When borrowing isn’t borrowing: how the Electoral Commission and the media get party debt figures wrong

Yesterday saw the publication by the Electoral Commission of the latest donation and borrowing figures for political parties. Their press release states:

As at 30 June 2008, total borrowing [by political parties] stood at just over £33.1 million

One problem though.

This figure is wrong.

For if you go all the way through the press release to the detailed breakdown and know how the terms are defined, you will find that this is actually the total figure for borrowing plus unused credit facilities. It’s as if I had an unused credit card with a £500 limit that’s never come out of the envelope and never been used, but you said, “Ah ha! You are borrowing £500.”

Matters are then made worse when the media take these borrowing figures that aren’t really borrowing, call them party debts and quote them in isolation from any information about party assets.

On the logic used, someone with an unused credit card with a £500 limit and £1,000 in bank (actual net position: plus £1,000) would be reported as being worse off than someone with a £400 debt on their credit card and no money in the bank (actual net position: minus £400).

This BBC report is, for example, simply wrong in its talk of party debt figures, and even The Guardian who – half a brownie point – make a nod in the direction of the figures not being what they really seem (working in a reference to “outstanding loans and credit facilities”), don’t fully explain the point and still talk about debt without reference to assets.

Does this matter? Well, in the case of the Liberal Democrats it certainly does, because included in the party’s figures is a very large sum for unused credit facilities, making the party’s overall financial situation look rather different from what you might at first think.

P.S. The way these figures are misleadingly presented is something I’ve raised with the Electoral Commission several times in the past and usually had a reasonable initial reaction from the person I have spoken to. But the way they present and explain the figures in the end hasn’t changed, with the ironic result that the Electoral Commission is actually making party debt and finance figures less open and transparent.