Written evidence from Britain Stronger in Europe[1] (EUR 91)
Public Administration and Constitutional Affairs Committee
Lessons Learned from the EU Referendum inquiry
Executive Summary
We would like to thank the committee for asking for our response to the issues they are investigating as part of this inquiry. We believe there are some significant areas the committee may wish to consider about the future conduct of referenda in the United Kingdom. These in general have an intertwined theme that regulations developed for electoral administration of general and local elections needs some further specific tailoring to make it more suitable to the different circumstances of referenda. Specifically;
1.1. We do agree with those who say that referenda are blunt instruments to decide the incredibly complex policy issues such as these constitutional matters decided by the Scottish and European Union Referenda. These referenda are issues of huge political contention not just between but also within all political parties and the different administrations within the UK. For that reason, it may be that these issues are simply not resolvable politically in any other way.
2.1. How effective, and comprehensible, is the existing system of regulation for referendums in the United Kingdom? In general, we believe the system is largely satisfactory, although we would wish to highlight several areas that we believe would benefit from review and improvement, specifically;
2.1.1. We believe there is a strong case for enhanced powers for the Electoral Commission (EC) to approve or refuse suitable ‘permitted participants’ from participating in a referendum, perhaps by the introduction of a ‘fitness’ test for permitted participants.
2.1.1.1. Thirteen potential permitted participants (all Leave campaigners) were disallowed by the EC for the technical reason that they were not properly formed unincorporated associations, rather than what we believe to be the substantive reason which is that they each appear to have been registered as part of a coordinated plan to circumvent the spending limits set by legislation. (See the EC press releases http://www.electoralcommission.org.uk/i-am-a/journalist/electoral-commission-media-centre/news-releases-donations/first-pre-poll-donations-and-loans-report-ahead-of-the-eu-referendum-published? and http://www.electoralcommission.org.uk/i-am-a/journalist/electoral-commission-media-centre/news-releases-donations/second-pre-poll-donations-and-loans-report-ahead-of-the-eu-referendum-published? for the list of disqualified participants)
2.1.2. We believe this power should be matched with stronger requirements for the EC to intervene proactively to ensure compliance in referenda.
2.1.2.1. In general, at other elections the EC take a reactive approach to compliance on key issues such as participant registration, joint regulated expenditure and donations to other participants. The reactive approach brings political parties into compliance over time, and the ‘embarrassment’ of infringement is perhaps the strongest power the EC has with the political parties over time.
2.1.2.2. But we believe that the timescale and finality of result is different for referenda. The permitted participants, especially the lead campaigns, are often single purpose vehicles with no onward lifespan after the event – so the ‘embarrassment’ power does not apply to infringement in the same way. Once the result is known and becomes the new de facto political settlement, any infringement that is discovered after the event is highly unlikely to change the political result.
2.1.3. We believe that in the European Referendum such lack of appropriate powers and an insufficiently proactive approach by the EC may have allowed some campaigners to;
2.1.3.1. Register multiple entities that appeared to be clearly working in concert.
2.1.3.2. Overspend the regulated ceilings through collaboration during the entire course of the referendum. We would suggest this may have been the case between Leave.EU and Grassroots Out (GO) whose fundraising, database management and political strategy all appear to have been conducted by the same background company (ie not itself registered as a permitted participant) called Better for the Country Limited (BftC). (See Schedule 1 - services, Outsourcing Agreement between GO and BftC submitted as part of GO’s designation application http://www.electoralcommission.org.uk/__data/assets/pdf_file/0017/200663/Go-Movement-Ltd-Further-evidence-Outsourcing-Agreement-160316.pdf .) The same company appears to have sat behind the activities of Leave.EU, Grassroots Out, GO Movement, and the later deregistered multiple GO unincorporated associations. We hope the Electoral Commission will investigate these issues thoroughly now the referendum has concluded.
2.1.3.3. Allow one organisation to directly fund the activity of another organisation to meet its own objectives but not count this as referendum spending itself, and thus circumvent the spending ceilings imposed by legislation. Suggestions have been made in the media that this was the case for the large donation made by Vote Leave to Mr Darren Grimes in the final days before the referendum. ( See for example http://www.thetimes.co.uk/article/fashion-student-given-625-000-to-spend-by-vote-leave-x5r75ws6t )
2.1.3.4. It is not clear that any of these actions had a material impact on the final outcome, but we would contend they do raise serious questions about the efficacy of the current ability of the EC to police the regulations set down in statute with only its current powers.
