Strong Parties Clean Politics

8/22/2019 Strong Parties Clean Politics

1/39

March 2003

Strong PartiesClean PoliticsThecaseforpartyfundingreform


2/39 March 2003

CONTENTS

FOREWORD

Margaret Prosser OBE 1

STRONG PARTIES, CLEAN POLITICS

Peter Facey 2

A LABOUR VIEW

Martin Linton MP 13

A CONSERVATIVE VIEW

Andrew Tyrie MP 19

A LIBERAL DEMOCRAT VIEW

Matthew Taylor MP 25

THE EUROPEAN PERSPECTIVE

Kaitlin Kalna 28

FURTHER INFORMATION

Scottish Nationalists 32Plaid Cymru 33The Greens 34

www.cleanpolitix.com 35

Bibliography & Biographies 36

NewPoliticsNetworkMarch2003DiscussionPaper

Published:March2003

Editing,designandlayout:BenjaminLinsley

Coverimage:ErikP.Hanson

Photography:KathyKeep&KaitlinKalna

Additionalmaterial :MajaTjernstrm(IDEA),BenjaminLinsley,KaitlinKalna,JaredBosk,

JamieAustin,KathyKeep,(NPN),Dr.JustinFisher(BrunelUniversity)Printed:Halstan&Co.Ltd.,Amersham,Bucks,HP66HJ

Distributed:WarnesMailMarketingLtd,London

The opinions in this paper reflect those of the individual authors only.


3/39 March 2003 1

As I write the country is at war in Iraq. There is much concernexpressed in the parliamentary Labour Party and in the partygenerally. Accusations of high handed decision making and of

exclusivity abound. Whatever the rights and wrongs of the situation Ican't think of a better example of the need for strong political parties. Abalance of power between political leaders and party members is centralto our democratic process so that governments under a pressure froma myriad of forces can be tested, questioned and held to account. Strongpolitical parties of course need adequate and secure funding. The everydayexperience of most of the population is of sophisticated communications,

stylish images and professionally provided services. Politics on the back of afag packet has long since passed its sell by date.

Traditionally of course the Labour Party has drawn much of its fundingfrom the trade union movement. More lately, and I believe to its credit,the party has attracted funding from a wider variety of sources with manybusiness men and women donating funds in a practical demonstration ofsupport for Labour's governance of the country.

The introduction of the Political Parties Elections and Referendum Actdesigned to bring transparency to the political finance system has had asharper than intended effect with many large donors hounded by the press,accused of buying political favour or looking for political honours. At the

same time some trade union leaders have declared their affiliations to belined up against policy delivery. Meanwhile party managers try to plan. Theyhave to run policy development, party membership, polling, IT systemsetc with the certain knowledge that there is nothing certain about theirincome levels.

All this leads me to believe that we need to ensure financial supportfor core political activities. The state already provides some funding forpolitical parties, at election time for example and for annual conferences.The principle is therefore established. Core funding from the state for coreactivities would leave the party managers free to develop membershipactivity and involvement leading to a healthier politics all round.

FOREWORD

Margaret Prosser OBE

was a former Deputy

General Secretary of the

T&G Union as well as a

former Treasurer of the

Labour Party


4/39 March 20032

Whyshouldthepublicbeconcernedwiththehealthofpoliticalparties?

Whyshouldtheycareenoughtocontributemorepublicmoneytosustainthem?

Since1997therehasbeen

increasingconcernforthehealthofelectoralpoliticsinBritain.Thefocusofconcernhaslargelybeenthecollapse inthenumberofpeopleturningouttovote.In199771%ofthoseeligibletovote,didsointheGeneralElection:thelowestturnoutsinceWorldWarII.In2001voterturnoutfellto59%,thelowestsincetheintroductionoftheuniversalfranchise.Turnouthasnotjustdroppedforgeneralelectionsbutacrosstheboard,withsomeof

thelowestturnoutsseeninlocal governmentandEuropeanelections.

Thecausesforthisarenumerous,complex,interwovenandnecessarilysubjecttointensedebate.Thesubjectoflowpoliticalandvotingparticipationisnotthemainfocusofthispaper.Wedo,however,wishtofocusontherolethehealthofpoliticalpartieshastoplayinthismuchbroaderdebate.Inparticular,wewishtodrawattentionto

twoissues.Firstlytherelationshipbetweenpartyfundingpractices,publicperceptionofcorruption,andthecontributionthismakestowardsthegrowingpublicdistaste

forpolitics.Andsecondly,thedevelopmentsincampaigningpractices:thecentralisationofpoliticalcampaign;howthisrelatestodecliningpar tymembershipandinparticulartheeffectofdecreasedpartycampaigningactivityatalocalandinterpersonallevel.

Wewishtoadvocatetheneedtocompletethereformoffundinglaw,whichtheGovernment,inadrivetoendclaimsofsleaze,embarkeduponin1997.Butwewishalsotoillustratetheimmenseopportunitiessuchreformcouldbringifapproachedwiththeseadditionalobjectivesborninmind.Wehavearareopportunitytolookatthegeneralhealthofourparties,tostabilisepoliticalpartymembership,

removetheconcernthatpartiesarebeholdentoafewrichbackers,andtocreatea frameworkunderwhichpartiesseeknewandeffectiveopportunitiestoengagewiththeelectorate.

Sleaze and perceived sleaze

Ifabusinessmanorbusinesswomangives100,000tocharity,heorsheispraisedforputtingsomethingbackintothecommunity.

Ifheorshegivesthesamesumtoapoliticalparty,thequestionaskedis"What'she/shegettingoutofit?".Inmostcasestheansweris"nothing".TherequirementunderthePolitical

Parties,ElectionsandReferendumsAct2000(PPERA)topublishallsignificantdonationsmakesovertcorruptionhighlyunlikely.Butmanywiththewherewithaltomakealargedonationwillhavefinancialintereststhatareaffectedbygovernmentdecisions.Itwillalways

bepossibletofindachangeinpolicythatbenefitsthemandcanbeportrayedasaquidproquo.

Sixmillionairedonorsprovided

morefundingtothepartiesin2001thanalltheirmemberscombined,andtwodonorsgavealmosthalfofallthemoneytheConservativesspentinthe2001electioncampaign.Inshort:peopleare,quitesimply,verycynicalofbigdonors.

InMay2002,anICMpollfortheBBCsTodayprogrammefoundthat74%ofthosequestionedfeltthatthepresentwayinwhichpartieswerefundedgavetoomuchinfluencetorichindividualsandbigbusiness.Also,82%ofthepeoplesurveyedsaidtheyfeltthatthepresentsystemoffundingmadethepublicsuspiciousofpoliticsandpoliticians.Althoughitshouldbenotedthatthisdoesnotnecessarilytranslateintofullpublicsuppor tfor

statefundingatthispoint.

Overthelast10years-underthisgovernmentandthepreviousConservativeadministration-

Strong Parties,

Clean Politics

Peter Facey

is Director of the New

Politics Network


5/39 March 2003 3

allegationsregardingtheconnectionbetweendonationsandinfluencehavebeenrife.WhetherithasbeenthecontroversysurroundingLordAshcroftundertheConservativesortheBernieEcclestoneandLakshmiMittalallegationsunderLabour,theproblemswithlarge

donorshavestubbornlypersisted.

Parties and campaigns

Ithasbecomeapparentthatwherethereareactiveandcompetitivelocalparties,voterturnoutismuchhigherthanwhereactivityorcompetitionislower.Therelationshipbetweenturnoutandthemarginalityofaconstituency,forinstance,supportsthisclaim.In2001,therewasa10%difference

inturnoutbetweenthesafestandmostmarginalseatsintheUK.

Therelativeallocationofresourcesdependingonseatmarginalityrelatestoquestionsofpeoplepoweraswellasjustmoney.Politicalpartiesdonothavetheresourcestofighteveryconstituencycampaign,letaloneeverylocalcouncilwardwiththesameresourcestheywould presentlyfightanimportant

marginalseat,norshouldtheynecessarilyeverwantto.Buttheyshouldbeawareoftheeffectstheirpresenttargetingstrategiesarehavinginaneraofdecliningpoolsofpersonpoweravailableincampaigns.Bycompensatingforthisthroughnationalandspecifically

targetedadvertisinganddirectmailcampaigns,ashorttermgoalofwinningamarginalmaywellhavebeenachieved,butitislikelytohavehadlongtermconsequencesintermsofoverallvoterturnout.Inshort:peoplerespondtobeingcontactedpersonally.

Moreovertheeffectofpersonalcontacttopeoplesperceptionofpoliticsinthelongertermissignificant.Ifoversuccessiveelection

campaignsapersonhasneverbeencanvassedpersonally,thelikelihoodofthemhavingapositiveattitudetowardspoliticsandpoliticiansandconsequentlythelikelihoodofthembotheringtovoteislikelytodropsignificantly.

In1964,itisestimatedthatcombinedmembershipfortheLiberal,LabourandConservativepartiesstoodat3.2million.By2002,theirmembershiphadfallen

toaround663,000.Thismeans,forinstance,thattheaveragenumberofpartymembersforthethreemainpartiescombined,isjustoverathousandperconstituencyinGreatBritain.

ArecentstudybyDenver,

Hands,FisherandMacAllisteronConstituencyCampaigninginthe2001Electionfoundthattheaveragenumberofcampaignworkersactivepartymembers-fortheConservatives,Labour,andLiberalDemocratswasrespectively61,32,and20or113intotal.Itfound,however,thatinasafeLabourseatwhichisnotatargetforeithertheLiberalDemocratsortheConservatives,theaveragetotalnumberofcampaignworkers

wasaround68.Itshouldbenotedthatturnout isatits lowestinsafeLabourseatswherethelevelsofactivityareattheirlowest(Fig.1).Itisthereforenotsurprisingthatthestudyalso foundthatthe percentageoftheelectoratecanvassedwasinthewordsofthestudyrelativelymodest.(Fig.2)

Fig.1

Fig.2

Source: Denver, Hands, Fisher and MacAllister 2002

Source: Denver, Hands, Fisher and MacAllister 2002


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IfanythingtheDenver,Hands,FisherandMacAllisterstudyprobablyoverestimatestheresourcesavailabletolocalpoliticalparties,asitdependsonlocalpartiestoaccuratelyreportthenumberofpeopleinvolvedandtheremaybeatemptationto

exaggerate.

Itisnotjustthevolunteercapacityofthepartiesthatisindecline:thenumberofpaidstaffatasubnationallevelhasalsodeclined.InPaulWebbsstudyTheModernBritishPartySystemhefindsthatlocalorregionalstaffhavedeclinedbetween1964and1998byover58%.Thedayswhennearlyeveryconstituencyhadatleastacoupleofpaidorganisers

arelonggone.Therecentincreaseinstatesupportforpoliticalpartieshasdonelittletochangethistrend.Infact,ithashelpedincreasethetrendofresourcesmovingtowardsthecentretowardsthenational,usuallyLondonbasedoffice.

