The launch of the official referendum campaign period on Friday 15 April also brings into effect tight controls on campaign expenditure, which will affect how businesses can engage in the debate. Given the importance of the voice of business on the implications of the referendum outcome, many have raised concerns about their ability to lay out the relevant facts and figures after Friday. Even for businesses that are simply carrying on business as usual, there is a risk that they could fall foul of the rules, and risk criminal penalties.
Some businesses have expressed concern about the clarity of the rules, particularly in light of indications from pro-Brexit campaigners that they will be actively monitoring business compliance.
Charles Brasted, Partner in the Hogan Lovells UK & EU Public Law and Policy practice, said:
"The referendum expenses rules are relevant to any business that is communicating about the referendum, whether it has taken a public position or not. They do not prohibit businesses from engaging in the debate — and it is of course vital that the voice of business is heard and understood at a time when many are crying out for more facts and figures to inform the political debate. However, the rules do impose strict limits on what businesses can spend without registering as a campaigner. These rules are highly likely to curtail the role of those businesses that have a strong view.
"For many businesses, the real risk is of inadvertent breaches as they go about their usual business activities and special care must be taken during the campaign period to ensure that any communications relating to Brexit or the referendum are seen to be balanced. That may present particular challenges for those businesses routinely communicating with clients, employees and the wider world on political and economic risks and opportunities."
What the rules say
With the economic impact a key issue, some businesses have expressed strong views on Brexit, while others have chosen to remain publicly neutral. There is no prohibition on businesses engaging in the Brexit debate and/or campaigning for either side. However, statutory rules (The Political Parties, Elections and Referendums Act 2000 ('PPERA 2000'), as amended by the EU Referendum Act 2015), governing the campaign period limit the amount of money that any person (including businesses) can spend on "referendum expenses" unless they have registered as a campaigner - which would require them to declare which side they support and to disclose full details of all referendum expenses. Expenditure in excess of this will give rise to criminal penalties if the person authorising it knew or ought to have known that it was in excess of the limit.
Referendum expenses are defined as expenses incurred in respect of a wide range of activities (as listed in Part 1 of Schedule 14 PPERA 2000) including informational materials and events; and in connection with promoting or procuring a particular outcome in the referendum (the purpose test).
This test has to be applied on a case by case basis in respect of each activity.
On 11 April 2016, the Electoral Commission published further guidance aimed at addressing some of the practical questions raised by businesses, and this provides some examples of what might count as referendum expenses.
Key questions that remain include:
- Could events or communications aimed at clients or employees still be caught if they meet the purpose test?
- Could a business that has declared itself neutral still be found in breach of the rules if its communications or events inadvertently give undue prominence to one outcome or another?
Charles Brasted continued: "These questions may be particularly difficult for businesses who routinely communicate on economic and political risk as part of their usual business activities, particularly if they are expected to give opinions. They will need to monitor all of their communications carefully and to take advice to ensure they are taking reasonable precautions to avoid a breach."