Election watchdog probing £600,000 Labour donation for transparency breach

The UK’s election watchdog is probing a major donor to the Labour Party over an apparent breach of transparency laws.

Barnes & Richmond Labour Club and Institute donated £598,000 to Labour in December 2022. The organisation is listed by the central party as an unincorporated association, a legal term for organisations that aren’t registered companies or other formal bodies.

But the Barnes and Richmond Labour Club doesn't appear in the register of unincorporated associations despite having donated more than half a million pounds to Labour. As a result, it has not accounted for the source of these funds, although its former secretary told openDemocracy the cash had come from the sale of the club building itself. Documents at the Land Registry confirm that the four-storey townhouse in Church Road, Richmond, was sold in 2018 and turned into flats.

Under UK electoral law, unincorporated associations that give more than £25,000 in any given year must register themselves with the Electoral Commission. Once registered, they must report all incoming donations of over £7,500 for that year, and for the years immediately before and after – but a spokesperson for the club said the central Labour Party hadn’t informed them of this rule.

The failure raises questions about Labour HQ’s rigour in ensuring its donors comply with electoral law. The central party did not respond to openDemocracy’s request for comment.

Rules around unincorporated associations were introduced in 2009 to ensure they could not be used as fronts for donations to political parties from people who wished to remain anonymous, or who aren’t legally allowed to donate.

“We have not received a notification from Barnes and Richmond Labour Club that they are an unincorporated association and they have made a political contribution above the £25,000 threshold in the 2022 calendar year,” an Electoral Commission spokesperson told us.

“As such, we are contacting the club to find out more information about this matter and their status and we will then consider what, if any, action is appropriate.”

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Chris Priest, who was secretary of both the club and the local Richmond Park Constituency Labour Party (CLP) for whom the funds were ultimately intended, told openDemocracy the Barnes and Richmond Labour Club had been run as a social club for Labour members and supporters, as well as an office for the CLP, but that its use had been dwindling for decades and that by 2007 it served “no real function”, resulting in the decision to sell the building a little over a decade later.

Barnes and Richmond Labour Club, founded in the 1930s, had once been registered as a company, meaning it wasn’t an unincorporated association. But the company was dissolved in August 2013; its last accounts, posted in 2011, showed it had £50,000 of debt and that the club had been valued at £90,000.

Affluent Richmond Park is currently a Liberal Democrat seat held by Sarah Olney, who beat former Tory mayoral candidate Zac Goldsmith in 2016. Olney subsequently retook it in 2019 after Goldsmith, now a Lord, won it back in 2017. The seat has never gone to Labour since its creation in 1997.

Rose Whiffen of Transparency International said: “Unincorporated associations can be useful vehicles for local fundraising clubs to rally support for a political party in their area, but ambiguous and weak reporting requirements mean their financial arrangements are often kept from public view.

“Very few of these groups actually report the original source of their donations, making it far too easy for money of dubious origin to fund political parties. Clearly, [donors] should abide by the current rules, but to bring dark money out of the shadows, we need a significantly lower threshold for transparency over these donations.”