PPERA

Thepresentlegislation,thePoliticalParties,ElectionsandReferendumsAct2000(PPERA),

soughttorestorepublicconfidenceinpoliticsbyestablishingtheElectoralCommissionandthefirstlegallybindingrulesconcerningdonationstopoliticalparties.

ThePPERAstatesthatpartiescanonlyacceptdonationsover200fromUKregisteredvoters,orUKbasedorganisationsandcompanies.Furthermore,straightforwardgiftsofcashorbequests,sponsorshipofpartyevents,andgiftsinkind-such

asprovidingfreeofficespaceorsuppliesshouldbecategorisedasdonations.

PoliticalpartiesarerequiredtomakefourquarterlyreturnstotheCommissioneachyear.Thereturnshouldgivedetailsofcashandnon-cashdonationsreceivedbythepartylocallyandornationally.PartiesmustreportthefollowingtotheElectoralCommission:

Donationstotallingmorethan5,000acceptedbythepartynationallyandor;

Donationstotallingmorethan1,000acceptedbyapartylocallyorregionally.Thoughthesereformshavemade

thesystemmuchmoretransparent,forwhichtheGovernmentshouldbeapplauded,itcannot

beemphasisedenoughthatthesereformshavestillnotendedtheperceptionthatBritishpoliticsissleazyandpotentiallyrathermercenary,letaloneensurethatpoliticalpartiesarehealthyorvibrant.Thereformofpartyfundingpracticeswasstartedadmirably,itisnowtimetofinishthejob.

Reform

Acommonangleofcriticism

towardsanynotionofstate interferenceinpoliticalparties,takesthepositionthatpar tiesareautonomous,voluntarybodies,whichchoosetocompeteinelectoralpolitics,butrequiremasssupporttodoso.Iftheydonothavethissupport,theyshouldnotbeartificiallyproppedupbythestate.Thereality is,however,thatpoliticalpar tieshavebecomefundamentalinstitutionsofourdemocracy.Thehealthofour

democraticandpoliticalsystemisinextricablylinkedwiththehealthofourpoliticalparties,andassuchwehaveahugevestedinterestintheirfateandthusa justificationforintervening-toanextent-toensurethattheycontinuetoservethenationappropriately.

Asinstitutionsofcivilsociety,

ourpoliticalpartiesareinlongtermdecline .Theyarecurrentlyweakerthanatanytimesincethe

1950s.Althoughoverthelastfewyearstherehasbeenanincreaseinthenumberofhighprofileindependentsandagrowthinsingle-issuegroupssuchasHealthConcernKidderminster,thereisnoindicationthattheycanofferanalternativetopoliticalpartiesasawayoforganisingmodernpolitics.Nomajordemocracyexistswithoutapoliticalpartysystem.

Therearefewalternativesto

reform.Wecaneitherletpoliticalpartiescontinuetodeclineinpublicsupportwhiletheyclingtoneartotalpoliticalpowerorseektoreversethedecline.Theissue

isnotmerelyoneofsleazeandpartyfinances,itistherelationshiptothehealthofourparties,theircampaigningpotentialandtheimplicationsforthelongtermhealthofourdemocracywewishtostressinourdeliberations.

Options for reform

Donations from Individuals,Companies and Trade Unions

Somehavearguedthatmaking

politicaldonationspublic,asispresentlyrequiredunderthePPERAshouldbesufficient:thateverythingelseisamatterbetweenthedonorandtherecipientparty.Political

parties,likethedemocracytheyoperateinneedtobeinapositiontocommandbroadbasedsupportnotonlyonafewwealthydonors.ItsimplyisnthealthyforanypartyinthiscasetheConservatives-tobedependentontwodonorsforoverthreequar tersoftheamount spentintheaGeneralElection,butstillbeappealingforwidespreadsupportfromthecountry.Politicsnotonlyneedstobecleanofsleazeandcorruptionitneedstobeseento

beclean.

Aslongasareasonableconnectioncanbedrawnbetweendonationstoapartyandapolicydecision,therewillbesuspicionofcorruptionorundueinfluence.

Individuals

Overthelasttwoyears,large

donationsbyindividuals,suchaJohnPaulGettyIIwhogave5million

totheConser vativepar tyorLordSainsburywhogave2milliontotheLabourParty,havecaughttheheadlines.Thesedonationsrepresentedrespectively18.3%and39%ofwhattheLabourandConservativePartiesspentnationallyinthe2001GeneralElection.However,itisnotjustverylargedonationsthathavecausedpubliccontroversy,evendonationsasrelativelysmallas10,000havebeencausefornewsstories.

Asitstands,thereisnolimiton

theamountindividualscandonatetopoliticalpar ties.


7/39 March 2003 5

CompaniesSincetheintroductionofthe

PPERA,anydonationmadetoaregisteredpoliticalparty,politicalorganisation,oranyotherpoliticalexpenditureaggregatingover200ayearbyacompanymustbe

detailedinadirectorsannualreporttoitsshareholder s.Therepor tmustdetailtowhomthedonationwasmadeandthetotalamountofcontributionstothatsource.Donatedmoney,subscriptionfees,ormoneyspentpayingexpensesforapoliticalorganizationareallconsideredtobecontributions.Significantly,companiesmustalsoobtainshareholderconsentbeforeincurringapoliticalexpenditureordonation.

Today,veryfewcompanies

donatingtopoliticalpartiesarehouseholdnames.In1997,companiessuchasVodafone,Dixons,P&O,ScottishandNewcastleandTarmacdonatedatotalof300,000topoliticalpar ties.In2001,theydonatednothing.

Bloomberg(UK)Ltd,Labours

largestaggregatecompanydonorbetweenFebruary2001andthe

endofSeptember2002,cameinatnumber43intheLabourpartyslistofdonors.TheConservativeParty,however,isstillmoredependentoncompanydonations,butevenherethereisashiftawayfromhouseholdnames.TheConservativePartystoptwoaggregatecompanydonorsbetweenFebruary2001andtheendofSeptember2002wereIIRLtd(giving1,066,000.00)andNorbrookLaboratories(GB)Ltd(giving1,015,000.00.)Whilethese

contributionsaresignificant,neitherofthesecompaniesarehouseholdnames.

Theoveralldeclineindonations

fromthebusinessworldislargelyduetotheimpactofthetransparencyelementsofthePPERA,butcouldalsobeattributedtoanextenttothegeneraldip inpopularityoftheConservativeParty.Whetherunderthepresentlegalarrangementsbusinesseswould

startgivingtotheConservativePartyagainasadifferentphaseinthecycleofelectoralpopularitywerearrivedat,isdifficulttosay.Anecdotalevidencedoessuggest

thatbusinessesnowsimplyconsideritnotworththeirwhileengaginginthisareaofpublicaffairsactivity.Largecompanies,particularlycommonhouseholdnames,seemtohavedecidedthatdonationstopoliticalpar tiesarenowmoretroublethantheyareworth.

Trade UnionsTheTradeUnionandLabour

Relations(Consolidation)Act1992regulatestradeuniondonations.Atradeunionneedsapoliticalfundonlyifitwishestoengageinpoliticalactivitiessuchasgivingmoneyorservicesdirectlytooronbehalfofcandidatesorpoliticalparties.Apoliticalfundisestablishedbyamajorityballotofallmembersof

thattradeunion.Itisalmostwhollyfinancedbycontributionsfrommembersandanyofthesecanoptoutofcontributing.Thefundmaybemaintainedforuptotenyearsafterwhichthemembershiphastobereballoted.During2003,forinstance,Amicus,Labourssecondlargestaffiliate,willholditspoliticalfundballot.

Somehavearguedthat

donationsfromtradeunionsshould

notbethoughtofinthesametermsasbusinessdonationsasthebulkofdonationsareaffiliationfeespaidonbehalfofindividualmemberwhohavecontributedthefundsthemselves,andthatmembershavetherighttooptoutofthescheme.

Theessenceoftherelationship

betweentradeunionmembers,theunionandapoliticalpartyisnotinanywaythesubjectofcriticisminthispaper.Itisunique

andinmanyrespectsreflectsexactlythekindoflocalgrassrootspoliticalactivismtheproposalsinthispaperaspires towards.Thecriticismrestssolelywiththedegreeofcontroloverthepoliticalfundtheunionexecutivesandgeneralsectarieshave.ThedecisionoftheRMTin2002toreduceitscontributiontotheLabourpartyfromover90,000tojustover20,000isagoodillustrationofthisproblem.Thedecisionwas

notbasedonareductioninunionmembers,bythosepayingthepoliticallevy,orbyanydecisionofindividualRMTmembers.Instead,thedecisionbytheRMT

tocutitscontributionwasbasedprimarilyonpolicydisagreementsbetweenitsleadershipandtheLabourGovernment.ThesensethatanindividualorsmallgroupofindividualscanwieldsuchdisproportionateinfluenceoveranationalpoliticalpartyorHer

MajestysGovernmentisoffensivetomostpeoplessenseoffairplay;ofameritocracyofargumentandinfluenceinafreeandfairliberaldemocracy.

Theinvolvementofcivicsociety

organisationssuchastradeunionsinthepoliticallifeofthiscountry-particularlyatatimeofdecliningparticipationinotherpoliticalinstitutions-shouldbeembracedandcelebrated.Itwouldbewrong,

however,topresumeandtoassertassomehavethatchangestothemechanismbywhichmembersfeesareorarenotpassedontopoliticalpartieswouldinanywayunderminetradeunionism.Anunderlying principleoftheproposalsofthispaperisthattradeunionismshouldbestrengthenednotunderminedbythenewarrangementsproposedhere.

Cap on Donations

Themosteffectivemethodof

removingtheclaimthatmoneybuysinfluenceistointroduceacapondonations.TheIPPRintheirrecentpaperKeepingItCleanarguedforacapof5,000foralldonationswhetherfromindividuals,companiesortradeunions.Theexactlevelatwhichacapshouldbesetshouldbedeterminedbyanindependentbody,butwewelcometheproposalbytheIPPRandwouldsupporta

capbeingsetintheregionofafourfiguresum.

Thetwomostrealisticoptions

forcreatingacapare:

Tocapalldonationsatthesamelevel,i.e.5,000.TheexactlevelatwhichthecapwouldbesetwouldbedeterminedbytheElectoralCommission.

Capcorporateandtradeunion

donationsatadifferentlevelfromindividualdonations.


8/39 March 20036

TheCanadianGovernment,forinstance,hasintroducedlegislation-withthebackingofthetradeunionmovement-thatwillcapindividualdonationsat$10,000butwouldbantradeunionandcompanydonationstopoliticalpar tiesaltogether(seeCanadacasestudy).

