Investigation: Conservative and Unionist Party campaign spending returns for the 2014 European Parliamentary Election, 2015 UK Parliamentary General Election, and the 2014 parliamentary by-elections in Clacton, Newark and Rochester and Strood

The scope of the investigation

In January 2016 our attention was drawn to broadcast reports in which Channel 4 News made a number of allegations about spending by the Party and/or its candidates in the South Thanet constituency during the 2015 UKPGE campaign.

Channel 4 News subsequently ran other broadcast reports concerning the way the Party had reported party and candidate campaign spending during 2014 and 2015. After assessing the evidence provided by the reports, and having had discussions with the Party, we opened an investigation on 15 February 2016.

The scope of the investigation extended as further evidence came to light. In total this investigation considered the following matters:

• Whether the Party’s campaign spending return for the 2014 EPE was a complete statement of all campaign payments made. The investigation looked at campaign spending by or on behalf of the Party and/or its candidates in three by-elections in Clacton, Newark and Rochester and Strood in 2014. The first of those by-elections took place during the regulated period for the 2014 EPE, and any party campaign spending in relation to the EPE during that by-election was required to be included in the spending return for the EPE. Failures in relation to this may constitute offences under section 82(4) of PPERA. In this report these are referred to as the ‘by-election issues’.
• Whether the Party’s campaign spending return for the 2015 UKPGE was a complete statement of all campaign payments made, again in relation to spending by the Party during the 2014 by-elections, all of which took place during the regulated period for the 2015 UKPGE. Failures in relation to this may constitute offences under section 82(4) of PPERA. In this report, these again are referred to as the ‘by-election issues’.
• Whether the then registered treasurer of the Party, Mr Day, ensured that accounting records were kept which were sufficient to show and explain the Party’s transactions. This concerned the Party’s accounting records in relation to campaign activity carried out by the Party on behalf of the candidates in the three aforementioned by-elections, and reported by the candidates. Failing to keep sufficient accounting records constitutes a contravention of a prescribed requirement under section 41 of PPERA. These are the ‘accounting records issues’.
• Whether the Party’s 2015 UKPGE campaign spending return was a complete statement of all campaign payments made by the Party during the 2015 UKPGE campaign, in respect of payments incurred by the Party in the South Thanet constituency. This concerned whether the Party’s return included spending that was for the purpose of electing its candidate in South Thanet, and was not therefore Party campaigning and whether it failed to include all Party campaign payments relating to this constituency. Failures in relation to the campaign spending return such as this may constitute an offence under section 82(4) of PPERA. These are the ‘UKPGE spending return - South Thanet issues’. 
• Whether the Party’s 2015 UKPGE campaign spending return was a complete statement of all payments made in respect of spending on transporting Party activists to a number of constituencies across the UK to carry out campaign activity. This concerned whether the Party’s return included spending associated with this activity which was not Party campaign spending, and whether it failed to include all Party campaign payments relating to this activity. Failures in relation to the campaign spending return such as this may constitute an offence under section 82(4) of PPERA. These are the ‘UKPGE spending return – Battlebus2015 issues’.
• Whether further payments were omitted from the Party’s 2015 UKPGE campaign spending return. Failures in relation to the campaign spending return such as this may constitute an offence under section 82(4) of PPERA. These are the ‘UKPGE spending return – omitted payments issues’.
• Whether there were any invoices or receipts missing from the Party’s 2015 UKPGE return. Failures in relation to this may constitute an offence under section 82(4) of PPERA. This is the ‘UKPGE spending return - omitted invoices/receipts issue’.
• Whether there was evidence to suggest that the then registered treasurer of the Party, Mr Day, may have knowingly or recklessly made a statutory declaration in respect of one or both returns that those returns were complete and accurate when they were not. Failures in relation to this may constitute an offence under section 83(3) of PPERA. This is the ‘declaration issue’.

Under its section 145 of PPERA duty to monitor and take all reasonable steps to secure compliance with election spending under the Representation of the People Act 1983 (RPA), we also considered the accuracy or otherwise of a number of campaign expense returns made by Party candidates and their agents, following the 2014 8 EPE and the 2015 UKPGE.

We have no powers to make findings of offences in respect of these returns, and have not sought to do so. However, we have made observations in respect of these returns under its section 145 duty, which are included in this report.

This section summarises the conduct of the investigation and the key actions taken by us.

The Party did not cooperate fully with our enquiries. While at times answers were forthcoming, and in particular cooperation was given when arranging interviews with certain Party officials, at other times the Party hindered and caused delay to the investigation.

