15 Jul 2010

Questions over Zac Goldsmith’s election expenses

A Channel 4 News investigation has raised questions over the election expenses of Conservative MP Zac Goldsmith.

Zac Goldsmith is the new MP for Richmond Park and one of the best known faces of the modern Conservative Party.

The former non-dom is worth an estimated £200m. He was the richest candidate at the election, but insisted that his money gave him no advantage at the ballot box. His constituency in south west London is a leafy and affluent area. It had been held by the Liberal Democrats since 1997, but Zac Goldsmith (see his Who Knows Who profile) won a closely fought contest with sitting MP Susan Kramer (see her Who Knows Who profile).

David Cameron with Zac Goldsmith before he became a parliamentary candidate - Reuters.

During a closely fought and at times bitterly contested campaign Cameron made a point of promising a new, cleaner politics in the wake of the expenses scandal.

So did Goldsmith stick to the letter and spirit of the law on election spending? By law, all candidates have to file a detailed declaration of spending with their returning officer, and these are available for inspection at local town halls. In a joint investigation, Channel 4 News and the Bureau of Investigative Journalism has scrutinised the Goldsmith campaign’s election expenses return.

Questions over Zac Goldsmith’s election expenses – signs, jackets and leaflets

The Electoral Commission set a spending limit for parliamentary candidates in Richmond Park of £11,003 to spend on campaign materials in the 23 days up to polling day. This is known as the short campaign and runs from the day after parliament is dissolved.

Goldsmith’s declaration, signed on 7 June, states that he came £220 below this with a campaign total of £10,783. However, when Channel 4 News and the Bureau of Investigative Journalism looked at his receipts in detail, there were some puzzling items.

Like most candidates, Goldsmith used hundreds of signs and boards to raise his profile. The invoices show that the Goldsmith campaign spent some £2,800 for 600 signs bearing his name and photo.

But when it came to declaring how much the campaign spent on these signs during the key campaigning period, the amount is reduced by 90 per cent – to just £262. This reduction helped to keep him under his legal spending limit.

Zac Goldsmith's election expenses declaration

It appears he managed to do this by claiming half these costs were for another campaign – but he has not revealed which one. Costs are also reduced further by saying, for example, some signs were used before parliament was dissolved.

From the details provided it is hard to tell whether it was legitimate to shift the costs in this way. But there is one reduction that seems particularly puzzling.

A quarter of the costs of the signs – some £700 – was moved from Goldsmith’s own personal parliamentary campaign, onto the expenses of local Conservative candidates in the council election, despite the fact that they all appear to bear the face and name of Zac Goldsmith.

Election spending rules

Legislation regulated by the Electoral Commission sets out strict rules on the amount each candidate can spend on their campaign. Typically, campaign money is spent on leaflets, posters, signs and other promotional material as well as staff and office costs.

It is vital that MPs keep their spending under control. If they fail to do so, it can be a criminal offence. In 1999, Labour MP Fiona Jones was convicted of overspending on her limit, and kicked out of the Commons. She won on appeal but her political career never recovered.

Experts say there is a very good reason for these tough sanctions, because fairness with election spending really does matter - to ensure a level playing field at the polls.

The rules exist so that each candidate has a fair opportunity of reaching the voters and to ensure that no rich candidate can "buy" an election.

Going over the limit by even a small amount can have serious consequences, it could amount to an offence: an MP could be barred from parliament and there might have to be a by-election.

Political funding expert Professor Keith Ewing explained to Channel 4 News how the rules apply in principle: “I would think it would be quite hard to see how it would be possible to argue that a poster which contains only the image of a candidate for a particular election could be said to be poster which is designed to promote the election of anyone other than the candidate in question.”

Tony Stafford from the Electoral Commission added: “Certainly if you’ve got something that clearly identifies the candidate and encourages people to vote for the candidate then you’d call that a candidate return.”

So if the Goldsmith campaign was wrong to shift half the cost of the signs from his parliamentary campaign to the local council campaign, then he could well have breached his legal spending limit – and he could have broken the law. Just going over by one pound could amount to an offence.

Another big ticket item in Goldsmith’s highly-visible campaign were the 200 blue jackets his campaigners wore, featuring the slogan “I back Zac”. At a cost of more than £2,000 these could easily have taken Goldsmith’s spending over the limit, but the cost of them was reduced in his spending declaration – also by 90 per cent.

This was done by separating the cost of the jacket from the cost of the sticker.

According to the invoice that Channel 4 News has seen, the full cost of 200 of these was £2,168. Removing the cost of the jackets took more than £1,400 from his declared campaign spend, leaving £753.

The Goldsmith team made further deductions by saying for example that he did not use all the “I back Zac” stickers, and that left him with a total declared campaign spend for these 200 jackets of just £170.

Again, if Goldsmith was wrong to leave the cost of the jackets out of his declaration, he would be over his legal limit.

The final big-spending item was the cost of Goldsmith’s campaign leaflets. He ordered 272,000 posters and leaflets which invoices show cost more than £14,000. This cost alone would have taken him over his spending limit.

But Goldsmith’s campaign reduced the costs in various ways. One that stuck out was his claim that he simply did not use 62,000 of them. This helped cut his spending declaration by more than £2,500.

In other words, he only declared what he claims he used, rather than what he ordered. Some other candidates also only accounted for what they used but in Goldsmith’s case the sums were large.

He told Channel 4 News: “It would seem to me to be logical to claim for the ones they’ve ordered because these are materials for the purposes of the campaign. It also would be impossible to audit. You can audit the receipt for the items ordered, you can’t audit whether or not something’s been delivered.”

In a statement to Channel 4 News, Zac Goldsmith’s election agent cautioned against reporting inaccurate figures and making false assumptions.

He said: “We were scrupulous in ensuring that all our election expenses complied with both the letter and the spirit of Electoral Commission rules.”

A Conservative Party spokesperson said candidates were justified in only accounting for items used as material can become out of date during a campaign. She added that the examples raised could be seen in the returns of other candidates.

Zac Goldsmith later accused Channel 4 News of sleazy unethical journalism. In response a Channel 4 News spokesman said: “We refute any suggestion that Zac Goldsmith was targeted simply because he is a high profile figure.

“The questions we have raised relating to his expenses are entirely legitimate. The issues we found regarding Mr Goldsmith’s campaign expenses are materially different and of a different scale to those found in other returns we looked at.

“We informed Mr Goldsmith of our report last week and he was given ample opportunity to respond on the record to these questions.

“Channel 4 News stands fully behind its report which was rigorously researched. The investigation into campaign spending continues.”

The law governing campaign spending is rarely tested in courts, much is left open to interpretation. However our findings do suggest that Zac Goldsmith has questions to answer about whether his spending has complied with both the letter and the spirit of the law.