Rotten borough: Questions and answers

An unincorporated association listed by the Electoral Commission as ‘The Bristol Labour Group’, The Council House, College Green, Bristol BS1 5TR has donated £10,000 in cash to the Bristol North West Constituency Labour Party. So what?

Q. What’s an unincorporated association?

A. The law relating to unincorporated associations is not fully settled and it is complex. A popular definition is:

“An association of two or more people who have come together to achieve a common purpose, set out in a constitution.”

However unincorporated associations are not required to register with or be regulated by either Companies House, the Financial Services Authority or the Charity Commission. They are not therefore publicly accountable bodies. Neither is there any clear legal requirement for an unincorporated association to have a formal written constitution or set of rules.

This effectively means ‘the Bristol Labour Group’ can operate with no apparent officials, directors, trustees, employees or any other accountable person. It also does not have to keep or reveal public accounts or financial information. They do not even have to reveal their membership. This allows them an extremely high degree of secrecy in their business dealings.

Traditionally unincorporated associations have been used by organisations whose administration is very, very simple and uncontroversial, such as local and community organisations running things like village halls, parent teacher associations or OAP lunch clubs.

However unincorporated associations have grown in popularity in recent years as vehicles for making donations to political parties. This is because the Political Parties, Elections and Referendums Act 2000 (PPERA) allows unincorporated associations as “permissable donors” to political parties.

One potential downside to an unincorporated association is that it has no separate legal identity. This means that every member carries the risk of personal liability (including criminal liability). For tax purposes an incorporated association is treated as a company and is therefore liable to corporation tax.

Q. So it’s not illegal to donate money to political parties through unincorporated associations then?

No it’s not. Although an opinion is forming that they provide a loophole in the law that can be exploited to make anonymous donations to political parties.

Q. So could an unincorporated association like ‘the Bristol Labour Group’ be used to disguise large donations from individuals who wish to remain anonymous?

A. Yes they could. The Electoral Commission has even informally confirmed to The Blogger that unincorporated associations could be abused in this way although it is difficult to prove.

Q. What’s suspicious about this £10k donation from ‘the Bristol Labour Group’ then?

A. For starters £10k is a lot of money to raise from a quick whip round of Labour’s councillors for a one-0ff donation to a local constituency party. Also ‘the Bristol Labour Group’ has never donated money to the Labour Party in this way before.

It seems strange too that the money has been donated either side of a local election campaign when you might have thought funds were needed for this. And why would councillors from Bristol South, Bristol East and Bristol West choose to donate their money to Bristol North West?

Finally it’s notable that ‘The Bristol Labour Group’s’ donation to Bristol North West is the largest donation from any local authority Labour Group made to a constituency party this year.

Q. Yes but don’t Labour councillors have to donate a certain amount of their expenses to the Labour Party?

A. Some local authority Labour Groups require this and it is a possibility that the £10k was raised in this way from Bristol’s Labour councillors. But ordinarily councillors would donate their money direct to Labour Party HQ openly and transparently.

This would also be the first time Bristol Labour councillors have donated “blind” to the Labour Party. Why would they all change to an unaccountable and secretive method? (Especially after making such a fuss when they took power in May of running a more “open and transparent” council) And why would councillors from other constituencies donate their money to the Bristol North West constituency?

Q. Surely £10k isn’t that much money to donate in a year is it?

A. For a small, middle class group of 23 full-time politicians, part-time public/charity sector workers and retired people, it’s quite a lot of money to raise. Especially as the group would also have had to find the money to fund 24 local election campaigns as well this year.

Q. Why don’t our Labour councillors just tell us where the money came from?

A. Normally you would expect politicians to make a political judgement based on minimising damage to themselves. They should consider whether it’s more damaging to reveal where the money came from and what’s really going on than it is to allow endless rumour and speculation to swirl around them.

It would therefore seem ‘the Bristol Labour Group’ believe that damaging rumours and speculation about their party funding arrangements are preferable to the truth about them.

There is a caveat to that however. It should be remembered that the Bristol Labour Party has run the city for most of the last 30 years. This has engendered in the party a complete arrogance, egotism and stupidity. So it’s just as likely that the Bristol Labour Party doesn’t know how to make political judgements any more and simply sees itself as above having to answer for its behaviour.

Q. Have any other parties in Bristol donated money in this way?

Yes, two other unincorporated associations – ‘the Liberal Democrat Group’ and the ‘Horfield & Bishopston Unionist’ (sic) – have donated money in this way, albeit less significant amounts.

Many questions being asked of the Labour Party should therefore also be asked of the Lib Dems and Tories. This may explain why the opposition to Labour in Bristol is not interested in taking up party funding issues with them.

Q. How can we find out where the money Labour donated came from?

A. With a lot of difficulty. However, The Blogger’s research team, having made a number of initial enquiries last week, is hoping to approach Bristol Labour councillors later this week. Remember, though, that our resources are limited, so this may take longer.

Q. If it turns out that the donation was legitimate have Labour done anything wrong?

Regardless of the origin of the donation, all members of ‘the Bristol Labour Group’ have failed to register an interest in the Register of Members’ Interests at the Council House. They may have also used city council facilities and political staff for party political, fundraising and donation purposes. This is technically illegal. And, depending on the origin of the cash, there may be issues for them with the Inland Revenue.

Got any questions about ‘the Bristol Labour Group’ and their donations? Ask and we’ll try and answer!

For the purposes of PPERA, a donation is defined as anything received by

the Party or any of its local associations from one single source having a

value of over £200 per year either by way of gift, donation, sponsorship,

subscription, or affiliation, received either as money or in kind