During the investigation we had contact not only with the Party but with a number of other individuals and organisations. Those other individuals and organisations cooperated with our enquiries throughout2 .

The opening and scope of the investigation

In January 2016 Channel 4 News made a number of allegations about Party spending in South Thanet during the 2015 UKPGE campaign. Its broadcast reports alleged that:

• The Party had included spending in its 2015 UKPGE campaign spending return which was not party campaign spending. The spending related to hotel bills at the Royal Harbour Hotel in Ramsgate. According to the reports, this spending should instead have been included as part of candidate expenses in the South Thanet constituency, for the Party candidate Mr Craig Mackinlay.
• Spending incurred by the Party in the neighbouring constituency of North Thanet, at the Premier Inn Hotel in Margate, had not been included in the Party’s 2015 UKPGE spending return.
• The cost of advertising in a local Thanet newspaper had been included in the Party’s return, but was in fact candidate campaign expenses since the newspaper had only been distributed in the North and South Thanet constituencies. It should, the report alleged, have been split between the returns for the two candidates in those constituencies.

We raised these allegations with the Party, which explained that South Thanet had been its base for its ‘anti-UKIP’ campaign. We then opened an assessment to determine whether or not it had reasonable grounds to suspect offences under PPERA in relation to the Party’s 2015 UKPGE spending return. The assessment concluded that an investigation should be opened. The Party was notified accordingly and evidence sought in order to progress the investigation, both from the Party and from the UK Independence Party (UKIP).

In a report broadcast on 8 February 2016, Channel 4 News made further allegations, this time about Party spending during three by-elections in 2014. These by-elections were held in the constituencies of Newark (on 5 June 2014), Clacton (on 9 October 2014) and Rochester and Strood (on 20 November 2014). The report alleged that the Party had incurred spending on accommodating employees and activists at hotels in those constituencies during the by-election campaigns, and that those employees and activists were working on the by-election campaigns. However, the spending was not reported on the candidate returns for those by-elections.

The dates of the spending at these hotels fell within the regulated periods for the 2014 EPE and 2015 UKPGE. Any Party campaign spending during those periods should have been included in the Party’s campaign spending returns for those elections. However, none of the spending identified in the report appeared to have been declared in the Party’s spending returns. We assessed these further allegations and concluded that they should be investigated to determine whether the Party’s 2014 EPE, and 2015 UKPGE, returns were complete and accurate. We told the Party that the scope of the investigation had widened and again sought relevant evidence.

In April 2016, while the investigation was progressing, the Party told us that it had identified omissions in the Party’s campaign spending return for the 2015 UKPGE. It said that Channel 4 News had raised new concerns with it about a national tour by Party activists that took place during the election campaign, under the name ‘Battlebus2015’. The Party had reviewed its reporting of spending on Battlebus2015 and uncovered £39,511.90 of spending that it considered it should have reported in the Party’s spending return, but which had been missed. The review was ongoing at the time but completed during the investigation.

Shortly afterwards, Channel 4 News broadcast its report about the Party’s spending on the Battlebus2015 tour. It alleged that the Party had paid for an operation to transport activists to over 20 marginal seats across England, known as Battlebus2015, and that it had evidence those activists campaigned for individual candidates as well as the Party. It stated that none of the costs associated with this were included in the relevant candidate returns, and referred to the Party’s acknowledgement that some costs had not been included in the Party’s spending return.

The Party’s acknowledgement gave us further reasonable grounds to suspect that the Party’s spending return was incomplete. However, we did not accept at face value the Party’s assertion that all the missing spending should have been reported in the Party’s spending return. Instead, we explained to the Party that it would be whether the Party had, over 2014 and 2015, been improperly reporting spending by the Party on its and its candidates’ campaigns.

Engagement with the Party

From February to May 2016 we sought to obtain relevant documents and information from the Party by way of three statutory notices. These notices were issued under Schedule 19B paragraph 3 of PPERA. They covered, in turn, the South Thanet issues (issued on 18 February), the by-election issues (issued on 23 March) and the Battlebus2015 issues (issued on 9 May).

The Party responded in part to the first and second notices by the deadlines given. Following that, however, it caused delay by incorrectly asserting that we did not have the power to request some of the material, and by citing administrative reasons for taking additional time to respond. We granted extensions, both by amending the first notice and through voluntary agreement with the Party.

Despite this, by May 2016 we still had not received full disclosure from the Party of the required material. Consequently, we were no longer willing to agree to the Party’s continuing requests for further periods of time to provide the material and, given the Party’s limited disclosure up to that point, did not have confidence that the Party would provide all the material.