Thepurposeoftheproposalsinthispaperistoremovetheexcessesofpartyfundingpracticeswhichareoffensivetotheelectorate.Itisnotintendedtocompletelychangethenatureofrelationshipsbetweenpoliticalpartiesandinterestedgroups.Itwouldthereforeseemexcessivetocompletelylegislateagainstanyrelationshipbetweenbusinesses,tradeunionsandparties.Wethereforerejectthe

Canadianmodel.Furthermore,tointroduceacaponsomedonations,suchascompaniesorindividualdonations,andnotonothers,wouldbepoliticallybiasedandwouldunderstandablefailtogainanydegreeofcross-partysupport.Acapshouldthereforeapplyatthesameleveltodonationsfromallsources.

Affiliation Fees

TheLabourPartyisuniquein

Britaininthatitismadeupofdirectandaffiliatemembers.In2002,itisestimatedtheLabourPartyhad272,000individualmembersand2,744,709affiliatedmembersviatwenty-twotradeunions,theCooperativePartyandsocialistsocieties.

Asstatedabove,theinvolvement

oftradeunionsinthepartypoliticsofthecountryissomethingtobecelebrated.Butifweintendtoremoveoratleastsignificantlyreduceconcernaboutundueinfluenceoflargedonors,whilst

atthesametimeensuringthatpoliticalpartiesarehealthyandremainactive,thensomeelementsoftherelationshipbetweentradeunionsandtheLabourPartyneedtoevolve.

Inorderforaffiliationfeesnot

tobesimplyregardedascorporatedonations-andsubjecttothesamedegreeofsuspicion-andthencriticisedwheneverthereisadisagreementbetweenanaffiliated

unionandLabourGovernment,thentherelationshipmustbealteredastobemorefundamentallybasedontheactiveconsentofindividualtradeunionists.Affiliationmoneymustbeseentobegoingfromindividualmembers,withtheirconsent,toapoliticalpartywiththeunionactingasencouragement,supportandconduitbutnotbrokerofbehind-closed-doorsdealsbasedonamalgamatedlevies.ThiswouldbeahealthydevelopmentforboththetradeunionmovementaswellasthepartiesgainingaffiliationatpresentlargelytheLabourParty.

Forexample,UNISONoffers

itsnewmemberstheoptionofcontributingtoeithertheAffiliatedPoliticalFund,therebyaffiliatingtotheLabourPar ty,ortotheGeneral

PoliticalFund,whichisindependentofanypoliticalparty.However,eveninthiscasethereisnothingonitsapplicationexplainingtoaprospectivememberthattheyhavetherighttooptoutofthepoliticalfundalltogether.TheapproachUNISONhastakenshouldbe

embracedbutdevelopedfurthertomakethechoicessubscribingmembershavemoreexplicit.

Theovertdifferentiation

betweentradeunionparticipationandpoliticalpartyparticipationinthetermswhichweproposewould,mostcrucially,alloweachtobecelebratedandsoldtoprospectiveparticipantsseparatelyandontheirindividualmeritsinawaywhichismuchmoredifficult

when,asispresentlythecase,thewatersaresomuddiedbetweenthetwo.Ifindividual tradeunionistshaverealchoicetooptinoroptoutofpayingtheaffiliationfee,itisfairtoregardtheircontributionasan individualdonationthatiscollectedbytheaffiliateduniononbehalfofthepar ty.Thisoptionneedstobearightofwhicheverynewmemberisinformed,ratherthanarightthatmembershave,buttheuniondoesnotactivelyinformmembersorprospectivemembersof.

Ifthelawwerereformedin

thismanner,thenthepresent requirementfortradeunionstoholdexpensiveballotsontheirpoliticalfundseverytenyearscouldalsobereformed.Thisshouldinnowaypreventunionsfromcollectively

Fig.3

Source:The Electoral Commission


9/39 March 2003

affiliatingtoaparty,butsimplyensurethatitameaningfulreflectionoftheirmemberswishes.

Lowering campaign limits

ThePPERAintroducedfor

thefirst timeaspendinglimitfor politicalparties.ForUKGeneralElections,aparty'sspendinglimitforthetwelvemonthsuptopollingdayis19,230,000forGreatBritainand540,000forNorthernIrelandbasedon30,000perconstituencycontested.

Thiscoversexpenditureby

thepar tiesforthe followingactivities:partypoliticalbroadcasts;advertising;unsolicitedmaterialtoelectors;manifestoorotherpolicydocuments;marketresearchandcanvassing;media/publicity;

transport;andralliesandevents.Inadditiontothisthereis

alimittoindividualcandidatesexpenditure:5,483plus6.2pperelectorinarural(county)constituencyor5,483plus4.6pperelectorinanurban(borough)constituency.

Inthe2001GeneralElection,

partieswereallowedtospend24,000foreachconstituencythey

contested.

Onesimplewayofreducingtheamountspartiesfeeltheyneedtoraisewouldbetoreducethelimitfornationalexpenditure.Byraisingtheamountpar tiescanspendlocally,anaddedincentivewouldbecreatedtoimprovecampaigning,recruitingandotherpoliticalactivityatalocallevel.

Funding activity

Weneedtobehonestabout

theclearcontradictionbetweenpublicdesireontheonehandfor

politicalpartiestobemoreactiveand,ontheother,wantingtorestrictthesourcesfromwhichtheygettheirmoney.Atthemomenttheyareheavilydependentontradeunionsandafewcompaniesorrichdonors.

Relyingonpartymembership

isnotenoughanymore.Partymembership,ashasbeenshown,isindecline.Thesimpletruthisthatpoliticalpartiesneedmoneyandresources.Wecaneithercontinuetodependonlargedonationsorwecanfindamoredemocraticwayoffundingparties.Ifwechosethelatterroute,wehavethe opportunitynotonlytoensurethatpartiesaresufficientlyfunded,butthatweorganisepar tyfundinglawsoastoencouragegreateractivitybypartiesatalocallevel,and

moveawayfromthetrendtowardscentralisedcampaigningactivity.Thebenefitsofthiswouldbetwofold:firstlythatlocalcampaigningactivityincreasesturnoutatelections(ashasbeendemonstrated).Andsecondlythatthisincreasedactivitywouldstandanexcellentchanceofturningaroundthedeclineinpartymembershiptrends,therebyreducingthelikelihoodthatpartiessimplybecomeevermorereliantonpublicfundsoverthecoming

decades.Anynewformofpublicsubsidy

forpoliticalpartiesshouldhavetheaimofencouragingwiderpoliticalparticipation,andincreasedlocalpoliticalactivity.Thereareavarietyofoptionsfororganisingthedispersalofpublicfundstopoliticalparties.Theoneswehaveconsideredherefallintothefollowingcategories:

Moneyforvotes

Taxrelief

Membershipandmatching

donations

RegisteredSupporters

Money for VotesPublicfundscouldbeallocated

tothepar tiesonthebasisoftheamountofvoteswonatageneralelection.ThisisthesystemusedinAustraliaandwasthemainrecommendationoftheHoughtonCommittee.

Eventhoughthesimplicityof

thissystemisattractive,itwoulddonothingtoencouragewiderparticipationinpolitics,wouldstrengthenthewinnertakesalltendencyinBritishelectoralpoliticsandcouldleadtoagreatercentralisationinpoliticalparties.

Tax reliefAtpresent,politicalparties,unlike

charities,areunabletoreclaimthetaxondonations.In1998theCommitteeonStandardsinPublicLifeunderthechairmanshipofLordNeill-initsreportonTheFundingofPoliticalParties-concludedinfavouroftaxreliefondonationsupto500topoliticalpartiesatthestandardrate.Itisimpor tanttonotethatthisistheonlymajorrecommendationtheGovernmentfailedtotakeupfromtheNeillreport.

Evenwithathresholdfixedas

lowas100andsetatthestandardratefortaxrelief,thepoorersupportersofapartywouldloseout,asitwouldonlyapplytotaxpayers.Bygivingdonationstopoliticalpartiesasimilarstatustothoseofchar ities,itwouldatleastimplythatweasasocietyregardpoliticalactivityasaworthwhilepublicgood.

Case Study: AustraliaRegistered political parties are entitled to election funding where an endorsed candidate receives at least 4% of the firstpreference votes.

The amount a party receives is indexed every six months to increases in line with the Consumer Price Index.In December 2002, the amount was 184.253 cents per eligible vote.


10/39 March 20038

Membership and matchingdonations

Attheheartofanypolitical

partyareitsmembers.Theyprovideitwithactivists,funders,andcandidates.Politicalactivityatalocallevelisprimarilydependent

onthem.If,aswepropose,itisdesirabletoencouragegreaterparticipationinpartiesthengivinganincentivetopartiestorecruitandretainmemberswouldbeagoodwayofgoingaboutit.

Thiscouldbedonebyoffering

tomatchfundsformembership subscriptionsanddonationsuptoaceilingofsay20.Forexample,ifapartyreceivedamembershipsubscriptionof10itwouldreceive

another10frompublicfunds.Combinedwithabanonlargedonations,thiswouldhavesome

degreeofeffectinensuringthatpartiesareaccountabletotheirmembersandthroughthemtothepopulationasawhole.Whilstthisoptionmayhavetheeffectofhaltingthedeclineinpar tymembership,itisunlikelytoproducetherevivalinpartymembershipthatinour

opinionisnecessary.

Registered supportersInordertosucceedinrevitalising

politicalpartiestoanysignificantdegree,wehavetolookbeyondthenumberofpeoplewillingtosimplydonatetoparties.Simplyhavingpartiesfundedbyblockgrantsnotconnectedtotheparticipationofindividualswoulddonothingto

achievethis.Boththetaxreliefandmatch

fundingoptionsworkontheprincipleofgivingofpublicmoneyinreturnforanactionthatsocietyregardsasaworthwhilepublicgood,inthiscasedonatingmoney.Ratherthansimplyvaluingmoney,whynotvalueparticipation?

UnderaRegisteredSupporterssystem,partieswouldreceiveafixedsumsuchas20foreveryregisteredsupporter.Partiescouldsignpeopleupthemselvesorcitizenscouldproactivelyrequestaformwhentheyregisteredtovote.ThissystemissimilarinprincipletothatusedintheUnitedStatestofundpresidentialelectioncampaigns(seeUSCaseStudy).

Inreturnforacceptingmoney,

partieswouldhavetoensurethatindividualsreceivedcertainprivileges,suchastherighttovote

Case Study: GermanyThe public subsidy is calculated on the basis of the most recent election result. For the first 5 million votes, each party receivesDM 1.30 per annum and DM 1 thereafter. The party must have obtained at least 0.5 percent of the vote in the last election (or 1percent of the vote in a state election) to be eligible.

In addition, DM 0.5 is granted for every DM 1 received by the party in membership dues up to 6,000 DM. Political parties cannot

receive more than half their income from public funds. There is an annual limit on the total amount of public money available topolitical parties; it was DM 245 million in 1999.

