The Referendum In Campaign - Did Remain overspend?

Summary

A close inspection of the accounts submitted by “The In Campaign Ltd” suggests that they may have overspent by about £314,106 during the period of regulated spending.

Referendum Regulation

The regulatory procedure for the Referendum was as follows:

Until 31st January 2016 campaigners could spend and receive donations without reporting them . From 1st February 2016 they had to regularly report all donations over £7,500 and from 15th April 2016 they had to regularly report all spending.  The Lead Campaigners were “Vote Leave Ltd” and “The In Campaign Ltd”.  Spending by the Lead Campaigners in the period from 15th April to 23rd June was limited to £7m. (See Campaigning and Registering for EU Referendum Campaigners ).

The table below is taken from  Electoral Commission Report on the Regulation of Campaigners

According to the Electoral Commission Report on the Regulation of Campaigners the In Campaign had £12,119,050 of donations during the Referendum period. However, a search of the Electoral Commission Database shows that the In Campaign “received” over £24,000,000  (See Electoral Commission Search for Donations and full pdf of individual donations).  The discrepancy has arisen because the In Campaign entered an entire set of duplicate accounts on the 23rd December 2016. This administrative mistake is useful because it allows us to inspect how the accounts were changed between the pre-referendum submissions and the final accounts that were used to construct the entries for donations and spending in the table above.  In the discussion below the first set of accounts that were entered will be called the "pre-polling" accounts and the second, duplicate set, will be called the "final donations".

Differences between the pre-polling and final donation submissions

The pre-polling submissions had no entries in the “date accepted” fields, otherwise the pre-polling and final donation submissions were almost identical apart from the date changes listed below. 

1. There were 17 date changes to the “date received” data, 8 of which shifted donations to before 15th April 2016:

The total value of these date-shifted donations was £546,512. A substantial sum. Three of these date changes involved donations from David Harding, Stuart Rose and Roland Rudd who were directors of the In Campaign:

In normal accountancy practice the dates of transactions within an Accounting Period need to be recorded accurately for VAT returns. This is a statutory requirement.   However, the date changes shown above are such that it is very unlikely that VAT periods were responsible but highly likely that the object was to assign a date prior to the start date for declaring donations of 15th April 2016.

2. There were also five items that had “Date Accepted” fields past the 23rd June 2016:

This may indicate that these date changes were aimed at taking the donations out of the regulatory period for spending of 15th April to 23rd June. The total of these donations is £382,345

3. Only one value was changed, entry Ref C0242437, which was reduced by £10.

4. Two new donations in February of £2,501 & £7,499 by Michael Rake (CBI) were added.

Why would Donation Dates be Changed when it is Spending that is Regulated?

The In Campaign was set up with the following objective, as confirmed in the accounts of 31st Aug 2016:

The In Campaign had the sole purpose of fighting the Referendum. 

At the end of the Referendum its spending on the Referendum would equal its donations less any profit made.  This means we can check the declared spending using the donations data and the profit declared in the company accounts.

Suppose between the start of the declaration period (15/04/16)  and the end of the Accounting Period the In Campaign received £10m in donations and carried no money forward to the next Accounting Period yet reported £7m of spending.  Where has the difference of £3m gone?  £3m would be missing and we would all be asking where the surplus £3m went. In the hypothetical case of £10m donations from 15th April onwards and £7m spent the only way to "reconcile" the figures would be to shift £3m of donations to before the 15th April so it looks like £7m was received in the period.  

The Calculation

All expenditure was dedicated to a single end. This means that late invoices etc. should all have been allocated to the period before 23rd June 2016 and declared as expenditure for the Remain campaign.  

The amount that the In Campaign spent on the Referendum during the statutory period can be calculated as the amount in the bank at 15th April 2016 plus donations after that date minus any profit.

Amount spent = Amount in Bank at 15th April + Income in period - £81789

Where £81,789 is the profit (ie: the amount by which income exceeded expenses in the year (from the accounts)).

The official Electoral Commission accounts showed £6,767,584 was declared as spent in the regulated period from 15th April 2016 to 23rd June 2016 (see Table 1 above).

We have a final donations figure of £5,633,871 for income in the regulated period and £6,767,584 as spending, both from the Electoral Commission so we can find the amount in the bank at 15th April from:

£6,767,584 = Amt in bank  at 15th April + £5,633,871 - £81789

Which means that the In Campaign's amount in the bank at 15th April 2016 must have been £1,215,502.

Now the In Campaign are scarcely likely to have got the bank account figure wrong, it is on their bank statement and obvious to any investigator. Assuming that the bank figure is fixed, the spending figure for 15th April to 23rd of June using the pre-polling figures for income is:

Spending = Bank amt + prepolling donations - profit

Spending = £1,215,502 + £6,180,393 - £81789

So on the basis of the pre-polling declarations:

Spending = £7,314,106

This is £546,522 greater than the amount calculated using the final accounts. It is also £314,106 over the limit and would explain why a second set of accounts were submitted to the Electoral Commission.

This difference between the pre-polling and final spending figures is due to the shift of £546,512 out of the regulated period and a stray £10 (item 3 above).

It would appear that the “In Campaign Ltd” may have overspent by £314,106 and shifted contributions out of the regulated period to cover this up.  I am not saying this was definitely the case, but pointing out that it needs investigating.

The apparent overspend gets worse if the £382,345 worth of donations that were shifted to after 23rd of June have been treated as unrelated to spending in the regulated period and could result in as much as £696,451 overspend.

Next steps

Lets be clear that The In Campaign is not being accused of overspending.  This document highlights the fact that the accounts and declarations that are on public view have some uncomfortable questions that need answers. The next step is to persuade a forensic accountant to inspect the figures.  Any accountant would need access to the In Campaign bank account and then the detailed bookkeeping data.

An image of the full donations data is available below.  The declarations for donations from 15th April are available on request and the crude data can be obtained from Electoral Commission Search .

The In Campaign accounts for the year ending 31st August 2016:

Here is the full list of donations to the In Campaign Ltd.  The items with changed Date Received values have 1 in the far right column.  Click on the image and use zoom in your browser to enlarge:

Data tables for the above that can be copied into Excel etc are available here.

25/07/2020