Reform UK had £7mn ‘black hole’ in 2019 election accounts

Nigel Farage’s Reform UK recorded an unexplained “black hole” of more than £7mn in its accounts at the last general election, raising questions over the populist party’s opaque financial affairs.

Reform spent £7.8mn on what it labelled “other expenditure” in 2019, when it was called the Brexit party. The spending was in addition to “campaign” and “staff costs” of a further £11.1mn.

About £0.5mn of its “other costs” probably covered audit fees, leasing costs and the purchase of equipment, 2019 accounts show. The accounts also reference events and financial control costs that may have fallen under that category.

No further breakdown of Reform’s “other” spending was disclosed in the accounts or filings to the Electoral Commission, the UK elections watchdog.

Campaign finance experts said the accounts leave million of pounds that the party has not publicly detailed.

Samuel Power, senior lecturer in political financing at the University of Sussex, said the “other” costs “feel like a black hole that needs explaining, and doing so allows for the alleviation of any suspicion”.

While the party is not required to detail its additional spending by law, all other major UK parties provided greater transparency on their non-campaign expenditure.

The Conservatives were the only party with substantial “other costs”, amounting to £2.5mn out of £54.6mn of expenditure in 2019.

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The relative lack of transparency is not the only thing that makes Reform different to other British political parties. It is uniquely structured as a limited company, with Farage a director and majority shareholder. Its 50,000 members do not vote on policies despite each paying a £25 annual subscription.

Reform did not respond to requests for comment. There is no indication it breached electoral or other laws.

Farage founded the Brexit party in November 2018 ahead of the UK’s final election to the European parliament before exiting the EU. It won the most votes of any party in the largely symbolic poll held in May 2019.

During the 2019 general election campaign, Farage said the party would not field candidates in 317 Tory-held seats. It failed to win any of the remaining constituencies it contested. The Brexit party was renamed Reform UK in 2021.

The party told the Electoral Commission in 2019 it had spent £8.9mn during the EU and UK election campaigns that year, broadly similar to the £9.4mn of “campaign expenditure” figure included in its audited accounts filed at Companies House.

It also spent £1.7mn on staff costs for 47 employees. Overall the party spent £18.9mn on campaign, staff and on “other” costs.

Parties are required to tell the Electoral Commission about spending on activity during the “regulated period” that covers the year leading up to polling day. This includes spending on political broadcasts, leaflets, rallies and personal expenditure such as travel and living expenses.

They do not need to disclose details of non-campaign spending including the cost of party conferences or office costs.

The 2019 accounts for the Brexit party, now Reform, said its rapid growth “necessitated the institution of robust financial controls with some significant financial cost”. The accounts added that it “bore the costs of setting up controls and systems from scratch” as the party was new.

The party’s former finance manager has said on LinkedIn that in mid-2019 it had “incomplete accounting records, wrong journal entries and non-compliance of accounting standards”.

The staffer, who worked for the party between July and November 2019, added they were proud of “cleaning up” this problem once in post.

The accounts also note that the party held 10 regional conferences, rather than one national conference like other parties. Party conferences are typically not counted as “campaign” spending, meaning the cost of those events may have contributed to the £7.8mn of “other” expenditures.

One regional conference was held at the Emmanuel Centre in London in September 2019. It’s unclear how much that cost, but later, during the general election race, Reform recorded paying £18,000 to the centre the day before a campaign rally it held there.

Reform had £2.9mn of campaign expenditure from dozens of “rallies and events”, including £22,000 paid to Sunley Events, a hospitality company operated by Casper Sunley, a relative of party chair Richard Tice.

Sunley said his company provided event management and hire services to Reform, including emergency power generation for venues.

Campaign finance experts said existing legislation should be improved. Justin Fisher, a politics professor at Brunel University, said “greater detail is required by legislation to ensure parties’ expenditures are fully transparent”.

The right-wing party received £17.3mn of donations in 2019, with a £1.6mn deficit covered by the £3mn received in 2020 when it laid off three quarters of its employees and wound down most campaigning activities.

Farage has faced questions over expenditure in the past. Former UK Independence party officials in 2014 complained about £211,267 in unexplained “other costs” recorded in the accounts of a call centre the arch-Brexiter ran for the party between 2004 and 2005. Farage denied any wrongdoing at the time.