Case Study: US Presidential Elections - Opt in Public Funding

Each US taxpayer has the choice of giving three dollars to the Presidential Campaign Fund from their taxes by ticking a box ontheir income tax return form. This money is then used to fund the following: Presidential primary candidates can receive matching funds for donations from individuals. Individuals can donate up to

$1,000, however, only the first $250 will be matched by public funds. To qualify for these funds, a candidate must raise at

least $5,000 worth of private contributions from individuals in twenty different states. They must also accept a spending limit,which in 1996, was $30.91 million.

Presidential candidates can also receive public funds to finance their general election campaigns. Republican and Democratic

candidates who win their partys nomination for President are eligible to receive these public funds; however, if they acceptthese funds, they cannot raise private contributions to fund their campaign as well. Candidates can also spend up to $50,000of their own funds. In 1996, the fund for each candidate was $61.82 million. Third-party candidates can qualify for publicfunds after the general election only if the candidate receives at least five percent of the popular vote.

Federal funds can also be granted to each major party to pay for its National Presidential Nominating Convention. The base

amount for these funds is $4 million, which is adjusted for inflation each year of a Presidential election. In 1996, each partywas eligible for $12.36 million in public funds.

The interpretation of the freedom of speech provision in US Constitution (1st Amendment) has made it difficult in practice torestrict campaign donations and expenditure and has created a number of loopholes. In 2002 Bipartisan Campaign Reform Actwas passed. It is to early to evaluate if it will achieve its objective of reducing the influence of money in US politics.


11/39 March 2003 9

forcandidates,tovoteforpartyleader,ortohaveasayinpolicymaters.Ineffecttheserightsequatetoacer taindegreeofmembershiprights:theexactdegree,however,wouldbeuptotheindividualpartiestodetermine.

Partieswouldhavetorenewregisteredsupportersregularlyandwouldstillbeencouragedtorecruitfullmembers.Ifconcernaroseaboutthetotalamountapartywasbeginningtobeabletoraise,thenParliamentortheElectoralCommissioncoulddecidetocapthetotalamountofmoneyavailabletopar tieseachyear.

Weproposethissystemas

themosteffectiveintermsof

thecriter iawehavelaidoutasitwouldstandthebestchance

ofencouragingahighlevelofengagementwithpoliticalpartiesofeithersupporterormembertype-whileensuringthatpar tiesareresponsivetotheirsupporters.Atthesametime,unliketaxrelief,itwouldnotdisproportionatelybenefitthosepartieswhich

representwealthiersectionsofsociety.

Complementary steps

Subsidising Campaign CostsPoliticalpartiesarecentralto

ensuringelectionsareanactiveandinformativeexerciseindemocracy.Subsidisingthecostofcampaigningisonewaytounderminetheneedfor

hugecashflowsinandoutofparties,atthesametimeasensuringnational

andfairdemocraticcriteriaaremet.Evidencesuggeststhatwhere

politicalpartieshavemoreactivepersonpower-inanelection-atalocallevel,theturnoutishigher.InCanada,theyhaveasystemofrefundswherebyexpenditurebylocalcandidatesreceivesahigher

rebate:50%asopposedto22.5%atanationallevel.Thishastheeffectofencouraginglocalcampaignexpenditure.

TheHoughtonCommitteerecommendationsincludedsomethingsimilarintheirreportin1972.AccordingtotheElectoralCommissionin2001,55%ofcandidatesfromthefourlargestpartiesspentlessthan50%ofthepermittedamountandonly28%of

candidatesfromthesamepartiesspentmorethan80%.

Case Study: Canada

On the 29th January 2003 a Government Bill was introduced to reform and tighten the rules governing the funding of politicalparties and candidates.Current SituationThe Canada Elections Act provides that:

Registered parties that obtain 2% of the vote at a general election (or 5% where they stand candidates can be reimbursed

for 22.5% of their election expenses. Individual candidates can receive a rebate of 50% of their expenses if they receive at lest15% of the vote in their riding (constituency).

Individuals can receive a tax credit (tax relief) up to a maximum of $500 on donations to candidates or political parties. Individuals, corporations, unions and other organisations can make political donations and there are no limits on the amount

that can be donated.Proposed LegislationThe proposed legislation seeks to:

Introduce an annual limit of $10,000 on donations by individuals to registered parties and their electoral district associations,candidates and nomination contestants.

Prohibit companies, unions and organisations from making contributions to any registered political party or any leader-

ship contestants and it restricts them to donating up to a maximum of $1,000 in total to a partys candidates, nominationcontestants and electoral district associations.

Provide for an annual allowance to registered parties in the amount of $1.50 per vote received by the party in the previous

general election, provided the party has received in the last election either 2% of valid votes cast nationally or 5% of votes inthe constituencies where the party stood a candidate.

Increase the amount registered political parties can have election expenses reimbursed for, from 22.5% to 50%. Lower

the percentage of votes that a candidate must obtain in his or her constituency to qualify for reimbursement of electoralexpenses from 15% to 10%.

Increase the maximum amount tax credit to $650 for political donations of $1,275 or more.


12/39 March 200310

Thoughsuchasystemwouldcertainlyhelpencouragemorecampaignactivity,particularlypoorerandlesscompetitivelocalparties,itdoesnothingtoensurethatpartiesareactiveallthetimeorareabletocovertheirday-to-dayrunningcosts.Unlikesomeoftheothermeasures

proposedthough,thissystemwouldbenefitnewpartiesandindependentsaswellasestablishedparties,therebymakinglocalracesmorevibrantandcompetitive.

Extending help in kind

AlthoughBritaindoesnothavea

traditionofdirectstatesuppor tforpoliticalpartiesthereisatraditionofpoliticalpartiesreceivinghelpinkind,particularlyinorderto

communicatewiththeelectorate(PartyPoliticalBroadcasts;PartyElectionBroadcasts;FreepostfortheElectionAddress)

Atatimewhenpartiesareattheirweakestforseveralgenerations,extendingtheirpoliticalcommunicationsoptionsmayhelppromoteactivity.Forexample,throughextendingFreepostforlocalelectionsandincreasingthequantityofsuchatgeneralelections.Atthe

sametimetheconceptbehindfreepoliticalbroadcasts,wherebypartiesarenotallowedtoadvertise,butinreturnbroadcastersareforcedtoprovidealimitednumberoffreebroadcastscouldbeextendedtoareassuchasbillboardsorlocalauthoritiesallowingcontrollednumberoflamppostposterboardsashappens insomeUKcitiesandinmuchoftherestofEurope-therebyremovingasignificantcosttopar ties.

Whotofund

Naturallyassoonastheissueofintroducingpublicfundingofpoliticalpartiesisraised,thequestionofeligibilityforthisfundingarises.Alimitneeds,ofcourse,tobesetonwhichpartiesareallowedtobeincluded.Ifyousetthelimittooloosely,thepotentialthatyoumayfundpartieswithnorealsupportorextremistpartiesarises.Alternatively,

ifthebarrierissettoohigh,theregulationscouldactasabarriertoentrythatpreventsnewpar tiesandmovementsfrombecomingestablishedand,inaffect,protectthe

existingpartymonopoly.

TheHoughtonCommitteein1972triedtodealwiththisbyrecommendingthreewaysinwhichpartiescouldqualifyforstatefunding.Toqualifyapartywouldhavehadto:

(a)havesavedthedepositsofitscandidatesinatleastsixconstituencies,or

(b)havehadatleasttwocandidateselectedasMembersofParliament,or

(c)haveoneofitscandidatesreturnedasanMPandreceivedatotalofatleast150,000votes.

Sincethen,Britishpoliticshasbecomemorecomplicated.Parties

suchastheGreensandScottishSocialistPartyhaveemergedandhaveenjoyedsuccessinEuropeanordevolvedelectionsbutnotinWestminsterelections.Theywouldthereforenotquali fyundertheHoughtonformulathesepartieswouldnothavequalified.EvenifwesimplylookatWestminster,wenowhaveDrRichardTaylorwhositsinParliamentasanindependentMPandrepresentsKidderminsterHospitalandHealthConcern--a

registeredpoliticalpartythathas30councillors.Anysystemshouldbeflexibleenoughtocoversuchgroupsandpartiesaslongastheyhavesignificantsupport.

Mostofthefundingsystems

describedhere,suchasregisteredsupportersormatchfunding,dontnecessarilyrequireathreshold.Ifitisdecidedthatoneisrequiredforpoliticalreasons,thensomethingalongthelinesofanupdated

Houghtonformula--reflectingtheimpor tanceoflocal,devolved,Europeanandnationalelectionswouldthenberequired.

Valuing Political Activity

InBritain,wehavealongtraditionofvaluingandcelebratingtheinvolvementofpeopleand organisationsincommunityandcharitableactivity.Thegovernment

hasestablishedprogrammestopromotevolunteer ingand communityactivity.Ithasalsosetatargetofincreasingvoluntary&communitysectoractivity,including

increasingcommunityparticipation,by5%by2006.Whilsttosomeextentitisnotsurprisingthatpoliticianslackconfidenceintheirownareaofcommunityactivityandfeelreluctanttoincludepoliticalpartyactivityinthesesortsoftargets,itisaregrettableindication

ofhowpoliticalpartieshavebeencutofffromtheconceptofcommunityservice.

Thisdifferentiationcanbeseen,forinstance,intheverydifferentamountsofrespectpoliticiansmanagetocommandfromthegeneralpubliccomparedwithcharityandpublicsectorworkers.MORIinasurveyoftheleveloftrustworthinessvariousgroupsofprofessionalsareregardedwith,

foundthatpoliticianswerethoughtofastheleastlikelytotellthetruth,withonlyjournalistshavingthesamelowstanding.Thisperceptionisspreadingtoincludepoliticalpartiesthemselvesandhelpingtogenerateanatmosphereofanti-politics.

Itisimportantthatwestartdefendingpoliticalpartiesaspublicinstitutionsandrecognisetheirimportancetoourcivicaswellaspoliticalculture.

Doing it by themselvesBycallingforincreasedpublic

fundingofpoliticalparties,wearenotremovingthenecessityforpoliticalpartiestoreformthemselves.Politicalpar tieshavetofindnewwaystoengageandinvolvetheelectorate.Byincreasingpublicfundinginthewaywehaveproposed,wewouldbecreatingaframeworkwherebypartiesare

encouragedtodomorethemselvesandnottobecomeevermoredependantonthestate.

Conclusions

Withouthealthypoliticalparties,representativedemocracybecomesdifficultifnotimpossibletoverylooselyparaphraseBenjaminDisraeli.Thoughtherearemanyelementsoftodayspoliticalparties,

theoperationofwhichweshouldcontinuetocriticiseandcalltobereformed:politicalpartiesneverthelessremainavitalandnecessarypartofourdemocracy.