In May 2016 we lodged an application with the High Court for a documents and an information disclosure order. Later that day the Party provided the remaining material from the first two notices. After reviewing this material we withdrew our application to the High Court.

The Party complied with the third notice by the deadline given.

During October 2016 we interviewed four former or current Party officials. These were:

• Lord Stephen Gilbert of Panteg, who was the Campaigns Director at the Party during the 2015 UKPGE campaign. Lord Gilbert was interviewed in lieu of a Senior Campaigns Officer at the Party who had been based in South Thanet during the 2015 UKPGE campaign period. The officer declined an invitation to be interviewed on the grounds of ill health.
• Mr Alan Mabbutt, who was interviewed in his capacity as Chief Legal Officer of the Party, which he held during 2014-15.
• A Senior Press Advisor who had been employed by the Party as a consultant media advisor, and was based in the South Thanet constituency during the election campaign.
• Mr Simon Day, who was interviewed under caution on behalf of the Party and as its registered treasurer during the events under investigation.

We also interviewed a number of individuals who were involved in the decisions and/or conduct of the Party’s campaign activity during 2014-15. They were all interviewed in their personal capacity. These individuals were:

• the Right Honourable Mr Grant Shapps MP, Co-Chairman of the Party in 2014-15;
• the Chief of Staff to Mr Shapps during 2014-15; and
• the Director of Roadtrip2015 and Battlebus2015

We also spoke to three volunteers for the Party who acted as ‘team leaders’ on the buses used to visit constituencies as part of the Battlebus2015 campaign. Further, we issued a notice under Schedule 19B paragraph 3 of PPERA to one of these team leaders who had chosen not to provide information voluntarily.

We had ongoing correspondence with the Party from May 2016 to the conclusion of the investigation. This correspondence covered the issues under investigation, set out our developing views on these and contained further information and explanation from the Party. During this correspondence two further notices under Schedule 19B paragraph 3 of PPERA were issued by us on 15 September 2016 and 12 October 2016 to obtain material required to progress the investigation. In both cases notices were issued after the Party did not provide the material on initial request. The Party responded to both notices by the deadline given by us.

In February 2017 we issued three initial notices to the Party under Schedule 19C of PPERA. These set out our initial determinations in respect of contraventions and offences committed by Mr Day, and, in accordance with Schedule 19C, invited the Party to make representations. Under Schedule 19C the Party had 28 days from receipt of the notice to make any representations, and this deadline expired on 7 March 2017.

We copied the initial notices to Mr Day and explained we would accept representations from him also. Mr Day did not make representations on the notices.

The Party made their representations on the deadline of 7 March 2017. These were considered by us and a final determination made in respect of the contraventions and offences, and the sanctions resulting from them. This final determination was issued to the Party on 13 March 2017.

Engagement with other individuals and organisations

During the course of the investigation we issued three notices under Schedule 19B paragraph 3 of PPERA to Channel 4 News, to obtain the evidence underpinning its broadcast reports and allegations. Channel 4 News complied with these notices.

In addition, we issued a notice under Schedule 19B paragraph 3 of PPERA to UKIP. This followed an assertion by the Party that it based a number of officials and volunteers in South Thanet during the 2015 UKPGE campaign as a direct result of UKIP running its national campaign from the area. The notice required the provision of information relating to the location of UKIP’s national campaign. UKIP provided the information, which was analysed as part of the investigation.

Finally, a number of emails and letters were received from members of the public, concerned about whether campaign spending in their constituency had been properly reported by the Party. Many of these supplied examples of campaign activity by the Party. Each one was carefully considered and, where relevant, analysed as part of the investigation.

Engagement with the Police and Crown Prosecution Service

When opening the investigation in February 2016, we noted that the evidence disclosed potential offences in relation to candidate returns under the RPA. If candidate spending had been improperly included in the Party’s spending returns then it was possible that, in addition to the issues with the Party’s return, the candidate returns were inaccurate.

As mentioned above, we do not have investigation or enforcement powers in respect of offences under the RPA. These can only be investigated by the police and, if appropriate, prosecuted by the Crown Prosecution Service (the CPS). However, as noted above, we have a duty under section 145 of PPERA to monitor and take all reasonable steps to secure compliance with the RPA candidate spending rules. We recognised that any potential RPA offences relating to the 2014 by-elections were out of time for police investigation as more than a year had passed since the alleged offences. However, those relating to the 2015 UKPGE were, at that point, less than a year old.

