Private funding, party politics and regulatory change:how the British Conservative Party prospered under Labour’s political finance reforms

Before 2000, the UK operated one of the most liberal political finance regimes of any established democracy. Parties were highly dependent on private financing, state funding was minimal, limited transparency requirements existed with respect to party income or expenditure, and no limits applied to national election spending. Far-reaching reforms introduced by Labour in 2000 changed this regulatory environment radically, establishing donation disclosure requirements and capping election spending. However, Labour's reforms did not include significant increases in state funding, leaving the UK as a continued outlier in Western Europe in assuming political parties should predominantly be funded through private means. In this paper, we show how the Conservatives ultimately prospered under Labour's reforms, enabling them to greatly outspend Labour at four general elections from 2010 to 2019. Using the public registers created by Labour's reforms, we document how the party's financial re-stabilisation while in opposition was assisted to a surprising degree by state funding and how the party's donor base has shifted towards wealthy individuals and privately owned companies since its return to government in 2010. We conclude with a number of observations about how the apparently exceptional UK case can help generate important insights for the comparative study of political finance.