13/39 March 2003 11March 2003

Involvementandengagementwithpoliticalpartiesisatanalltimelow,andthereisnoindicationthatthetrendofthe last50yearshaseitherbottomedoutorstartedtoreverse.Atthesametimeelectoralpoliticshasbecomeevermoredominated

bypoliticalparties.

Moreover,thepublicregardforpolitics,politiciansandpoliticalpartiesisatanalltimelow.Themediascandalsconcerningthewayinwhichpartiesarepresently

fundedhavecontributedsignificantlytothisdecline inesteem.

Wehaveavitaloppor tunitytostabilisepoliticalpartymembership,removetheconcernthatpartiesarebeholdentoafewrichbackers,andcreateaframeworkunder

whichpartiesseekopportunitiestoengagewiththeelectoratemore.Andwhoknows,wemaymanagetokick-star tarenaissanceinpoliticalpartyactivity.Butevenifoursuccessismoremodestthanthis,whatwedoknowforabsolutecertainty,is

thatwithoutreform,wecanexpectonlymoreofthesorrydeclinewehavehadtoobserveoverthelastfewdecades.

The New Politics Network

Summary of Recommendations

1. Donation caps: There is strong, public perception that politicians are for sale and that politics is a sleazy business. As longas parties are dependent on a limited number of large donors this perception will persist. Therefore donations from individuals,groups, companies and trade unions should be capped.

Recommendation: The Electoral Commission should set the exact level of the cap, but we would recommend a figurebetween 5,000 and 10,000 pounds.2. Trade Unions Affiliations: There must be a direct link between the individual paying the affiliation fee and the party.Otherwise, trade union affiliation fees are regarded simply as corporate donations.

Recommendations: Reform the way trade unions affiliate allowing individuals to knowingly opt in or out of paying

the affiliation fee and not just the political levy. While also ensuring that individuals are informed of their rights, in return therequirement to hold political fund ballots every 10 years should be scrapped.

3. Reduce National Spending Limits: At present, political parties can spend up to 20 million nationally. One way toreduce the amount of money parties have to raise is to cut the amount parties can spend.

Recommendation: Reduce the National Campaign Limit from 20 to 10 million pounds.

4. Increase Constituency Limits and give a rebate on constituency election expenses: There has been a steadycentralisation in British elections with more emphasis moving to the centre.

Recommendation: To help shift the balance towards local activity, constituency spending limits should be increased up to 20%.This would allow the average spending limit for a county constituency to improve from 9,640 to 11,568. At the same time,

candidates/agents should be able to reclaim up 50% of the money declared in their election returns. This allowance would giveparties greater incentive to spend money in local campaigns.

5. Matched Funding or Registered Supporters: As well as removing the dependency on a limited number of largefunders the objective of reform must be to strengthen parties and increase participation and engagement.

Recommendation: Introduce a system of registered supporters whereby parties receive a limited donation per registeredsupporter. If this is not acceptable then a system of matched funding for donations up to 100 would be introduced.

6. Who should qualify for support: The purpose of increasing public funding is not to protect parties from competition orto maintain the present party system.

Recommendation: To qualify for support a party should either have an MP, MEP, an elected member of a devolved assembly or

parliament, 20 councillors or an elected mayor. To qualify for a rebate in a constituency a candidate should have to receive 10% ofthe vote.


14/39 March 200312

Parties

Membership

Approximately272,000members,downfrom405,000shortlyafterthe1997election.

Where does the money come from?

Despitethechangesoverthelast10yearsthepartyremainsdependentontradeunionsforalargepercentageofitsincome.Its2002accountsshowanincomeof3.4millionfrommembershipsubscriptionsand6.3millionfromtradeunionaffliations.DuringtheEightiesandearlyNineties,LabourstruggledtokeeppacewithaConservativepar tybankrolledbybigbusinessandsubstantialforeigndonations.However,since1997individuallywealthybackersincludingthelateLordHamlynandLordSainsburywerejoinedbydefectorsfromtheConservativepartyincludingChristopherOndaatje.Thetideseemstohaveturnedagain.DonationsfromRichardDesmond,LakshmiMittal,PaulDraysonandothershavearousedsuchcontroversythatdonorsarestayingaway,leavingLabourincreasinglyreliantontheunionsoncemore.

Existing State Funding

Traditionally,supportfrompublicfundshasbeenconfinedtooppositionparties,exceptforfreepartypoliticalbroadcastsand

candidatemailingsatelectiontime.However,thenumberofspecialadvisers,manyofwhomarepoliticalappointee'shasrisensharplyunderLabour.Thetotalsalarybillforspecialadvisersin2001to2002was4.4million,thoughthisincludesnonpoliticalspecialists.Labourwillalsobenefitfromsome500,000tospendonlong-termpolicydevelopmentfromafundadministeredbytheElectoralCommission.

Policy on party funding

TonyBlairhassaidthatraisingmoneyforthepartyistheaspectofthejobhelikesleast.PeterMandelsonhaswritteninfavourofstatefunding,andMikeO'Brien,nowaForeignOfficeMinister,proposedasystemquitesimilartotheCleanMoneyproposalontheCleanpolitix.comwebsite.Somepartytraditionalistswouldbeopposedtolimitsondonations,ortowideningstatefunding,astheyseethelinkwiththeunionsasessentialtomaintainingtheparty'sroots.Theleadershipisinfavourofwiderstatefunding,butwouldnotpushitthroughwithoutaconsensus.

Campaign expenditure in 2001 General Election

LabourPartyexpensestotalledapproximately10.9millionforthe2001GeneralElection.AccountingforalmosthalfofLaboursexpenditure,wasthe5millionpricetagonadvertising.Whilepartypoliticalbroadcastscostabout272thousand,ralliesandothereventsreached1.2million,andmarketresearch/canvassingamountedto869thousand.Moneyspentonunsolicitedmaterialtoelectorsandmanifestodevelopmentwere1.4millionand517thousand,respectively.Expenditureconnectedtomediatotalled750thousand,andmoneyspentontransportcost774thousand.

Labour Party

Source: www.cleanpolitix.com


15/39 March 2003 13

THISGovernmenthaseveryreasontobeproudofthePoliticalParties,Elections

andReferendumsAct.Itwasthiscountrysfirstcomprehensivelegislationonthefundingofpoliticalparties.Itbroughtinthebanonoverseasfunding,thelimiton

campaignspendingandthedutytodiscloselargedonations.Ahistoricachievement,butnot,ofcourse,theendofit.Itneveris.

ThereisnowaneedforasecondPoliticalPartiesActtobringinasecondstageofreform.IdontthinktheGovernmentwillbehardtoconvinceonthispoint.Ministershavebeendismayedtodiscoverthatthedisclosureprovisionsofthenewacthavenotputan

immediateendtopressstoriesaboutsleaze.OnthecontrarythepresshashadafielddayeverytimetheElectoralCommissionhaspublisheditsquarterlylistofdonors.Transparencyhasjustmadeiteasierforthepresstogathertheinformation.

Newspapershavenotconcentratedonthebiggestdonations,suchasthe5milliondonationfromthebetting

tycoonStuar tWheelertotheConservativeParty,butonmuchsmallerdonationstotheLabourPartywhichcanbeportrayedaspresentingethicaldilemmasforthe

Government,suchasthe125,000fromthesteelmagnateLakshmiMittal,the100,000fromtheDailyExpressownerRichardDesmond,the50,000fromPaulDraysonofthepharmaceuticalcompanyPowderjectandthe36,000conferenceeventsponsorship

fromEnron.Atnopointhasanynewspaperofferedanyevidenceofanyimproperinfluenceinconnectionwithanythesedonations,butthepresswillrunfordayswithasleazestoryevenwhenthereisnoevidenceofsleaze.

ItsnotdifficulttounderstandwhymembersoftheGovernmentshouldfeelaggrieved.Wereformedthesystem,wecleaneduppolitics,weendedsleaze,butnowwe

aregettingnoneofthecreditwedeservebecauseofthepublicitysurroundingofahandfuloflargedonations.

Itsbeenasteeplearningcurve,butwhatelsedidweexpectwhenweintroducedtransparencyintothepoliticalsystem? Itshappenedineverycountrywhendisclosurehasbeenintroducedandwearethelastcountr yinwesternEuropeandnorthAmericatointroduceit

thatthepresshashadafielddayonthedaywhenthepartiesannualreportsarepublished.AsProfessorKeithEwing,oneofthearchitectsoftheAct,pointedout,weshould

alwayshaveexpectedthepresstodowhattheyaresupposedtodo,whichistoshineabrightlightandpokearoundwithalongstick.Thatisthepointofdisclosure.Itstruethatourpresshasbeenmoreobsessivethanthepressinothercountries,butthatisbecause

halfourpressispartisanandtheotherhalfisparanoidsotheywillallascribethemostnefariousmotiveseventothemostinnocentdonations.

Whatweareoverlookinghereisthatdisclosurewassupposedtoworknotjustasasearchlightbutasadeterrent,makingdonorsmorereluctanttogivemoneyandpartiesmorecautiousaboutacceptingit.Itisalreadydeterring

donors.AccordingtoaLabourPartyfundraiserthebigdonorsarerunningscared.TheyfindtotheirdismaythatoncetheyhavebeentaggedaLabourdonorinthepresstheirconductbecomesnewsworthyoncompletelyunrelatedmatters.Andifindividualdonorsarerunningforcover,soarecompanydonors.Shareholderballotsmadeitmoredifficultforthemtogivemoney.Accordingtoviewofthepublicrelationsdirectorofacompany

thatusedtomakedonations,thegovernmenthasmadeitalmost

Martin Linton MP

is Labour member for

Battersea

How we got into the

sleazepit..

.. and how we couldget out.


16/39 March 200314

impossibleforcompaniestogivemoneywithoutappearingcorrupt.BPhasevenannounceditisnotmakingcorporatedonationstoanypoliticalpartyanywhereintheworld.

TheLabourPartyhasalso,some

mightsaybelatedly,becomemoreselectiveaboutthedonationsitwillaccept.IthasissuedaStatementonDonationsandinMay2002itsetupanethicscommitteetovetdonors.Transparencyisthusoperatingonthedemandsideaswellasthesupplyside.AsProfessorEwingsaid:Ithastakentimefortransparencytohavethedesiredimpact,withthepartiesnaivelyassumingthatbecausedonationsarenowdisclosed,itdidnotmatter

whatwasrevealed.Therewasnotinitiallyasensethattransparencywasdesignedtorequirethepartiestomoderatetheirbehaviourtoexercisecareaboutthepersonsfromwhomtheytookmoney.