In February 2016 we discussed the matters relating to South Thanet with Kent Police, who decided that, at that time, the evidence to hand was insufficient for it to investigate.

In April 2016, following the identification of the Battlebus2015 issues, we wrote to the Director of Public Prosecutions. We expressed our view that these issues raised reasonable suspicion of a course of conduct by the Party that may involve offences under the RPA. We drew attention to the fact that it was approaching a year since any such RPA offences may have been committed. In its view, the evidence and the seriousness of the issues warranted applications to the court to extend the time available to the police and the CPS to investigate.

At the request of the CPS we hosted a meeting with the CPS and relevant police forces. Consequentially, a number of forces made applications to the court and were granted an extension to undertake their investigations. This included Kent Police, which decided that it would take the matter forward.

Our investigation was entirely separate from any police investigation. In order to assist the police, we agreed to meet with its representatives and with the CPS on a number of occasions. We provided information to the Police under request to further their investigations and did so in accordance with our information-sharing powers.

The by-election issues

The by-election issues looked at three by-elections held during 2014. These were in Newark (June 2014), Clacton (October 2014) and Rochester and Strood (November 2014).

In February 2016, Channel 4 News published an allegation that the three Party candidates in these by-elections had failed to declare hotel payments incurred by the Party for Party staff and activists working on the by-election campaigns.

Invoices and documents obtained by Channel 4 News, and subsequently provided to us, indicated that the Party booked the following accommodation for employees and volunteers during those by-elections:

Newark by-election:

• Kelham House: 54 nights between 1 May and 6 June 2014 at a cost of £4,519.95
• Premier Inn: 125 nights between 19 May and 6 June 2014, cost unknown

Clacton by-election:

• Lifehouse Spa: 290 nights between 4 September and 11 October 2014, cost unknown
• Premier Inn: 71 nights between 9 September and 1 October 2014 at a cost of £6,582.86

Rochester and Strood by-election:

• Bridgewood Manor: 597 nights between 6 October and 22 November 2014 at a cost of £51,191.16
• Premier Inn: 246 nights between 17 October and 22 November at a cost of £20,985.91

All three by-elections took place during campaign periods for national elections. In particular, the spending associated with the Newark by-election took place during the campaign period for the 2014 EPE, and also during the beginning of the campaign period for the 2015 UKPGE. The spending associated with the Clacton and the Rochester and Strood by-elections took place during the campaign period for the 2015 UKPGE.

We do not have specific powers to investigate and enforce incomplete candidate returns. But we were concerned about whether the Party employees and volunteers based in the constituencies where the by-elections were being held may have also been carrying out campaigning for the Party for the purpose of the EPE and UKPGE campaigns.

If this was the case, then a proportion of the hotel accommodation costs incurred in locating them in those constituencies may have been reportable in the Party’s spending returns for the 2014 EPE and 2015 UKPGE. However, the spending detailed above was not included in either of these returns.

In response to our enquiries, including the notice issued to it on 23 March 2016, the Party provided us with information concerning the individuals located in the hotels and their roles. This included evidence of the work the individuals undertook whilst located at the hotels, such as electronic diaries, campaign material and letters. The Party explained that while they were located in those constituencies its employees both campaigned for the Party candidates and continued with their routine work for the Party.

We also considered the information published by, and obtained under notice from, Channel 4 News, including the accommodation invoices and receipts.

The UKPGE spending return South Thanet issues 

Mr Craig Mackinlay was the Party candidate for the South Thanet constituency during the 2015 UKPGE. Under the RPA, Mr Mackinlay and his agent were required to deliver an election expenses return including all expenses relating to his campaign. In this return Mr Mackinlay reported the following amounts:

• For the Long Campaign, from 19 December 2014 to 6 April 2015 which was the day before Mr Mackinlay became a candidate, Mr Mackinlay reported expenses totalling £32,661.26. His spending limit was £37,016.38.
• For the Short Campaign, from 7 April 2015 when Mr Mackinlay became a candidate to 7 May 2015 which was polling day, Mr Mackinlay reported expenses totalling £14,837.77. His spending limit was £15,016.38.

The team based in South Thanet

The Party advised us that it had chosen to base a small team in the South Thanet constituency. It said that the constituency was of particular importance during the campaign because the candidate for UKIP in that constituency was its then leader Mr Nigel Farage. The Party stated:

As part of its broader general election campaign, [Conservative Campaign HQ] had set up a series of national rebuttal and attack teams for Labour, the Liberal Democrats and for UKIP. To address the unusual method adopted by UKIP, CCHQ decided to base its national UKIP campaign team in Kent ("CCHQ UKIP team"), mirroring the fact that the UKIP national campaign operation was, uniquely, in Kent, and not in Westminster. The Labour Party also focused substantial national anti-UKIP activity in Kent.

