Cold outside? The chilling effect of the Lobbying Act 2014 Image

Cold outside? The chilling effect of the Lobbying Act 2014

Posted: 07/04/2014

On 30th January, the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014 received royal assent following a controversial passage through Parliament.

The act was borne out of politicians’ concerns that lobbyists were exerting too much influence over the Westminster corridors of power. As far back as February 2010, during the aftermath of the debacle surrounding MP's expenses, David Cameron warned that lobbying was "the next big scandal waiting to happen". He claimed to want to shine the "light of transparency" on lobbying to address the "far-too-cosy relationship" that exists between politics, government, business and money.

Will the act achieve this goal? We suspect not. Further, many fear that the negative consequences of the act, in particular the onerous obligations restricting third party apolitical organisations, will far outweigh its stated benefits.

The act

The act comprises three main parts. Part 1 deals with consultant lobbyists, part 2 relates to non-party campaigning and part 3 governs trade union administration. It is part 2 of the act that has proved to be the most controversial. Essentially, it regulates and potentially limits campaigning by organisations with no political affiliations.

Since the wording of part 2 was first proposed, it has often been described as having a “chilling effect" on free speech for third sector organisations. These concerns were echoed in January by a UN Special Rapporteur who stated that "[a]lthough sold as a way to level the electoral playing field, the [act] actually does little more than shrink the space for citizens... to express their collective will." Even a Select Committee established by the government itself have been critical of part 2.

Despite facing fierce opposition (leading to a pause in Parliament and the very unusual situation of a tied vote by the Lords on one aspect of part 2), the highly contested provisions of part 2 will take effect from 19th September 2014, thereby affecting public debate leading up to the next general election and beyond.

This article briefly outlines the impact of Part 2 and examines the very real concern that it will increasingly hamper the ability of third party groups to speak out on issues of public importance.

Controlled expenditure

The act limits third party spending on "controlled expenditure". That is, spending on campaigning which can "reasonably be regarded as intended to promote or procure electoral success". Crucially, the actual intention of the campaigning activity is irrelevant and it does not matter whether it could be considered to serve any other purpose (such as raising awareness or facilitating public discourse). Further, no explicit reference to any particular party or candidate is required as part of the campaign. Essentially, if an activity may influence voters, the costs of it are probably "controlled".

The problem with this is that many issues of concern to third party organisations are of such public importance that they are, or soon become, political by their very nature: recent examples include campaigns for and against HS2 and the drive to ban smoking in cars in which children are passengers.

Third parties raising or highlighting such issues often have no political affiliation or intent. They are merely seeking to have matters made known to and addressed by the public or decision-makers at large, regardless of their political persuasion.

Nonetheless, the amount they spend on such issues is likely to fall within the scope of regulation because of the deliberately wide definition of "controlled expenditure".  Affected groups come from a wide spectrum of society and include professional associations such as the Royal College of Surgeons, large charities such as Oxfam and Shelter, and small pressure groups campaigning on matters of local interest.

Cap on spending

Campaigning by third parties was already regulated to a limited extent under the Political Parties, Elections and Referendums Act 2000 (“PPERA”). The act itself, which uses PPERA as base legislation and amends it, goes much further by reducing spending caps and widening the scope of spending caught, arguably without any obvious justification or cause.

The act dramatically reduces the amount of controlled expenditure that third parties can incur in the lead up to an election. Under PPERA, third parties could spend £988,500 throughout the UK in the year prior to a general election. This has been decreased by more than half to just £450,000 under the act (although this cap will exceptionally apply to only 7 ½ months prior to the 2015 general election – starting on 19th September 2014).

The act also imposes new additional limits on spending focussed in particular constituencies and on expenditure aimed at promoting one particular political party.

At the same time as reducing (and introducing) spending limits, the act significantly broadens the scope of expenditure which counts towards these limits. Under PPERA, only expenses incurred in the production or publication of election material were included. Now, the costs incurred on a far wider range of activities will be included. Such activities include:

  • public rallies or other public events;
  • press conferences and media events;
  • canvassing and market research; and
  • transport in connection with publicising a campaign.

All of the associated costs of these activities, for example, premises hire and payments to secure attendance of speakers and other guests, will go towards the cap. Associated staffing costs in particular could be substantial. Often one event can result in the cap being reached or exceeded.

These tighter financial constraints on far more wide-ranging activities are, understandably, worrying to many third party organisations. Despite assurances from the government that the aim of the act is not to prevent their normal activities in raising awareness of and impartial campaigning on issues of public policy, it is hard to see how such activities will not be curtailed.

This, however, is not the only cause for concern for third party organisations.

Lack of clarity

One of the main criticisms levelled at the act as it made its way through Parliament was its lack of clarity. Some points were clarified by the Lords, but a degree of unhelpful ambiguity remains.