Thereis,inotherwords,anorganicprocessleadingfromthefirstPoliticalPartiesActtothesecond.Essentially,disclosureandshareholderballotswerealwaysgoingtoreduceindividualandcompanydonationswithoutprovidinganalternativesourceoffinance.Thiswasboundtopushthepartiesfurtherintodebt,andmaybeintobankruptcy.Thisisturnwaslikelytomakethepartieslookwith

envyatthepositionineveryotherEuropeanandNorthAmericancountrywheretheyalreadyhaveaformalsystemofstatefundingforpoliticalparties.SoitisnosurprisethatthefirstActhascreated pressureforlowerspendinglimits,forcapsondonationsandfora

greaterdegreeofstatefunding.

TheGovernmentforesaw,whenitpassedthePoliticalPartiesAct,thatlegislationonthefundingofpoliticalpartieswouldneedtobereviewedonaregularbasis.ThatisoneofthereasonswhyitsetuptheElectoralCommissionwiththepowertoreview legislationandrecommendreforms.Soitisnosurprisethatinitsreportonthe2001election,publishedinJuly

2001,theCommissionundertookinthelongertermtoconsidertheargumentforacaponpoliticaldonationsandstatefundingofpoliticalparties.

Lookingfurtherbacktothespringof2000,whenthePoliticalPartiesElectionsandReferendumsBillwasonitswaythroughtheHouseofCommons,theverysameissuesofspendinglimits,donationscapandstateaidwerebeingmovedasamendmentsatcommitteestage.Asamemberofthatcommittee,Imovedamendmentstoreducethespendinglimitfrom20millionto15million,tointroduceacapondonationsof_millionandtoincreasethebudgetforpolicy developmentgrants,theonlyelementofstatefundingintheBill,from2millionto10millionayear.

InOctober2002theInstituteforPublicPolicyResearch(IPPR)issuedtherepor tofaresearchprojectonpartyfunding,KeepingItCleanthewayforward forstatefundingofpoliticalparties,byMattCainandMatthewTaylor,recommendingalowerlimitoncampaignspending,acaponindividualdonationsandanovelmatch-fundingapproachtostateaid.

AlthoughtheIPPRisclosetotheLabourParty,therepor tcarriedaforewordbytheConservativeMPSirGeorgeYoungsupportingallthreeproposalsandConservativefront-bencher

AndrewLansleyattendedthelaunchandurgedhispartytosupportallthreerecommendations.TheLiberalDemocrattreasurerTimRazzallalsowelcomedthereport.ThethenchairmanoftheLabourParty,CharlesClarke,saidtheGovernmentwasseriously

consideringloweringthecampaignspendinglimitandintroducingmatch-funding.Acapondonations,hesaid,wouldbemoredifficult.

ApaperbyProfessorKeithEwingforanotherleft-of-centrethink-tank,Catalyst,advocatedalowercampaignspendinglimitandanincreaseinstatesupportforpoliticalparties,butalsoarguedagainstthecapondonations.Thustheproposalforalowerspendinglimit

appearstoenjoyall-partysupportalready.Thishasitsownironiesforme.Iarguedinthecommitteethat,whileitwasahugeadvancetointroduceanationalcampaignspendinglimitforthefirsttimeinourhistory,itwouldnotbiteifitwassetat20millionandshouldbereducedto15million.AsItoldthecommittee:IdonotbelievethattheLabourpar tywouldget20millionatthenextelection,letaloneneedtospendit.IamsurethattheConservativeswouldnotget20million.Whowouldputup20milliontogetthemelectednexttime?TheamendmentwasopposedbyboththeGovernmentfront-benchandevenmorestronglybytheConservatives.YetmyforecastprovedalltooaccurateandbythetimetheBillhadreachtheLords,theConservativePartytreasurerandallegedtaxexileLordAshcroftwassocertainhispartywouldnotbeabletoraise20millionthathevotedforamendmentstoreducethelegallimitto15millionandthento13million.

TheBillwasenactedwitha20millionlimit,butintheeventtheHomeSecretaryexercisedhispowertoreducethelimitto15millionbecausetheActhadbeeninforceforonlyfourmonthsbeforetheelection,andasitturnedoutnoneofthepartiescameclosetospendingeventhat.TheConservativesspent12,751,813,downfrom28millionatthepreviouselection,Labour10,945,119andtheLiberal


17/39 March 2003 15

Democrats1,361,377.

NowProfessorEwingisrecommendingthatthe20millionlimitshouldbereducedatleastto15mill ionwhichwasactuallythefigurethatheproposedwhenhegaveevidencetotheNeill

CommitteeonbehalfoftheLabourParty.TheIPPRhasgonefurtherandproposedalimitof12millionintheelectioncampaignandalsoalimitonhowmuchapartycanspendinanyoneyear,startingat20millionandreducingto15million.

Ipersonallyfeelwecouldnowgotoa10millionlimit ifwewanttoachieveanendtotheelectionarmsraceandarealdownwardstep

changeinelectionspending.Giventhattherewill alwaysberoomforargumentoverwhethersomeitemsshouldcountascampaignexpenses,itisinevitabletherewillbesomedrift.TheCanadiansreckonthattheirpoliticalpartiesprobablyspend$5milliondollarsmorethantheofficialcampaignlimit.Ifwewanttoholdcampaignspendingbelow15million,weshouldsetthelegallimitat10million.10millionisalsoafigurethattreasurersofthetwolargerpartiescanraisecomfortablyfrommembersandsmalldonationswithouttheneedtotrawlforbigdonors.

Theissueofstatefundingisrathermorecomplex.Ifitisaskedasastraightquestion:Areyouinfavourofthestatefundingofpoliticalparties?,thepublicisinvariablyagainstitbyabigmajority.Buttheydontseemtomindaboutthevariousformsofstate-aid-in-kindthepartiesalreadyreceivefreepost,freehalls,freeconferencesecurity,freepartypoliticalswhichareworthanestimated80millionayear.NorhasanyoneobjectedtothefirstformofstateaidincashintroducedbythePoliticalPartiesAct,the2millionalreadybeingpaidinPolicyDevelopmentGrants.ThereisnoparticularreasontosupposethepublicwillraiseanoutcryifthereisamodestextensionofthePolicyDevelopmentGrantsorgrantsforthetrainingortreasurerandagentsoryouthwork.

TherewillbeafewLabourMPsaswellasConservativeswhotakeaprincipledorapopuliststandagainststateaid.ButtheConservativePartywillbeinnopositiontodoso.Theirpartyhasbeensavedfrombankruptcy

largelybythedecisionofthisGovernmenttotrebletheso-calledShortmoneypaidtooppositionpartiesinParliament,increasingtheirsharefromjustunder1millionin1997tonearly3_millionin2002-03.TheyalsoacceptpublicmoneyintheformofpolicydevelopmentgrantsandgrantsfromtheWestminsterFoundation.Theircoffersarealreadyfullofpublicmoney.ThelatestquarterlyreportfromtheElectoralCommission,

coveringthelastthreemonthsof2002,showsthattheConservativePartyreceivedmoremoneyfrompublicfunds-950,604thanitreceivedincashdonations-883,039.OnlywhenthevalueofdonationsinkindareaddedinaretheConservativessavedfrombeingthefirstexampleofapoliticalpar tyfundedmainlybythetaxpayer.

TheConservativesalsomovedanamendmentinfavouroftaxreliefondonationstopartiesaformofstatefundingduringthePoliticalPartiesBill.MorerecentlyTeresaMay,theConservativechairman,joinedwithheroppositenumbersintheLabourPartyandtheLiberalDemocrats inwritingtotheElectoralCommissionsupportingtheuseofpublicmoneyforthetrainingofcouncillors,e-communicationsandinternationalwork.

InitsreporttheIPPRarguesforavoluntaryformofstatefundingwherepoliticalpartieswillbeeligibleforstatesupport,onaformulathatisrelatedtothenumberofvotestheyreceiveandthenumberofmemberstheyrecruit,butonlyforthosepartiesthatacceptamaximumsizefor donations.

TheyalsoadvocateavariationofproposalfromtheNeillCommitteefortax-reliefonsmalldonationstopoliticalpar ties.Underthe IPPRschemesmalldonationstopolitical

partieswouldbematchedbygrantsfromtheTreasury,butonasteeplyslidingscalesoanannualdonationof50mightattractamatchinggrantof50,butanannualdonationof80wouldattractamatchinggrantofonly30.Above100ayearthegrantswouldcease.

TheGovernmentopposedtheoriginalrecommendationoftheNeillCommitteebecauseofthepotentialbiasinfavourofbetter-offtaxpayers.A100taxexemptionwouldbeworth40toahigherratetaxpayer,22toastandardratepayer,10toalowerratepayerandnothingtoanon-taxpayer.ButtheIPPRproposalbasedonsimilartax-creditschemesinGermanyandCanadaisdesignedtoavoidthis

trap.

InhispaperProfessorEwingdrawsadistinctionbetweenstatefunding,whichheopposes,andstatesupport,whichheadvocates.Thedifferenceislargelyoneofdegree.Hewantsstatefunding,againrelatedtothenumberofmembersapar tyrecruitsaswellasthenumberofvotesitreceives,tobelimitedtoamaximumofonethirdofapartysincome.

TheTreasurywouldhaveanannualgrant,cappedatnomorethan70or80million,todistributetothepartiesanditwouldbeusedtocoverexpenseslikeeducationandtraining,butalsocoreactivitiesandorganisationalcosts,suchaspremises,staff,computers,telephones.Thatwouldbethesacrificethattaxpayerswouldhavetomaketoendthepartiesdependenceonlargeindividualdonations.Iftheyaretobedrawnawayfromtheirsugardaddies,wemustallbepreparedtoswallowabitterpillandmakeacontributionourselves,hesays.

Withsuchbroadsupportitmaybepossibletoproceedonthebasisofcross-partyagreement.ItiscertainlytruethatithasbeenintroducedineveryotherwestEuropeancountryonthebasisofcross-partyagreement.InGermanyitwastheChristianDemocratswhointroducedthefirststatefundingregimein1967.


18/39 March 200316

TheywerefollowedbySwedenandDenmarkin1969,theNetherlandsin1972,theUnitedStatesafterWatergateintheearly1970s,ItalyandCanadain1974,Greecein1984,Spainin1987,FranceandPortugalin1988.Britainwouldhavedonesoin1977had

itnotbeenfortheoppositionoftheConservativePartyunderMrsThatcher.ShehadacceptedstatefundingforoppositionpartiesinParliamentin1975,theso-calledShortmoney,butopposedstatefundingforotherparties.

WearenowuniqueintheEuropeanUnioninnothavingit.Butatthesametimewemustrecognisethepoliticaldifficultiesandsensibilitiesthatstandinthe

way.IronicallytheBritishpublichasbecomemoreopposedtostatefundingasaresultofsleaze,eventhoughitisarguablethatthesleazewascaused,oratleastaggravated,bytherefusalofpoliticalpartiestoagreetoasystemofstatefundinginthefirstplace.Sleazeiswhyweneedstatefunding,butitisalsowhypeopleopposeit.Thereis,however,nopointinpoliticianscomplainingthatthepublicisbeingirrational.Itisuptothemtoregainthepublicstrust.Theycannotsimplyawardthemselvesstatefundingoutoftaxpayersmoneywithoutfirstconvincingthepublicthatitisintheirinterest.