Each of CCHQ's party-focused teams researched and created political material to deploy nationally as part of the national campaign literature. They also had a role in ensuring that any local literature was consistent with national campaign messages.

Further, the Party said that the team researched and created national campaign material and “…also had a role in ensuring that any local literature was consistent with national campaign messages.”

This team stayed in hotels in the Thanet area, notably the Royal Harbour Hotel and the Premier Inn Margate. Mr Mackinlay’s spending return does not include any entries in relation to these two hotels. Nor does it include any spending associated with the people who stayed at the hotels, such as salary or subsistence costs.

The Party’s 2015 UKPGE spending return contained four entries, with associated invoices, totalling £15,640.65 in relation to spending at the Royal Harbour Hotel. The invoices relate to hotel rooms booked at the Royal Harbour Hotel between 23 and 29 March, 8 and 15 April and 20 April and 7 May 2015.

The Party’s spending return did not include any expenditure in relation to the Premier Inn Margate. However, invoices seen by us indicated that the Party had booked rooms at the Premier Inn Margate between 14 April and 9 May 2015.

We obtained and reviewed significant evidence from the Party and under interview about the activities of the team based in South Thanet. From our analysis, we are satisfied that several of them were, for a proportion of their time during the campaign, working to procure the electoral success of Mr Mackinlay rather than of the Party and its candidates generally. In particular, we looked into the role and activities of the following members of the team based in South Thanet:

• A Senior Campaigns Officer, who the Party said was tasked with taking a lead role in the CCHQ UKIP team, liaising with Mr Mackinlay’s campaign team where necessary. This Officer was based in the Royal Harbour Hotel during part of the election campaign. The Commission concluded that she took an active organisational role in Mr Mackinlay’s campaign. She had oversight of his activities and took an active role in coordinating his campaign. She also contributed to drafting campaign material promoting Mr Mackinlay’s electoral success. This role in Mr Mackinlay’s campaign was evident in many of the emails sent by her during the election campaign. By way of examples from these emails the Commission noted the Officer commenting in correspondence to another of the individuals based in South Thanet that Mr Mackinlay had not been writing his own literature and that she had spent her “…first couple of weeks here getting stuff re drafted…” In another correspondence, Mr Mackinlay refers to her as “the Campaign coordinator”, whilst in further correspondence she advised a volunteer that “…we are running Craig’s campaign”.
• A Senior Press Advisor, who was, according to the Party, responsible for managing national and international media outlets, and liaising with the press with regards to the UKIP national campaign. Again, he was based in the Royal Harbour Hotel for part of the election campaign. We concluded that he was, for at least a proportion of his time, acting as a press liaison on behalf of Mr Mackinlay in particular rather than the Party generally. This included handling queries from local and national press on behalf of Mr Mackinlay, and advising him on his personal media handling approach and messages. For example, the Senior Press Advisor explains in correspondence during the campaign that he has “…been drafted in to help Craig Mackinlay with media issues during the election campaign…” and in separate correspondence explains that he is “…working full-time for our candidate in South Thanet…”
• Two Political Advisors, who according to the Party were providing research support on UKIP and literature sign off in relation to UKIP target seats, to ensure it was in accordance with the Party’s national campaign messages. The Political Advisors, who were also based in the Royal Harbour Hotel, in fact played key roles in determining Mr Mackinlay’s campaign messages and in drafting campaign material promoting Mr Mackinlay’s electoral success. There were a number examples of them commenting or advising on the wording of Mr Mackinlay’s campaign message and digital content. For example, one comments on a video the other has created for YouTube on behalf of Mr Mackinlay, stating:

Thanks... This is ok as far as it goes BUT why are we not trying to convey the messages better? Anybody can stand in sandwich saying traffic is bad. The point is that [C]raig brings cabinet ministers here and can get things done…. Every time we communicate without the messages we are at best wasting our time and at worse losing votes.

The Party also listed several other individuals as being part of this team, including volunteers providing further support, such as assisting with national tours and events held in Kent, attending UKIP rallies and events and monitoring the activities of Mr Farage. Some of the emails involving or referring to the other volunteers show they also played a role in Mr Mackinlay’s campaign; for example, by updating Mr Mackinlay’s ‘digital output’, issuing instructions in respect of the budget on social media messaging for Mr Mackinlay, and drafting campaign material promoting Mr Mackinlay’s electoral success.

