Campaign finance systems in the US and the UK have provoked similar controversial discussions over the past few years especially due to reforms introduced in both jurisdictions by the Bipartisan Campaign Reform Act (BCRA) of 2002 in the US and the Political Parties, Elections and Referendum Act (PPERA) of 2000 in the UK, respectively. Despite the similarities characterizing the relevant debates in both countries and relating mostly to their source—which could be briefly described as the effort to decrease the influence of big money and special interests in government—striking differences exist, stemming from a number of factors: Different constitutional frameworks, governmental structures and roles of the judiciary as well as historical deviations in political cultures and in the public perception about donations to election campaigns have shaped dissimilar regulatory frameworks.

The purpose of this alert is not to extensively analyze the differences between such regulatory frameworks. It rather intends to provide a comprehensive overview of the different legislative approaches to traditional campaign finance measures to demonstrate the different approaches of the two systems.

Contribution limits

Contribution limits to candidates and political parties alike have consistently been an inextricable part of the US campaign finance system. The contribution limits provided by the Federal Election Campaign Act (FECA) of 1971 were upheld by the US Supreme Court in its landmark decision Buckley v. Valeo despite First Amendment objections and naturally survived FECA’s amendments that followed the decision in 1974 and 1979. Contribution limits are still applicable under FECA and are adjusted from time to time to reflect inflation and other circumstances. Indicatively, current individual candidate contribution limit at the federal level is set to $2,700 per candidate election while the limit on individual contributions to the six national party committees was raised to $33,400 per year. Similarly there is a special limit on national party committees that are now allowed to give up to $46,800 per candidate for the US Senate per campaign. Recently, the Supreme Court in McCutcheon v. FEC struck down the aggregate contribution limits provided by FECA initially thought to have been upheld in Buckley.

In the UK, no contribution limits to political parties for general parliamentary elections to the Westminster Parliament are provided by the PPERA or any other applicable campaign finance instrument. The system overall is characterized by a different philosophy and balances the absence of contribution limits with strict expenditure limits (see below) and permissible donor rules. Overall, it must be mentioned that the system in the UK is party-centered and there are no candidate centered organizations that run campaigns parallel with the political parties as in the US. This shall always be taken into account when considering where large contributions are directed during general elections in the UK.

Expenditure limits

A fundamental premise of US campaign finance law is that expenditure limits violate the First Amendment and are thus prohibited. The Supreme Court in Buckley subjected the expenditure limits provided by FECA to exacting scrutiny, striking them down as they “necessarily reduce […] the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached.”

In the UK, spending caps apply at the national level in general elections during the campaign periods. Campaign period is defined under the PPREA as the period of 365 days ending with the date of the poll for the election. The spending cap is determined by the number of constituencies which are contested by a party, each constituency capped at £30,000. For example, the spending cap for the upcoming 2015 general election for those parties that filed candidates in all 650 seats was set at £19,500,000, equivalent to £30,000 for each of the UK's 650 constituencies. Similar expenditure limits exist for individual candidates.

The formula upon which these are determined is based on the number of electors in the constituency of the candidate and a cap per elector is set by the Secretary of State. For the upcoming general election, the pre-candidacy spending limit, during the “long campaign” (as of December 19, 2014), was £30,700, plus 9p per voter in county constituencies, and 6p per voter in borough seats. During the “short campaign” (from March 30, 2015 up to the day of the general election on May 7, 2015), an official candidate may spend £8,700, plus 9p per voter in county constituencies and 6p per voter in borough seats. It must be noted that average reported expenditures per candidate in the UK during general elections are generally low (below £10,000) and cannot be compared to the definitely higher amounts spent by candidates for federal office in the US.

Disclosure requirements

If there is one campaign finance norm, where both jurisdictions are aligned and pretty similar obligations apply, it is disclosure requirements. From Justice Brandeis who over a century ago commented that “publicity is justly commended as a remedy for social and industrial diseases” as sunlight that “is said to be the best of disinfectants” to Chief Justice Roberts who more recently wrote for the Court in John Doe#1 v. Reed that disclosure “promotes transparency and accountability in the electoral process to an extent other measures cannot”, disclosure has long been central to thinking about campaign finance regulation in the US.

In particular, the FECA requires candidate committees, party committees and Political Action Committees (PACs) to file periodic reports disclosing the money they raise and spend. Candidates must identify, for example, all PACs and party committees that give them contributions, and they must identify individuals who give them more than $200 in an election cycle. Additionally, they must disclose expenditures exceeding $200 per election cycle to any individual or vendor.

As mentioned above, the UK campaign finance system is characterized by strict disclosure requirements which were introduced to balance the absence of contribution limits. Donations over £5,000 to the main political party offices or over £1,000 to a party’s unit are required to be reported to the Electoral Commission on a quarterly basis; the same reports need to be submitted to the Commission every week during a general election campaign. Prior to 2005, a scandal created by a parties’ coordinated effort to circumvent the strict disclosure requirements by taking out considerable loans for election purposes, which were not deemed as reportable at that time, monopolized the public opinion and media’s attention for some time. The law was then amended to include loans in the reporting requirements for political parties. Candidates are also required to submit a return detailing their campaign expenses to the Electoral Commission within thirty-five days of the declaration of the election result. Donations of more than £50 to the candidate must be included in the return.

Concluding remarks

As mentioned above, the purpose of this post is not to provide an exhaustive analysis of the differences between the US and the UK campaign finance systems. In fact, important differences concerning the function and the roles of the systems’ enforcement mechanisms, the Federal Election Commission and the Electoral Commission respectively, as well as the different provisions on electioneering communications will be part of a subsequent post.

Interested parties in financing political parties and candidates in the two countries should avoid misperceptions stemming from their experience in any of the two systems. The frameworks differ substantially and high level legal counseling is required to avoid violations that stem from unpermitted analogies between them. Dentons has a team of experienced lawyers involved in its Trans-Atlantic Political Law practice, who would be happy to assist you and respond to any questions you may have on either the US or the UK campaign finance system.