Binks:
I've no wish at all to be argumentative, and my ignorance on the subject of banner towing is near total, but I don't understand how the above paragraphs you quoted demonstrate that carrying a passenger while towing a banner is illegal.
Para 5.1 - we assume that the unfortunate Mr Farage did not claim to be a member of the crew, so he was a passenger.
Para 5.3 - I assume the operator doesn't hold an AOC, so that of itself this clause doesn't make this a public transport flight.
Para 5.4 - Assuming payment changed hands for the flight, (it could be a private flight by a UKIP supporter, for example), then this paragraph makes it aerial work.
Para 5.2 is the key para, surely? It clearly gives cause for a prudent operator to think hard before carrying passengers while conducting aerial work, because of the risk of the flight being deemed public transport, but it doesn't mean that simply carrying another, non-paying, human being necessarily makes the flight public transport. (E.g. suppose a fee has been agreed for the work, and the pilot offered to take a supernumerary at the last moment? There's no additional payment involved, so no paying passenger.)
And CAP393 doesn't forbid carrying passengers while towing, except for a helicopter.