As a result of its analysis of the evidence, we are satisfied that the Party did not distinguish adequately between (a) campaigning that opposed UKIP as a party and (b) campaigning that opposed Mr Farage as a candidate and/or promoted Mr Mackinlay as a candidate in the South Thanet constituency. While evidence shows that the Party may have made the political judgement that to oppose Mr Farage was in essence the same as opposing UKIP, the regulatory framework of PPERA required spending on the Party campaign to be reported separately from any spending it undertook on behalf of its candidate.

The evidence shows that, to a significant extent, the team based in South Thanet went about their ‘anti-UKIP’ work by promoting and supporting Mr Farage’s rival for the constituency, the Party candidate Craig Mackinlay. There was no evidence to indicate that Mr Day or the Party made the necessary distinction between the team’s work campaigning against UKIP as a party, and work opposing Mr Farage as a candidate and/or promoting Mr Mackinlay as a candidate. Lord Gilbert, for example, stated that it “…never occurred to [the Party] that this was… constituency spending.”

Further, the evidence the Party provided in respect of the submission of candidate campaign material for factual accuracy and policy checks, showed that this was unrelated to the work that was undertaken by the individuals based in South Thanet as described above. The correspondence, invoices and general election campaign packs seen by us indicated that this was a separate package of services provided by the Party.

Premier Inn Margate

The Party advised us that in error no spending in relation to the Premier Inn Margate had been included in its spending return. The value of the spending incurred in relation to the Premier Inn Margate was provided by the Party and, after omitting non-relevant spending, totalled £3,809.03.

In correspondence and in interview the Party ultimately advised that the explanation for the missing accommodation spending from the Party’s 2015 UKPGE spending return was “simple human error”. We are satisfied that this does not constitute a reasonable excuse. It does not represent evidence of unforeseen or exceptional circumstances beyond Mr Day’s or the Party’s control that prevented it from reporting this spending.

Reporting staff accommodation costs

During the investigation the Party said that it considers that hotel costs for employed staff members are not reportable in its spending return pursuant to Schedule 8, paragraph 2(1)(d) of PPERA, which exempts remuneration and allowances for employed staff. It therefore has argued that the hotel spending should not be included in the Party’s 2015 UKPGE spending return at all and so it has not omitted spending in that regard.

Having sought and obtained from the Party details of the employment terms and conditions for the individuals concerned, we are satisfied that Schedule 8, paragraph 2(1)(d) does not apply. Spending on an employee’s remuneration and allowances is not reportable; spending on expenses incurred by staff while campaigning for the Party are reportable.

Conclusions in respect of the UKPGE spending return South Thanet issues

It is acceptable for a party to apportion spending between the Party’s campaign and that of a particular candidate or candidates. However, we concluded that it was not accurate for all of the Party’s spending on the team in South Thanet to be considered Party campaign spending. Some should have been apportioned to Mr Mackinlay’s candidate expenses.

Under section 82(4)(b) it is an offence for a treasurer, without reasonable excuse, to submit a campaign spending return that is not accompanied by all the required invoices or receipts relating to the payments in the return. Section 76(2) specifies that an invoice or a receipt is required for all payments with a value of over £200.

We identified 81 payments of over £200 included in the return which were not accompanied by the required invoices or receipts. These payments had a total value of £52,924. These payments were identified from credit card statements provided with the return. A credit card statement does not meet the requirements of s80(4) and 76(2) PPERA. It does not provide the itemised details of each payment that would be included in an invoice or receipt.

Once raised by us during the investigation, the Party provided the required invoices or receipts for these payments. The Party provided no explanation in relation to this failure other than to refer to administrative errors in the compilation of its campaign spending return.

Under section 83 of PPERA, campaign spending returns must be accompanied by a declaration to us made by the registered treasurer of the Party. The treasurer is required to state that they have examined the return and, to the best of his or her knowledge and belief, it is complete and correct as required by law. It is an offence for the treasurer to knowingly or recklessly make a false declaration. Civil sanctions do not attach to this offence; it can only be pursued via a criminal prosecution.

When Mr Day made the declaration accompanying the 2015 UKPGE spending return, he declared that he personally had examined the return, and that to the best of his knowledge and belief, the return was complete and correct.

As explained above, we have concluded that the Party’s spending return was missing payments worth at least £104,765, and more likely a far higher figure; that it included payments worth £118,124, a proportion of which should not have been included; and that it did not include the required invoices and receipts for 81 payments to the value of £52,924.Consequently, the spending return was not complete or correct in a number of significant respects.

