Published on 26 Mar 2012 Sections ,

Party funding: what is the solution?

“Action should be taken now to end the big donor culture before another scandal does further damage” – the warning four months ago from the Committee on Standards in Public Life.

The committee published a report proposing a shake-up of the way political parties are funded, following years of discussions between the Conservatives, Labour and the Liberal Democrats that have yet to come to fuition.

It warned that all three party leaders were obliged “to spend time soliciting those individuals or organisations for the funds they need to survive,” which “cannot be healthy for democracy”.

The report offered some reassurance to those convinced that parties and donors are behaving disreputably, saying there was “no hard evidence of current corruption”.

‘Clearly corruptible’

But the commitee, “an independent public body which advises government on ethical standards across the whole of public life”, argued that even so, the funding arrangements that exist at the moment were “clearly corruptible”.

Following claims that major donors to the Conservatives could secure dinner with the prime minister at No 10 and the chance to air their views on government policy, chairman Sir Christopher Kelly reiterated the committee’s concerns.

“It would be wrong to regard this as an isolated event,” he said. “Events like it are inevitable as long as the main political parties are dependent for their existence on large donations from rich individuals or, in the case of the Labour party, a small number of trade unions. The parties collectively need urgently to address the damage this does to confidence in the integrity of the political process.”

The parties collectively need urgently to address the damage this does to confidence in the integrity of the political process. Sir Christopher Kelly, Committee on Standards in Public Life

The Lib Dems’ Danny Alexander, a member of the cabinet, agreed, saying: “What I would say is this makes the case for reforming the system of party funding in this country even stronger.”

There is no cap on donations to political parties, but all payments over £7,500 that are received centrally have to be declared.

Donation caps

All three major parties agreed that reforms were needed in their election manifestos, and the prime minister is pushing for a £50,000 cap on donations.

The committee believes this would be too high and is lobbying for a £10,000 limit on donations from individuals or organisations, including trade unions, which are responsible for the bulk of Labour’s funding.

Its argument is that while £10,000 is a sizeable sum of money, the public would understand that it is not big enough to secure favours.

Labour is concerned that limiting what it receives from some unions could threaten its viability. The committee believes it has found an answer: the cap would treat union members as individuals, as long as they opted to pay an affiliation fee to the party. Currently, members have to opt out if they do not want to support Labour financially.

As well as a cap, the parties would also have to accept a 15 per cent cut in campaign spending in the period before an election.The upshot of these measures would be a big loss of income for the parties, affecting their ability to campaign at elections and keep going between them.

State funding

To ensure that the parties remain viable, the committee believes some state funding is necessary, but it recognises that at a time of austerity, many people would resent their taxes being spent in this way.

Sir Christopher and his colleagues see no alternative, given the public’s “high degree of scepticism about the motivation of both donors and recipients”.

Public funding would depend on the number of votes a party had won at the previous election, with £3 for every cross on the ballot paper. This, along with tax relief, would raise about £23m a year, equivalent to 50p a year for every voter in the UK.

In its report, the committee said it had not reached this conclusion lightly. “We would not recommend public subsidy to political parties if we thought there was an alternative.

“If the public want to take big money out of politics, the only way to do so is a cap on donations. It is unrealistic to expect to be able to do that at a level low enough to achieve the objective without at the same time increasing public support.”

In other words, people cannot look in disgust at how parties are funded, but object to the solution: a measure of state funding that takes suspicion out of the equation.