2.1.3.5. We would welcome the committee considering enhancing the ECs powers to force more proactive compliance for the specific case of participants in referenda. The powers of the EC do appear to sufficiently incentivise compliance for normal elections, but we believe the above cited examples suggest that they are insufficient to ensure compliance at referenda.
2.1.3.6. All of these potential infringements mentioned above appear to stem from the same issue of permitted participants in referenda not being required to meet a ‘fitness test’ to ensure they not only understand, but have procedures and policies in place to make sure they will not breach regulations on these matters during the campaign.
2.1.4. Expenditure caps at elections are always problematic. But we believe that they are fundamental to a ‘fair contest’ and a ‘democratic outcome’ that is trusted by voters. Our view again is that these provisions appear to work reasonably well at other elections but suffer several additional problems during referenda.
2.1.4.1. The expenditure cap set by legislation is too inconsistent between referenda. The Scottish Independence Referendum had a spending level of more than twice that of the EU referendum on a per capita basis. We believe the committee could benefit the conduct of future referenda by laying out some clear principles to ensure better consistency on this issue in future.
2.1.4.2. In a general election, a political party can only spend up to their limit during the regulated period and has no incentive to give any additional cash to another entity, because maximising their own level of representation is their primary purpose. As we saw in this referendum campaign, other campaigners were giving away grants in the final days to like-minded organisations meaning they effectively spent more than their £7m cap. We also believe it may be the case that there were efforts to circumvent spending caps by multiple participants. We would welcome the chance to explore with the committee other solutions to ensure spending caps do not become meaningless or unenforceable in future referenda. This issue is closely linked to some of the problems experienced around the ‘working together’ provisions of referenda regulation detailed below.
2.1.5. We believe that the working together (‘concert plan’) provisions of referenda are too opaque as currently construed. The definition of ‘working together’ is not tested in law currently, and the guidance is too opaque to allow participants to be sure of their ground when they are one the same side of the argument, but parts of different campaigns.
2.1.5.1. The intention of these regulations is absolutely sensible. To make sure that neither side coordinate expenditure between different organisations in a way that circumvents expenditure limits. But as we have suggested above we believe the current opaqueness may, have allowed some organisations to flaunt the intent of these regulations through collaboration or donation
2.1.5.1.1. and on the other hand the same regulations created an unnecessary ‘freezing’ of activity by some smaller participants who because they were determined not to breach these regulations decided not to undertake any activity at all that could be perceived to have involved any other participants. In all likelihood this will have impacted on their effectiveness as campaigners.
2.1.5.2. Perhaps some system regulating the total expenditure by each side of the debate, as well as the expenditure by any individual participants, could work for referenda. One scenario could allow the designated lead organisation to allocate expenditure ceilings to other participants through a process overseen by the Electoral Commission, and which enables only a set proportion of the total spend ceiling to be allocated the lead organisation itself. This sort of approach might incentivise ALL participants on the same side to work together, would allow spend ceilings to respect the organisational capacity of different participants to campaign, would incentivise both lead and other participants to allocate spend ceiling to the organisations best placed to raise the funds and to be impactful in their campaigning, and would remove the need for working together provisions which we believe as currently constructed only encourage non-compliance or hinder full participation.
2.1.6. There is no body charged with overseeing the veracity of campaigner claims. Neither the Advertising Standards Agency nor the Electoral Commission has the powers or the regulatory framework to do so.
2.1.6.1. We stopped counting the number of emails we received asking why nothing could be done to stop Vote Leave using the NHS logo, or continuing to use the discredited claims that £350m a week could be spent on the NHS if we left Europe. We were also asked repeatedly by voters and the media why Vote Leave were allowed to spend public funds on promoting these claims in items such as their freepost referendum addresses or in their Referendum Campaign Broadcasts.
2.1.6.2. In a general election, the ‘embarrassment’ factor and political necessity of delivering on manifesto promises means that political parties self-regulate to a large degree – as we suggest is similarly the case with compliance issues.
2.1.6.3. Referendum campaigns face no such constraints and we would suggest that the committee could benefit the conduct of future referenda greatly by looking at whether there might be cross party support for a system that regulated the content of materials in a referendum, or at the very least the materials of lead campaigners using publically funded materials.
3.1. How sufficient was the purdah period provided during the EU Referendum campaign and should a longer purdah period apply in future referendums?