Themostproblematicreformwill

bethecaponindividualdonations.

TonyBlairdidconsidertheidea

briefly,inthewakeoftheEcclestone

affair,whenhewroteinTheTimes

thattheGovernmentshould

bereadytolimitindividualand

companydonationstoamodest

amountandeventoconsiderwhetherthereshouldbebusiness

fundingatall.

IntheeventtheNeillCommittee

recommendedagainstacapon

donationsandtheGovernment

endorsedtheNeillCommittees

view.Atthecommitteestageof

thePoliticalPartiesBill Imovedan

amendmenttoseta250,000limit

onindividualdonations,butthat

wasopposedbytheGovernment.WhentheGovernmentraninto

furtherproblemsovermillionaire

donors,Itabledanearlydaymotion

intheCommonstointroducea

100,000capondonations.That

attractedover100signaturesand

variousamendmenttoreducethe

limitevenlowerto10,000,butno

supportfromtheGovernment.

NowtheIPPRhascomeinwith

aradicalproposalforalimiton

individualdonationsof5,000.Theybasedtheirfigureonwork

withfocusgroupswhichshould

that5,000wasthefigurethat

wouldconvincetheelectoratethat

adonationdidnothaveimproper

motivations.

AndrewTyrieissofartheonly

ConservativeMPwhohascome

outinfavourofadonationscap,

arguingthatbigdonationsfromrich

individualsandtheircompaniesandfromtheunions.willhaveto

stop.TherestoftheConservative

Partymayfinditdifficulttoagree

becausetheystillrelyheavilyonthe

supportofahandfulofmillionaire

donors,butontheotherhandthey

mayfeelthatthenameoftheir

partyhasbeensotarnishedbyits

associationwithsleaze,andthat

theygainso littleadvantageover

Labourinthebattleforindividual

donations,thattheironlyhopeis

toputanendtomillionairefunding

throughacross-partyagreementto

capdonations.

ItmaybetheLabourPartythat

hasmoredifficultyinreaching

agreementonthisissuebecause

oftheambivalentpositionofthe

tradeunions.Atthemomentthe

ElectoralCommisionliststhe

affiliationfeespaidonbehalfof

themembersofeachtradeunion

asthoughtheywereasingledonationtotheLabourPartypaid

byanindividualratherthanas

membershipsubscriptionspaidby

manymembers.Theresultisthat

mostofthemillionairedonorsto

theLabourPar ty,astheyappearin

theElectoralCommissionrepor ts,

areinfacttradeunions.Between

themtheycontr ibuteroughly40%

ofthepartysincome.Thusifthere

wereacaponalldonationsabovea

certainsize,regardlessofsource,theLabourPartywouldbeinsevere

financialdifficulties.

Butthisisanoddwayoflookingat

affiliationfees.Theyarenotasingle

chargeonaunion,butacharge

peraffiliatedmember,anditisthe

individualunionmemberwhohas

therighttodecidewhethertopay

ornot.Itistheindividualunion

memberwhovoteswhetherto

haveapoliticalfundornot.Itis

alsotheindividualaffiliatedunionmemberwhohastherighttovote

inLabourPartyleadershipelections

(althoughuntilrecentlyitwasthe

tradeunion thatdecidedwhether

ornottoholdaballot)andtotake

partintheselectionofLabour

candidates.Inallthesewaystheyare

likemembershipsubscriptions.

However,whenitwassetupin

1900,theLabourPartywasan

organizationofaffiliatedbodies.Ithadnoindividualmembership.In

somerespectsithasretainedthis

corporatenature.Tradeunionscan

voteascorporatebodiesatthe

partyconference(althoughthevote

canbesplit)andtheycandecideas

corporatebodieswhethertoaffiliate

totheLabourParty.Theycaneven

decidehowmanyoftheirmembers

toaffiliateandrecentlyanumber

ofunions,includingTGWU,GMB,

CWU,RMTandUnison,haveeither

reducedorthreatenedtoreduce

theiraffiliationasawayof saving

moneyorofexertingpressureon

aLabourgovernment.Thispractice


19/39 March 2003 1

ofunder-affiliationmeans,not

thatfewerwillhavethevoteina

leadershipballot,butthevotesof

allwillbedevaluedinproportion,

eventhoughnoneofthemmay

haveagreedtoreducethelevelof

affiliationinthefirstplace.

Inproposingadonationcapof5,000,theIPPRhasacknowledged

thatthiswouldrequireachangein

thefinancialrelationshipbetween

affiliatedunionsandtheLabour

Party,buthaslefttheballinthe

unionscourtonthebasisthatit

isnotourplacetostipulatehow

thisshouldwork.ProfessorEwing

hastakentheviewthatthepartys

linkwiththetradeunionistoo

importanttobesweptawayasthe

side-effectoftheintroductionofadonationscap.Hesuggestsinstead

thattheLabourPartyshouldadopt

itsownmaximumfigureforprivate

donations-tobesetnohigher

thanthenationalaveragewage

orsalary-whileinsistingthatthe

unionsshouldaffiliateontheirfull

membership.

Neitherhasputforwardwhat

wouldseemtometobethe

commonsensesolutionthatthe

LabourPartyshouldchangethesystemsothataffiliatedmembers

becomeanewcategoryof

members,payinglessthanordinary

membersandenjoyingfewerrights,

butneverthelessentitledtovote

inleadershipballots,innational

executiveelectionsandincandidate

selections.Theiraffiliationfeeswould

bepaiddirectlyandautomatically

totheLabour(orother)party

andwouldnotbeaffectedbya

donationscap.

Itwouldthenbepossibletorefine

thebluntinstrumentofadonations

capbutsettingamaximumsizefor

anindividualdonation,butallowing

corporatedonationsfromboth

companiesandtradeunionstobehigheronthebasisthatthe

membersofthoseorganisations

havetovotetopermitthe

donationstobemadethrough

shareholderballotsinthecase

ofcompaniesandpoliticalfund

ballotsinthecaseoftradeunions

andtradeunionshavetheadded

protectionoftherighttocontract

out.

Thiswouldthenallowthedonationscaptodealwiththe

realmischiefthelargeindividual

donationwhichwillalwaysraise

thesuspicionthataprivatedeal

mayhavebeendoneoratleast

thatthepar tyisgoingtofeelin

somewaybeholdentothedonor.

Andhowevermuchtrustonemay

haveintheindividualsconcerned,

whocanbesurethatapartywont

behaveslightlydifferentlytoabig

donor.Maybetheyllbeworried

aboutjeopardizingthechanceofanotherlargedonation.Or,more

likelyinLabourscase,theylllean

overbackwardsinordertobeseen

tobefair.

Forthefirsttimeinageneration

allthreemainpartiesareprepared

totalkser iouslyaboutendingtheir

dependenceondonationsfrom

wealthyindividualsandreducing

theirspendinginelectioncampaigns.

Atthesametimethepublicareso

wearyofsleazeoraccusations

ofsleazethatmanyofthem

wouldtacitlyacceptanextension

ofstatesupportforpoliticalparties

inreturnforadecisivehalttothe

armsraceonelectionspending

andanendtomillionairefundingofpoliticalparties.

Wemustnevermakeitacondition

thatweshouldfirstachieve

completeagreementbetweenthe

parties.Thatwasthemistakethat

JimCallaghanmadeinthe1970s

anditjusthandedavetotothe

Conservativeswhouseditto

obstructallprogress.Butwedo

nowhaveahistoricchancetolift

politicsoutofthesleazepitintowhichitdescendedinthe1990s

andtodosowithoutaslanging

matchthatwoulddamagethe

reputationofpoliticsstillmore.

Wearethenearestwehavebeen

sincethe1970stofindingacross-

partyconsensusonthisissue.The

Conservativesarethenearest

theyhaveeverbeentosupporting

asignificantloweringofelection

spending,amoveawayfrom

millionairefundingandanextensionofsupportforpoliticalparties.

Thismaybebecausetheyareat

theweakesttheyhavebeenfor50

years,financiallyaswellaselectorally.

Butifwewanttoreformparty

fundingonacross-partybasis,this

isourmomenttoputourstamp

onthepoliticalsystemandtomake

adecisivemovetowardscleanand

openpolitics.


20/39 March 200318

Parties

Membership

Approximately318,000


Throughoutthe80sanduptothemid90stheConservativesalwaysheldahugeedgeinfinances,receivinglargesumsfrommanyindividualsandcompanies.However,sincetheirlossofpowertheyhavefounddonationsfromthesesourcesdryingup,andhavebeenforcedtorelyuponasmallgroupofwealthyindividualsandcompaniesformostoftheirdonations.

SirPaulGetty,SirJohnPaulII,JohnWheeler,andSirStanleyKalmshaveaccountedforover8millionindonationssincethebeginningof2001.IIRLtdandNorbrookLaboratories(GB)Ltdremaintheirmostconsistentcompanydonors,witheachhavinggivenover1millionsincethebeginningof2001.

SincetheyhavebeenthemainOppositionPartytheConservativeshavehadtoincreasinglyrelyonpublicfunding.


TheConservativeshavebeenthemainoppositionpartysincelosingthe1997election,andreceivethebulkofShortmoneyandCranbournemoneythatisgivenout.Sincethebeginningof2001theConservativeshavereceivedover6millionpoundsfromtheDepartmentofFinance&AdministrationandtheElectoralCommission.


TheConservativeshavebeenthemostvocalopponentofanykindofstatefundingscheme.However,withtheirincreasingrelianceonpublicfunds,itwillbeharderforthemtocontinuethatargument


ConservativePartyexpenditureforthe2001GeneralElectionwasintheorderof12.7million.Advertisingaccountedfor4.4

million,whilepartypoliticalbroadcastcost567thousand,andrallies/eventsreachednearly2million.Moneyusedformarketresearch/canvassingwas1.7million,andmanifesto/partypolicydocumentcostjustover1million.Thepriceofunsolicitedmaterialstoelectorscameinat1.2millionandtranspor tamountedto1.4million.Mediarelatedexpenseswere356thousand.

Conservative Party



21/39 March 2003 19

Theelectoratehasconcludedthatpoliticsstinks.Thewidespreadimpressionthat

influenceovergovernmentpolicycanbeboughtbytherich,andthathonoursespeciallypeeragescanbetraffickedaretwoofthemainreasons.Maybetheyare

nolongermistaken.Morestatefunding,intelligentlydeployed,isnowtheonlywaytorestorepublicconfidence.