Our enforcement policy explains that where we consider a criminal offence may have occurred that is outside our enforcement role, if appropriate we will refer the matter to the police.

We considered the evidence gathered in this investigation about Mr Day’s actions in respect of the compilation and submission of the Party’s 2015 UKPGE spending return. As a result, we have referred Mr Day to the Metropolitan Police Service for consideration as to whether to investigate him for a potential offence under section 83(3) of PPERA. It will be a matter for the Metropolitan Police Service as to what steps they take in this regard.

In accordance with the procedure set out in Schedule 19C of PPERA, we issued the Party with initial notices setting out its initial determination in respect of the matters under investigation. For each contravention and offence, the initial notices also set out the proposed sanction and the grounds for proposing it.

The Party made representations in respect of each of the contraventions and offences, and proposed sanctions, set out by us in our initial notices. In its representations, the Party raised a number of points about, and disagreements with, our conclusions in matters of fact and law. This section summarises the key representations made by the Party, and our response to them.

In addition to the key representations set out below, the Party submitted that it had not been uncooperative during the investigation, and that the proposed sanctions were disproportionate in comparison with the penalties issued to other parties in respect of similar matters. We did not agree with these points. The Party’s unreasonable failure to cooperate with us caused delay to the investigation, as described in this report. In addition, when determining the sanctions we considered the specific facts of this case, and its aggravating and mitigating factors, in line with our enforcement policy.

The accounting records issues

The Party submitted that only those situations where the Party received a monetary income or paid out a monetary amount could be ‘transactions’ entered into by the Party. The calculation of the notional invoices provided by the Party for inclusion in its candidates’ returns for the three 2014 by-elections were not, according to the Party, transactions under section 41 of PPERA as there was no movement of money.

This is not the position under PPERA. What counts as a transaction under section 41 of PPERA must be understood in the context of that legislation. The Party’s position would mean that there would be no accounting records kept to cover agreements between a party and its candidates and agents for the provision of campaigning services. This would be a major gap in a party’s financial records, and inconsistent with the purpose of the PPERA rules, which are there to ensure transparency, scrutiny, fairness and legitimacy in elections.

The Party submitted that if contraventions were to be determined in respect of the three 2014 by-elections, then only one sanction in respect of all three should be imposed. The three by-elections were, however, three distinct elections. For us to conclude that three separate sanctions are appropriate is fair and proper. We accepted that the fact that the three arose from the Party taking the same wrong approach to the rules in relatively short succession was a mitigating factor.

The 2015 UKPGE spending return – South Thanet, Battlebus2015 and further omitted payments issues

• The Party raised a point of law that in its view there was no duty on Mr Day as the then registered treasurer to exclude candidate campaign expenses from its Party campaign spending return.
• This position is at odds with section 72(7) of PPERA, which states that party campaign expenditure does not include anything which falls to be included in a return as to election expenses in respect of a candidate or candidates at a particular election. It is also at odds with the purpose of section 80 of PPERA and the wider PPERA campaign spending regime. To read into the rules that a return can include anything, with the impression that it is all reportable campaign spending, and still be lawful, is inconsistent with a regime the purpose of which is for there to be clear transparency about, and public confidence in, campaign spending.
• The Party repeated its point, made during the investigation, that it did not consider spending on accommodation for its staff campaigning for the UKPGE to be reportable. It extended this argument to spending on accommodation for volunteers. To support this point it referred to Part 1 of Schedule 8 of PPERA, which sets out a list of what may be considered campaign expenditure by a Party. Part 1 does not refer explicitly to accommodation.
• We are satisfied that spending on accommodation that is incurred by or on behalf of a registered political party for electoral purposes, is reportable where it is not excluded from reporting by virtue of being candidate campaign expenses or staff remuneration or allowances. The list given in Part 1 of Schedule 8 should be regarded as categories of spending and does not state all types of spending falling within each category, but confirms that all payments qualifying under it are reportable. Staff and volunteer accommodation is not excluded from being reported by paragraph 2 of Schedule 8 – unless it forms part of staff remuneration and allowances which was not, as a matter of fact, the case in this matter. The consequence of the Party’s position would be that political parties with the staffing and financial resource to pay for staff and volunteers to stay and campaign in particular constituencies would have an advantage over those without that resource, as that spending would not count towards the relevant spending limit. This is not consistent with the purpose of the PPERA regime.
• The Party disagreed that the evidence demonstrated its team based in South Thanet took active roles in campaigning for its candidate, Mr Mackinlay. It also disagreed that the evidence demonstrated activities on the Battlebus2015 tour was campaigning in part for candidates in the constituencies visited. We, however, were satisfied with the evidence on this point.