3.1.1. We believe that the purdah length was adequate and, indeed, was something of a non-issue. For us the far more serious issue was the overlap with local and national elections in the nations. This overlap lead to a ‘freezing’ of debate on the issue of the referendum by the referendum participants during a key period of the entire 10 week regulated campaign. This gave one political party UKIP a unique advantage since they campaigned on Europe while other parties chose not to. This was particularly effective in Wales where UKIP increased their vote share and, in the process, were unchallenged in their criticism of the EU. More importantly it meant that the public and the media were focused on other political issues for 3 of the 10 weeks of the referendum period. This shortened political and media focus on the referendum itself may have contributed significantly to the lack of media and public scrutiny on some of the more unsubstantiated of the Leave campaign’s claims – such as the £350m for the NHS.
3.2. How effective was the designation process for lead campaigners, and will future referendums require further reform of the designation process?
3.2.1. A concern for us is simply the unduly lengthy amount of time allowed to submit an application. Any campaign seriously considering applying for designation does not need a four-week window to prepare its application. It will almost certainly have prepared it long before the window even opens. We would suggest this period might be reasonably shortened to just two weeks. The later two week adjudication period for the EC does seem fair and for the Leave side was necessary with two strong contenders.
3.2.2. We do think the EC should lay out publically more open guidance about how it determines designation. From the other side of the fence, as it were, it seems that the grounds upon which Vote Leave was chosen over Grassroots Out for designation was largely down to the degree of support from senior current elected politicians, rather than the amount of public recognition, public support or campaigning capacity an organization had. Nowhere in the EC guidance on designation does it say that senior political support specifically outweighs these other factors in determining designation. Clearer guidance on weighting of different contributory factors would help bidding organisations in future.
3.3. What role did the machinery of Government play during the referendum campaign and what were the consequences for Civil Service impartiality?
3.3.1. We believe there is a fine but well understood line between the machinery of government and political campaigns. We found the civil service to be extremely clear in their guidance about what was and what wasn’t acceptable activity for their ministers to be undertaking during purdah. Special advisers resigned from government to work for the campaign as is entirely appropriate.
4.1. How competently did the Electoral Commission discharge its statutory duties during the referendum campaign?
4.1.1. Please see our comments above. We think the EC lacks certain powers appropriate to regulating the unique nature of referenda, and also the necessary pro-active approach to ensuring compliance with key aspects of regulation.
4.1.2. We found the guidance from the electoral commission in general to be helpful, but in too many cases insufficient to provide clarity to participants.
4.1.2.1. For example, many companies, especially in financial services, felt constrained from undertaking normal activities for their clients such as evaluating market risk, simply because they received initial guidance from the EC saying that this ‘could’ be interpreted as ‘promoting’ one outcome or the other. After much effort from the companies and campaigners like ourselves the EC responded with clearer guidance but we believe this should never have been the case in the first place.
4.1.3. Similarly, getting clarity as a participant about what items exactly do, and what do not, represent regulated expenditure has been tricky. Too often the answer is ‘well it’s a matter for you to interpret’ when some simple guidance could clarify things. Too often this is because the regulation has been written to take account of other elections and is not applicable without modification in some way to the different circumstances of a referendum.
4.1.3.1. Here the example of how to treat overheads as campaigning expenditure is a good one. For an established political party, it has a base level of expenditure on things like offices, utilities etc. So during an election period it can account for ‘additional spend’ as a regulated election expense. This is the basis for the regulations as they stand. But these regulations have been extended to referenda without thought about how to interpret them in the different circumstances. A campaign that may have come together simply to fight the referendum does not have a ‘base level’ of activity in the same way as a political party. One could argue that all its activity is campaigning for a result it desires so anything occuring within the regulated period should count. You could similarly argue that any activity or resource supported before the regulated period begins was ‘base level’ so only that above this level should be reported as regulated expenditure, or again that activity before the date of a referendum was announced was ‘base level’. It seems to us that simple decisions clarifying which of these courses was the most appropriate to take would make the declaration of expenditure easier for all concerned.
4.1.4. We would suggest that for referenda in particular (although it might also apply to other elections of national scale) that the deadlines for invoice receipt and payment should be looked at. The rules currently allow only 30 days for receipt of invoice, and 60 days for payment of those invoices.
4.1.4.1. For many of our own commercial suppliers, we held terms of ‘end of month plus 30 days’ for invoicing. This meant that after the referendum we had to request invoicing ahead of their normal cycle.
