democratic Unionist Party continued to receive Short Money in the 2017–19 session after it concluded a confidence and supply agreement with the Conservative Party, as it did not formally join the government. 

Cranborne Money, introduced in 1996, provides funds to support the main opposition party in the House of Lords (currently Labour), the second-largest opposition party (the Liberal Democrats) and cross-bench peers. 

Policy development grants, introduced in 2000, are awarded to parties to help them develop policies to include in election manifestos. The grants are available to opposition parties and those in government with two or more MPs (who have taken the oath). They are administered by the Electoral Commission. 

How are the funds allocated to political parties? 

At the start of the 2021/22 financial year, general funding to opposition parties under the Short Money scheme was allocated as follows: £18,407.21 per seat won by the party at the last election and £36.76 per 200 votes the party received in the same election.[13] A lump sum for travel expenses was divided between the opposition parties in the same proportion as the amount given under the general funding scheme. 

The total value of policy development grants each year is £2m. The Electoral Commission distributes half of this amount equally between eligible parties. The other half is distributed using a formula that takes into account the vote share the party received in each constituent nation of the UK and the proportion of the registered electorate where the party contests elections. 

How much public funding do parties receive? 

Public funding allocations to political parties 2021/22

Political party

Short money

Office of the leader of the opposition

Cranborne money

Policy development grant

Total

Labour Party

£5.7m

£858k£667k£451k£7.7mLiberal Democrats£904kN/A£333k£451k£1.7mScottish National Party£1.1mN/AN/A£182k£1.3mConservative PartyN/AN/AN/A£451k£451kDemocratic Unionist Party£197kN/AN/A£157k£353kSocial Democratic and Labour Party£105kN/AN/A£157k£261kPlaid Cymru£105kN/AN/A£151k£256kGreen Party£182kN/AN/AN/A£182kSinn Féin£166kN/AN/AN/A£166kTotal

£8.5m

£858k£1m£2m£12.4m

In the 2017 general election, the Scottish National Party won more seats (48) than the Liberal Democrats (11), but the latter’s national vote share was higher (11.5% to 3.9%) as they contested constituencies across the country. This meant the parties received similar shares of the Short Money allocation. 

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