This explainer blog goes into detail and clear explanations of how the Westminster parties in the UK are funded.

How are political parties at Westminster funded?

Generally speaking, UK political parties are mainly funded through membership fees, financial donations from individuals, and contributions from companies and trade unions. Public or state funding is another important component of party finance, notably for opposition parties which have to develop policies without civil service support and smaller parties which tend to attract more modest private donations.

Membership fees and private donations

The estimated funding the main Westminster parties received in 2025 via membership fees and private donations is set out in the table below:

Donations to political parties (or individual politicians) have no set limits but these financial contributions (and loans) have to come from ‘permissible’ sources, including a person on the UK electoral register, UK-registered companies and various UK-registered organisations, such as a trade union. All donations and loans over £500 have to be checked by the party concerned to make certain that they have been sent by permissible sources. If the identity of the donor or lender cannot be confirmed as permissible, the party has to return the money. Foreign companies and individuals not on the UK electoral register are prohibited from making political donations to a party. They can, however, cover the ‘reasonable’ costs of an overseas visit by UK politicians. All donations and loans have to be logged by the party or individual politician involved. If the central party receives a donation or loan over £7,500, it has to forward the details to the Electoral Commission. Similarly, party sections outside the financial control of the central organization have to notify the Electoral Commission when they are given a donation over £1,500. Furthermore, MPs have to inform the parliamentary commissioner for standards if they receive a donation or loan over £500 linked to their role as an elected representative in the Commons. Finally, MPs and parties are required to inform the parliamentary commissioner for standards and the Electoral Commissioner respectively as and when they return impermissible donations or loans.

The Labour government’s proposed reforms of 2026

Starmer’s government introduced the Representation of the People Bill in February 2026, partly to set out new rules concerning party donations, including (1) enhanced ‘know your donor’ checks to be carried out by the recipients of political donations (2) shell companies to be prohibited from making donations to UK parties, and (3) raising the maximum fine the Electoral Commission can impose for violations of the regulations to £500,000 (from £20,000). When the Rycroft Review, an independent investigation into foreign financial influence in the UK which was commissioned by the government in December 2025, reported in March 2026, Starmer’s administration incorporated two of the Rycroft Review’s recommendations into the Representation of the People Bill. These recommendations were (1) a cryptocurrency donation moratorium to prevent untraceable ‘dark money’ funding being given to political parties, and (2) an annual limit of £100,000 on donations from British citizens living outside the UK. The Bill is currently being considered in parliament.

Public funding for political parties

‘Short Money’, the main form of public funding for political parties, was introduced in 1975 under Harold Wilson’s Labour government to help opposition parties perform their parliamentary functions, including policy research. This Short Money system was enhanced in the 1990s when additional funds were allocated to cover travel expenses (1993) and the running costs of the Leader of the Opposition’s office (1999). All opposition parties that either secured a minimum of two seats in the Commons at the last general election or one seat plus more than 150,000 votes in total across the seats they contested are entitled to Short Money. However, this type of public funding is not available to independent (non-party) MPs or parties that achieve the two MP requirement between general elections due to byelections or defections. Thus, the breakaway Change UK, which was formed in early 2019 and spearheaded by several Labour and Conservative MPs, received no public funding. Sinn Féin, an Irish republican party, is also excluded since its MPs refuse to take the oath of allegiance to the Crown and do not attend the Westminster parliament. Nevertheless, since 2006 the party has received ‘Representative Money’ under a system similar to Short Money. Governing parties are not entitled to Short Money. Consequently, the Liberal Democrats lost this form of public funding when they entered into a coalition government with the Conservatives in 2010 but the Democratic Unionist Party, having concluded a confidence and supply agreement (2017-19) with the Tories, were still entitled to Short Money as they had not formally joined the government.

The amount of Short Money each party receives is based on a formula which takes into account the number of seats and the number of votes a party obtained at the last general election. As a result, in 2025-26, opposition parties have been funded at the rate of just below £22,300 for each seat they won plus £45.64 for every 200 votes they secured in the 2024 general election. The Short Money travel fund is divided up among the opposition parties on the same basis. Parties with one to five MPs can only receive Short Money ranging from £131,685 to £395,055. The running costs for the Leader of the Opposition’s office are funded separately with just over £1 million allocated for this purpose in 2025-26.

A similar scheme, known as Cranborne Money, which was established in 1996, ensures that public funding supports the main opposition party (the Conservatives) and the second-largest opposition party (Liberal Democrats) in the Lords as well as crossbench peers. Under the Cranborne Money scheme in 2025-26, the Tories have received £887,939, the Liberal Democrats £443,340 and the crossbenchers £134,850.

Finally, the Electoral Commission administers and distributes policy development grants (introduced in 2000), totalling £2 million annually, which are available to all parties in the House of Commons with at least two MPs. These grants are designed to assist parties in the task of developing policies for their election manifestos. Each year, half of the £2 million is divided equally among the parties entitled to this funding and the remainder is distributed using a calculation based on a party’s vote share in each of the UK’s constituent nations and the proportion of the UK’s registered electorate where the party involves itself in elections.