Investigation: Inside the SNP money machine

Almost £30m was generated in donations, membership fees, bequests and fundraising after the launch of the ring-fenced Indyref2 appeal which triggered the police inquiry. 

Similar sums flowed out the SNP’s doors on wages, conferences and campaigning.

Public records also show how power transformed the SNP’s previously precarious finances.

Launched in July 2021, Operation Branchform has seen Nicola Sturgeon, her husband Mr Murrell and former SNP treasurer Colin Beattie arrested and released without charge. 

Ms Sturgeon has insisted she is innocent of wrongdoing, while some of her supporters have accused Police Scotland of time-wasting and heavy-handed tactics.

Last week, Sir Iain Livingstone, the force’s departing Chief Constable, said the sooner the investigation was concluded the better it would be for all concerned, insisting it was based on “evidence and facts as opposed to rumour and innuendo”.

He has also called it “complex”, “thorough and proportionate” and “bigger than expected”.

Prompted by claims in March 2021 that £660,000 raised by the SNP specifically for Indyref2 had been misspent, the investigation had “moved beyond” the initial allegations into “potential embezzlement” and possible “misuse of funds”, he revealed. 

Branchform
SO how big a challenge has the team of 20 officers on Operation Branchform faced?

The exact extent of the operation is not known outside the force and the Crown Office, but it is understood witnesses have been questioned on party spending at least back to 2017, when the Indyref2 appeal was launched by Ms Sturgeon and Mr Murrell with a £1m target.

However, the police have been free to look at whatever catches their attention and given the scale of the SNP’s money machine there has been no shortage of possible trails to follow.

The Herald looked back at two decades of SNP accounts and Electoral Commission files to find out just how much money has been swirling around the party.

The watchdog publishes material back to 2002, Mr Murrell’s first full year as chief executive.

The records show that in devolution’s early years the SNP was habitually cashstrapped.

Its income varied from £972,976 to £2.56m between 2002 and 2010, and five of those nine years saw deficits, which ranged £66,115 to £305,725.

Every year ended with net liabilities, from £229,124 to £885,540, rather than net assets. Its financial cushions were wafer-thin. In the first years for which figures are available, 2008 to 2010, it had cash deposits of just £2,336, £4,624 and £1,241 respectively.

It all changed in 2011, when the party moved from being a minority government unable to get a referendum off the ground to Holyrood’s first majority administration.

The election year saw a donations bonanza, although most came unexpectedly.

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Major donations
BUSINESSMAN Brian Souter gave £500,000 ahead of the vote, and the death of the poet Edwin Morgan the previous year brought a bequest of £917,739 in July 2011.

In the autumn there was another £1m from Christine and Colin Weir, SNP supporters who became the UK’s biggest lottery winners after scooping £161m on EuroMillions.

The SNP’s income that year was more than £5m. After ending 2010 with a £305,00 deficit, the party boasted a £1.58m surplus, £1m cash at the bank, and reserves of £858,996. 

It also had the parliamentary majority which would lead to its next financial leap.

The referendum of 2014 boosted the SNP’s coffers in multiple ways. It remains its best year for donations, which accounted for £4.47m of its £7m income.

More important financially was what happened after the No vote.

The party’s membership had been ticking up modestly since devolution - from 9,500 in 2003 to 15,000 in 2008 and 25,000 in 2013, when it generated £585,691 in membership fees.

But after Yes lost the referendum, the SNP’s membership skyrocketed - and so did the cash.

By the end of 2014, the party had 93,015 members yielding fees of £1.33m.

By the end of 2015, the membership was 115,102 and the fees £2.74m.
Membership fees have been the SNP’s main money spinner ever since.

In the seven years before Ms Sturgeon became SNP leader, membership fees accounted for an average of 21% of SNP annual income. 

While she was leader, they averaged 49%.

At the same time - perhaps because of a perception that the party didn’t need them - the SNP’s donations saw a relative drop, from an average of 34% of annual income to 15%.

It is little surprise the party was so afraid to admit the loss of a third of its members earlier this year given their pivotal role in its funding.

The referendum also boosted the SNP’s finances in another way. 

In 2014, the party had six MPs and its Westminster group had an income of £181,029, all of it from Short Money, the parliamentary allowance paid to parties based on MP numbers and votes.