4.1.4.2. The rules make sense for small campaigns (such as at local level) but the complexities and number of suppliers for a national campaign we would suggest mean these deadlines could reasonably be lengthened to 60 and 90 days respectively.
4.1.5. Finally, we’d also suggest a review of what is, and what isn’t a credit facility for donation purposes.
4.1.5.1. We used charge cards to allow staff to make payments for campaign materials during the campaign. These were provided on purely commercial terms to us by our bank and contained no element of ‘political donation’. We paid an annual fee, were required to pay these off at the end of each month in full, were charged penalty interest if payment was late – exactly the same as any commercial arrangement.
4.1.5.2. But the Electoral Commission required us to declare these as a credit facility’ in our returns as if they were political in nature. We understand why these rules exist, to prevent ‘loans’ being given that last forever but avoid being declared as ‘donations’. The irony here is that these ‘credit facilities’ were on less generous than terms than many of our supplier terms which ran to almost 60 days in some cases.
4.1.5.3. The net result is that we suspect the bank we used will be much less willing to provide banking services to political campaigns in future as they understandably do not wish to be seen to be taking sides in political debates when all they have actually done is provide a commercial product to a client. Again a lack of flexibility or ability when interpreting the legislation by the EC seems to have done more harm than necessary.
4.2. Has the Electoral Commission been given the appropriate powers and responsibilities in statute? Should they be altered in advance of any future referendums?
4.2.1. Yes, see comments above about need for stronger powers to enable more proactive compliance for referenda.
4.3. How appropriate is it for the Electoral Commission to be both a 'provider', in the sense of running referendums and elections, and a 'regulator'? Should these functions be executed by separate bodies?
4.3.1. Our main concern here is that the Chair of the EC was effectively absent from making key regulatory decisions during the referendum due to their legislative responsibility to act as Chief Counting Officer. On some key compliance issues where we felt more junior staff weren’t giving due attention to the issues, we had no point of recourse because the Chair had to recuse themselves due to their Chief Counting Officer role. It might make good sense for a different person to act as the CCO for a referendum other than the Chair of the EC, so that the Chair of the EC can focus on the regulatory conduct of the referendum and not the administration of the poll, which is in general a far less politically contentious area of operations in the UK.
4.4. What were the main problems that arose regarding the electoral administration of the referendum?
4.4.1. See comments on other participants seeking to avoid spend cap ceilings by registering multiple permitted participants.
4.5. What impact did individual electoral registration have on the referendum?
4.5.1. We believe registration of young people was seriously impacted. Previously young people were normally registered by their head of household or head of institution ensuring that they were registered at both their home address and place of study. Individual registration means that students will often register in a single place where they are based at the time of registration rather than where they will be for an election. We found that this was an issue for the referendum since many students had left university by June 23rd. The significant publicity for voter registration meant that many students did register in the appropriate location during the final weeks of the campaign but this did not help them secure a proxy or postal vote if they were overseas or away from their home address on election day.
4.5.2. Registration of overseas voters was also a serious issue. There is no single register of eligible, overseas voters so it was impossible to know what proportion of people exercised their democratic right to vote.
4.5.2.1.1. We know that due to the shortened nature of the referendum poll that both electoral returning officers faced a disproportionate number of late applications from individuals already on the register (but who weren’t sure if they were) which must have been an unnecessary drain on their limited resources at a busy time, and that many overseas electors did not receive their ballot papers at all, or in sufficient time for them to be returned and be counted. These numbers were not sufficient to change the result in any way, but we believe the numbers involved to have been.
4.5.3. Registering to vote can now be done online simply and easily. But registering for a postal or proxy vote, especially for overseas voters or last minute applicants remains stuck firmly in the 20th century. We would welcome the committee making recommendations to government about how more ubiquitous forms of online identification (Facebook, Google etc, or taking photos of government documentations such as drivers licenses with a smart phone as is now standard for many websites and apps these days) might enable applicants to more easily use digital channels to apply for these as well. Currently many returning officers will take a scanned application form sent by email with a ‘wet’ signature included, but the advice on how to do this is not consistently passed on to voters, and many voters do not have the technical capacity to print and scan images in the same way as they might to simply take photos.
September 2016
[1] Submission on behalf of Britain Stronger in Europe (BSiE), the designated lead campaign for Remain. (BSiE was the campaign name for The In Campaign Limited registered in England and Wales number 9641190). This submission was prepared by Will Straw (Executive Director) and Paul Comer (Compliance Director).