Increasing the amount of money that political parties can spend during election campaigns might not sound sensible, but as Justin Fisher explains, the government’s proposal to do so seems reasonable in principle, but must be implemented with care to avoid disproportionately benefiting the two most popular parties.

On 20 July, Michael Gove, the Secretary of State responsible for overseeing party finance regulation, announced that party (and candidate) campaign spending limits for Westminster elections were to be increased in line with the value of money. This received little fanfare and was only touched upon briefly in the press the following month. This proposed change is both welcome and significant. So why is the change being proposed? To understand this, it is worth explaining how party spending limits are calculated.

Party Spending limits

Party (rather than candidate) spending limits were introduced by the Political Parties, Elections & Referendums Act 2000 (PPERA). Setting the period of regulation as 365 days before a general election, the act devised a formula for parties based on the number of constituencies in which a party fielded a candidate. The overall party spending limit was set at the number of seats contested multiplied by £30,000. Thus, at the 2019 general election, if a party fielded candidates in the 631 constituencies in Great Britain (assuming they did not contest the seat of the Speaker), the national party spending limit would be £18,930,000.

However, the sum per constituency (£30,000) set by PPERA in 2000 has never been adjusted for inflation. As a result, the national party limit is approximately 50% lower in real terms than when it was introduced. When accounting for whole-year inflation, the £18,930,00 spending limit equates to approximately £9,473,344 at 2022 prices. This erosion of the level in real terms has occurred over a period of relatively low inflation. So, given the relatively high rates of inflation experienced in 2023, this real-term figure will be even lower come the end of this year.