It was too little to justify the group’s accounts being audited. 

But after the SNP tsunami of 2015, the SNP had 56 MPs, and its Short Money surged too.

In 2016, the first full year of the new intake, it was £1.2m and the Westminster group had a total income of £1.77m, including a pooled staffing budget.
Since 2014, the SNP’s Westminster group has enjoyed an income of more than £11m. 

Tabulating the SNP’s finances brings something else into focus.
Despite the explosive growth in members and money, the party machine did not grow in the same way, at least not the salaried side of it. The volunteer side isn’t documented.

According to the party’s accounts, the same number of people - 25 - were employed in 2021 when the membership was 103,393 and total income was £4.5m as there were in 2009, when the membership was 15,644 and income was £1.8m.

Staff numbers
IN 2009, there was one member of staff at HQ for every 626 members.  In 2015, after the referendum and tsunami, there was one for every 6395 members. In 2021, the last year with published accounts, there was one staffer per 4135 members.

Before he was CEO, Mr Murrell was a press officer for the Church of Scotland for four years, then spent 14 years working for the SNP, at one point acting as its fishing spokesman.

One former worker at SNP HQ said: “There wasn’t any chief financial officer. It was pretty much Peter, perhaps [compliance officer] Ian McCann.”
They said any new hires after 2011 were mostly in social media and communications.

An SNP MSP said the SNP operated as a membership organisation governed by standing orders, not as a company would. 

That meant the party treasurer and a volunteer finance and audit committee were supposed to have oversight of the monies.

In March 2021, three tigerish new members of the finance and audit committee quit because they were denied access to files by HQ, helping to precipitate Operation Branchform.

The records also reveal something curious about Mr Murrell’s publicly declared salary.

Despite Ms Sturgeon’s boast of winning eight elections in a row, and Humza Yousaf’s praise for her husband’s part in that, Mr Murrell appears to have suffered a real-terms pay cut.

When he was appointed in October 2001, his salary was announced as £35,000. 

By 2008, after helping the SNP into power, it had jumped to £63,000.
It jumped again in 2011 to £109,000 after he helped the SNP win its Holyrood majority.

But it became a touchy subject. In 2012, Scottish Labour leader Johann Lamont mocked Ms Sturgeon for getting free prescriptions while living in a £200,000-a-year household.

Mr Murrell’s salary dropped to £77,000, then in the 2020 and 2021 accounts it was given as £79,750.

When the party advertised for his replacement in June, it said the next holder of the job would get a salary of £95,000.

 

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£71.2m income
OVERALL, since 2002, and taking the average of the preceding five years to estimate the figure for 2022, SNP HQ’s income has been £71.2m, including membership fees of more than £22m and donations of more than £15m. 

Almost £47.7m of the total has been since 2014 and £29.7m since 2017, when the Indyref2 fundraiser at the heart of the police inquiry was launched.

For comparison, Scottish Labour’s income from 2002 to 2021 was £11.7m, the Scottish Greens’ £4.6m, and the Scottish Liberal Democrats’ £2m.
The Scottish Tories do not produce public accounts.

The SNP’s declared expenditure, of just under £70m, includes £13m on fighting general, Scottish and European elections and the 2014 and 2016 referendums.

Under Ms Sturgeon it spent more than £7m on elections involving 1250 invoices. Another £500,000 was spent on parliamentary byelections. 

The £71.2m income figure does not include the Westminster group’s £11.6m income, which is spent almost exclusively on staffing.  

Operation Branchform may reveal whether those numbers need updating. 
But even before it reports, there are doubts over some of the arithmetic. #In June, the SNP’s new auditors warned the accounts for 2022 would carry a health warning.

The party had failed to keep “original documentation in respect to some items of cash and cheques received for the current and prior year, relating to membership, donations and raffle income”, meaning the records were incomplete and the reserves uncertain.

It was another twist in a saga that has sprawled across the SNP’s millions.

There may well be another when the SNP’s accounts for 2022 are published on August 25.

An SNP spokesperson said: “Financial decision making and monitoring in the SNP is through a combination of the Chief Executive, other senior staff, the National Treasurer, National Officer Bearers, the Finance and Audit Committee, and the National Executive Committee.

"The NEC approves the annual budget and accounts. This is similar to the model adopted by other major parties.”