The 2015 UKPGE spending return - omitted invoices/receipts issue

• The Party submitted that failing to include the required invoices and receipts for 81 payments of over £200 was not an omission from its 2015 UKPGE campaign spending return, as the payments themselves were included. The rules in PPERA are clear, however, that an invoice or receipt was required for each of these payments.

Contraventions and Offences

We determined that Mr Day had committed three contraventions under section 41 of PPERA, in that he failed to ensure that accounting records were kept that showed and explained the Party’s transactions. Specifically the Party’s accounting records failed to explain three transactions entered into with three candidates and their agents for a notional donation and spending by the Party on campaigning in by-elections in Newark, Clacton and Rochester and Strood during 2014.

We determined that Mr Day committed an offence under section 82(4)(b) of PPERA in that he failed to deliver, without reasonable excuse, the Party’s 2015 UKPGE spending return accompanied by a statement of all campaign spending payments. Specifically:  

• Spending in relation to South Thanet that was not Party campaign spending was included in the return.
• Party campaign spending in relation to South Thanet was omitted from the return.
• Spending in relation to the Battlebus2015 campaign that was not Party campaign spending was included in the return.
• Party campaign spending in relation to the Battlebus2015 campaign was omitted from the return.
• Five further payments were omitted from the return.

We determined that Mr Day committed a further offence under section 82(4)(b) of PPERA in respect of the Party’s 2015 UKPGE spending return, as a result of payments totalling £52,924 having been reported without the required invoices or receipts.

Penalties

In respect of each of the three contraventions under section 41 of PPERA, we have imposed the maximum financial penalty of £20,000 for the first contravention, £15,000 for the second and £10,000 for the third, a total of £45,000.

In determining this penalty we took into account the following factors:

• The magnitude of the contraventions and the harm caused to confidence in the PPERA regime were, in our view, significant. 
• The correct apportionment of spending between parties and candidates has a significant impact on the effectiveness of, and public confidence in, the PPERA regime.
• The advantage obtained by the Party from its actions with each invoice provided to each of the three candidates and agents which inaccurately understated the amount spent by the Party on behalf of the three candidates. This is irrespective of whether, in the end, the Party’s candidates were successful in the by-election.
• The significant uncertainty for voters as to whether the Party complied with its duties significantly, which increased the weighting to be attached to the magnitude of the breach and the impact on public confidence.
• The lack of cooperation by the Party during the investigation.
• The fact that the Party does not accept the requirement to keep records of this type, which leads us to consider the risk that the Party may follow a similar course of action in future if we do not take robust action to make our position clear.
• An acceptance that, while the second and third contraventions were no less serious than the first, the three separate failures resulted from the same misconceived course of action.

In respect of the offence under section 82(4)(b) of PPERA related to the failure to deliver the Party’s 2015 UKPGE spending return with a statement of all campaign spending payments, we have imposed the maximum financial penalty of £20,000.

In determining this penalty we took into account the following factors;

• The omission of over £100,000 of spending from the Party’s return alone, which was a significant loss of transparency and a failure of significant magnitude. The actual value of the under- and overstated spending was likely to be far greater.
• The advantage obtained by Party by its actions; the inclusion in the Party return of what in our view should have been reported as candidate spending meant that there was a realistic prospect that this enabled its candidates to gain a financial advantage over opponents. In this respect we noted that the Battlebus2015 campaign visited target constituencies and that South Thanet was also a key priority for the Party.
• The unreasonable uncooperative conduct by the Party, of which this offence was one element, which delayed without good reason and for a number of months the provision of information needed to progress the investigation. This in turn increased the public funds incurred by us during the investigation.

In respect of the offence under section 82(4)(b) of PPERA related to the failure to deliver all the required invoices or receipts with the Party’s 2015 UKPGE spending return, we have imposed a financial penalty of £5,000.

In determining this penalty we took into account the following factors:

• The harm caused to confidence in the party finance regime represented an aggravating factor, in light of the value of the payments and the campaign to which they related. The omission of supporting information undermines the ability of us and the public to review and verify the spending figures within the return. There was a consequent impact on transparency and most likely, as a direct result, on public confidence.
• The unreasonable uncooperative conduct by the Party during the investigation, of which this offence was one element, which delayed without good reason and for a number of months the provision of information needed to progress the investigation.
• The Party has now provided the missing invoices and receipts. However, these were only provided as a result of our enquiries.

The total value of the penalties imposed on the Party following this investigation is £70,000.