For example, what would happen should a political party or candidate latch on to a campaign started by a third party organisation? A strict interpretation of the act would result in any continued campaigning by that organisation being classed as controlled expenditure. However, this result seems somewhat perverse and provides a potential method of politicians ‘shutting down’ wider public discourse on an issue, which must be at odds with David Cameron's professed overarching aim to tackle Britain's "broken politics". Government assurances on this issue have unfortunately not proved reassuring for many third party organisations. During a House of Lords debate Lord Wallace, one of the ministers responsible for the act, stated that, in such circumstances, a third party campaign would only be caught by the act should the third party "subsequently highlight(s) the fact that party A or candidate B supports its policy, or ramp(s) up its campaign". However, third parties may legitimately intensify or 'ramp up' campaigning during certain periods or if media attention is drawn to an issue; it should not be automatically assumed that this has been done for any political purpose.

Further ambiguity surrounds the scope of activities covered by the new rules. To illustrate, whilst outlay on a third party's private meetings does not count towards controlled expenditure, it not entirely clear what constitutes a ‘private’ meeting for these purposes. Clearly, any meeting attended only by ‘members’ of the organisation would be considered private. But what if guests attend? Arguably a select few, specifically invited guests should not render an otherwise private meeting public (although this is not clear from the act itself), but where is the line drawn? Given that the cost of organising and holding meetings might well be substantial, third parties need clarity on when such costs go towards any applicable spending cap.

In addition, the act provides an exemption for spending on “annual conferences” such that any costs incurred do not class as controlled expenditure. However, some larger third party organisations, such as professional associations or umbrella charity groups, might host a number of annual conferences; a national one, plus regional or divisional ones. Despite the use of the plural ‘conferences’ in the drafting, it is not entirely clear where the line will be drawn.

The Electoral Commission, the body responsible for enforcement, is required to publish guidance on the practical workings of the act. Such guidance is expected in July. This should provide some clarity on the implications of the act for third parties but, whilst previous guidance on third party campaigning under PPERA was useful, it was by no means comprehensive.

Criminal sanctions

Despite the ambiguities, the potential consequences of breaching the act are severe.

Failure to comply with the act is a criminal offence and penalties can be imposed against the organisation and senior management within it. The organisation could be fined if found guilty, whilst the responsible person (tasked with ensuring compliance) could be punished with a fine and/or even imprisonment.

It will be a defence for the organisation or responsible person to show that they complied with the Electoral Commission guidance. The usefulness of this defence, however, will of course depend on the usefulness and extent of the guidance provided.

Against this backdrop of potential criminal sanctions, it is clear why the lack of clarity and the ambiguities in the act have caused additional alarm amongst those in the third sector.

Freedom of Speech

Ultimately, the combination of uncertainty over whether campaigning may be considered to "procure or promote electoral success", the extensive range of activities potentially covered by the act, the more stringent spending limits and criminal penalties for breach may understandably result in third party organisations being fearful of speaking out on matters of public interest. The risks of doing so may simply be too great.

As a result, the true effect of the act may indeed be a largely unseen but substantial curb to freedoms of speech, expression and association, fundamental rights guaranteed by the European Convention of Human Rights and enshrined in UK legislation through the Human Rights Act 1998.

On this basis, there are arguably grounds to mount a legal challenge to the act. It remains to be seen, however, whether any of those affected will do so, or whether they will simply wait to see how it fares with the passage of time. The crux of the matter is likely to be the vigour with which part 2 of the act is enforced.


Most third party organisations recognise and accept that there should be some degree of regulation and control on their public campaigning activities. Transparency and propriety in public life in general and politics in particular is, after all, to be welcomed.

However, legislation regulating this area should be clear, concise and certain not to result in a stifling of public debate on issues of national interest.

It is not suggested that the government's aim in drafting the act was to suppress the work of charities and non-political third parties. However, as it stands, the act seems to have the potential to do exactly that.

Both the Joint Committee on Human Rights and the Commission on Civil Society and Democratic Engagement asked for the act’s passage through Parliament to be delayed to allow a greater period of consultation. This request was not granted. Instead, the act was rushed through and subject to minimal legislative scrutiny. The concession allowed as a result was that part 2 will be reviewed following the 2015 general election. Its ‘workability’ and effect on organisations working in the third sector will be evaluated at that stage.

Accordingly, third party organisations should carefully monitor the practical effects of the act on their activities in the lead up to May 2015 and comprehensively feedback to the government on these implications. It is to be hoped that, if the negative consequences of the act envisaged do come to fruition, perhaps then the concerns voiced by so many prior to enactment will more adequately be addressed.

For the time being, we are left with a piece of legislation which, despite its legitimate aim of ensuring transparency, in fact poses a significant risk of infringing, or having a "chilling effect" on the fundamental human rights of freedoms of speech, expression and association.

This article was published in Commercial Litigation Journal in March 2014.

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