Thestenchisjusttoopungenttobeputdowntonaturalcauses.ThereistheEccleston1milliondonationtoLabour.WastherereallynoconnectionbetweenthatandFormulaOnesexemptionfromthetobaccoadvertisingban?TheresthePowderJect32million

contractanditsChiefExecutives50,000donation.TherestheMittal125,000.WasthatreallyentirelyunconnectedwiththePrimeMinisterslettertotheRomanianPrimeMinisteronbehalfofMrMittalsfinancialinterests?TherearetheHindujas.Wasthegrantingofpassportstothesebrothersentirelyunconnectedwith1millionfortheDomenotadonationtoLabourbutimportanttothem.SirAnthonyHammondhasnoteven

beenpermittedtoinvestigatethatmoneythePrimeMinisterkepttheDomeoutsidehistermsofreference.ThentheresLaboursblind

trust.JusthowblindcanatrustbewhenthePrimeMinisterschiefdoorkeeperandthemantowhomthewholeNumber10machineanswersJonathanPowell-wasallegedlyrunningthetrust(withGeoffreyRobinson)whenLabourwereinopposition?Theresthe

Enrondonation.Canthepublicfeelsurethattheendingofthegasmoratoriumwasentirelyunrelated?

Theresthehonourslist.Isitjustcoincidencethat,forexample,LordsBragg,Gavron,Haskins(alsothered-tapeTsar),Sainsbury(nowaMinister)madelargedonationstotheLabourPartypriortotheirennoblement?Theunionsareatit,too.ItwasrecentlydisclosedbytheFinancialTimesthatthe

RMTUnionwerethreateningtowithdrawconstituencysupportfromtheirsponsoredLabourMPsunlessthegovernmentchangeditsemploymentpolicy.

Atthispoint,anynon-Conservativereadermayconcludethatthisisapar tyrant.On honoursImshortofananswertotheInstituteforPublicPolicyResearchsrevelationthatpriorto1997about6percentofpublic

companiesmadedonationstotheConservativePartybut50percentofknighthoodsandpeerageswenttothedirectorsofcompanieswhomadesuchdonations.Another

coincidence?Idoubtit.CashforQuestions?Disgraceful,althoughthoseinvolvedwereneverclosetothecentreofgovernmentand,forthatreason,itpalesbycomparisonwiththelinksbetweenmoneyandtheheartoftheNewLabourgovernment.Overall,thingsappear

tohavegotworse.IcannotthinkofanallegedcaseofinfluenceatNumber10boughtforcashundertheTories-andcertainlynothingcompareswiththeMittal,Eccleston,Enroncatalogue-butIcantprovethatitneverhappened.

Theawfultruthisthatthepublicmaynowberighttothinkthatpoliticalfundingstinks.Thingsareataprettypass.Itsnotenoughforthoseofus inparliamentwhocan

seeallthistoholdournosesandwalkby,murmuringtoourselvesthatperhapsit isinourrespectivepartiesinterestsnottosniffaroundtoomuch.

Wemustinhale.Onlyoncewefullyappreciatethefoulodourintheelectoratesnostr ilscanwefindourwaytoasolution.

Theheartoftheproblemlieswithbigdonations,fromrich

individualsandtheircompanies,andfromtheunions.

Andrew Tyrie MP

is Conservative member

for Chichester

Our politics is healthy.

Our party finances stink.


22/39 March 200320

Thesewillhavetostop.Individualdonationsshouldbelimitedto,say,1000,orperhapsslightlymore.

Donationsfromcompaniesandtradeunionsshouldbebannedaltogether.Decisivelybreakingthelinkbetweenunioninfluenceover

theLabourPar tyandmillionairecaptureofbothpartiescouldprofoundlyimprovetheimageofpolitics.

Institutionalmillionairefundingwillhavetobereplacedwithsomething.Thereisnotamajordemocracywherepartiestrytofinancethemselvesexclusivelyfrommembershipsubscriptionstheyallhavesomeformofstatefundingeitherfromtaxrelieforgrants

orsomeformofmatchingfundingforpartymembershiplists,oramixture.

Iamattractedtomatchingfunding.Partiesshouldbepaidasmallsumforeachpartymembertheyrecruit,subjecttoanoverallcap.Thecashpermembershouldbesetatalevelwhichencouragesrecruitment.

Thesoonerthatactionstartstobetaken,thebetter.Aneasytoimplementalternativetomatchingfundingwouldbetaxreliefforpoliticaldonations,uptoacertain

limit.Taxreliefdoesnotnecessarilyprovideastimulustolocalactivismbutitwouldbeastepforwardoncurrentarrangements.IntheSpring2003budgettheChancellorcouldadopttheproposalsofLordNeillsCommitteeonStandardsinPublicLifewhichsuggestedthe

extensionoftaxreliefforindividualdonationstopoliticalparties.Thetwoapproaches-taxreliefandmatchingfunding-havesimilaritiesand,althoughitmightbemoredifficulttoadminister,theycouldberunintandem.

Therearetwomainobjections.Thefirstisthatitwouldforcepeople,throughthetaxsystem,togivemoneyforcausesinwhichtheydonotbelieve.Thesecondis

thatitmightkilloffwhatiscalledcivicengagementtheinstinctforvoluntarypoliticalactivism.

Iurgethosewhoareconcernedaboutthefirstobjectiontoconsiderthatapproachingtwothirdsofpar tiesGeneralElectioncampaigningactivityisalreadyprovidedbytheState.Fortypercentofallactivitybetweenelectionsalsocomes,incash,orkind,fromtheState.Some isShortmoney(aparliamentarygrantforoppositionparties),specialadviserssalaries,thepolicydevelopmentgrantsandthelike.Mostisstoleninadvertising

revenueforgonefromtheITV,orsimilarlypurloinedfromBBClicencefeepayersthroughtheimpositionofPartyPoliticalBroadcasts(PPBs).

Inadvanceddemocraciesaccesstotheairwavesisalargeslugofthetotalcostofpartypolitics.Inthe

US,forexample,thelionsshareofPresidentialelectionspendinggoesonbuyingTVadvertisingspace.ThearrangementsforUKpoliticaladvertising-wheretheairtimeisfree-arevoluntaryonlyintheory:ifthebroadcastersjibbedtheyknowthatparliamentwouldprobablyimposePPBs.Estimatesofthecostofrunningpoliticalparties,togetherwithabreakdownofthesourceofthecashorbenefitinkind,aresetoutinFig.4&5.

Soweareintheworstofallpossibleworlds:thepublicisalreadypayingforpartiesbutweareretainingthelargeindividual,companyandunionfundingwhich,eventhoughitonlypaysforasmallproportionoftotalpartycosts,corrodespublicconfidence.

Tothecivicengagementconcernatleastthreepointsneedtobeborneinmind.First,mostofthepartycivicdisengagementhasalreadyhappened.Masspartiesaredying.Theircombinedmembershippeakedinthe1950sataround

Estimated cost of party politics in anon election year with percentagecontribution by the State under

present arrangements

Fig.4

Note

CampaignspendingfigurestakenfromtheElectoral

Commission.Partyspendingfiguresderivedfromtheir

accounts.FreepostageaHomeOfficeestimate.Values

ofPPBsandPEBsestimatedfromInstituteofPublicPolicy

ResearchandIndependentTelevisionAssociationestimates

respectively,adjustedforinflationbytheAdvertising

Association'sindexofTVrates.


23/39 March 2003 21

4million,excludingtradeunionaffiliation.Thatfigurehasfallenbyovereightypercent.Thecombinedmembershipofthemajorpartiesatthemomentisprobablyonlyalittleoverhalfamillionandfalling,whichisunderhalfthatoftheRoyalSocietyfortheProtectionofBirds.

(Fig.6)ThesedayspeopletaketheirdoseofnationalpoliticsfromTVandradio,orinotherways,notbyputtingontheirhatsandcoatsandgoingtoapublicmeeting.

Secondly,wepoliticiansshouldntassumethatthedeclineinmasspartiesnecessarilybetokensasicklypolity.Itistruethatthepublicgaveuponpartiesalongtimeago.Yettheyhaveneverbeenmoreengagedincausesandassociations

thantheyarenow-pressuregroups,single-issuecampaignsandthelike.Ecologygroupshaveseenthelargestincreasewithover1600nowlistedintheDirectoryfortheEnvironment.Therehasalsobeenadramaticincreaseinmembershipofpressuregroups:theGreenMovementhasincreasedmembershipfrom1.5millionin1970,to5millioninthemid1990s,tocitejustoneexample.Peopleareactiveonspecificissuesthatmattertothem,oftenhighlylocal,ratherthanthroughparties.

Icanprovidesomeanecdotal

evidencetoillustratethis.Atthebeginningoftheyearanindependenthospitalwasthreatenedwithclosure inmy constituency.Over75,000peoplesignedapetitiontosaveitinalittleoverafortnight.Evenallowingforsomedoubleandtriplesignatures

thisisaremarkabledegreeofengagement.TheCountrysideAlliancewascreatedfromvirtuallynothinginjustoverayearandhassincebeenabletomobiliseseveralrallies,ontwoofwhichover400,000participated.

Thewiderpublichasprobablyneverbeensowellinformedaboutpoliticsorsocommittedtotheissueswhichmostmattertothem.Thosewhohavetheopportunity

toinfluenceormakedecisionsarebesiegedbylobbiesandpressuregroupinterestsonspecificissues.Ministerialpostbagshavemushroomed.MPsusedtoreceive10to15lettersaweek50yearsago.Todaytheyaverage300.Wearelivinginahighlypoliticallyactiveandissuedrivensociety.Insomerespectsitisananti-partycultureanditiscertainlyoneinwhichdeferencetoformalinstitutionsofalltypeshasallbutcollapsed.ButImnotsurethisisabadthing,particularlyifitalsocomes,inthebroadestsense,withgreatercivicengagement.Itistruethat

therearesomeseriousproblemsofdisenfranchisementfromthepoliticalsystem,particularlyintheinnercities.Butthenotionthatourpoliticalfabriciscollapsingasaconsequenceofdisengagementisjustsomuchnonsense.Itismainlythestaid,oldandby-passedpar ty

politiciansandacademics,forwhomitissomethingtowriteabout,whopeddlethisline.

Thirdly,thosewhobelievestronglyinthecaseformorecivicengagementinpartypoliticsshouldatleasttrymatchingfundingasameansofrevivingit.Theincentiveonpartiestorecruitwouldbestrong.Anintelligentlydevisedformofstatefundingmayprovidethebesthopeofrestoringameasureof

localparty-politicalactivism.Itmightspurpartiesbettertorepresentthosewhoengageininterestgroupactivism,particularlyonlocalissues.Itmightalsodosomethingtocounterthecentralisationthathascomewiththedominanceofthenationalmediainmodernpoliticaldiscourse.

SomemightarguethattheproposalsIhavesuggestedaretooradical.CantwerelyontheMajor/Blairclean-up-shareholdervotingforpartydonationsandthepublicationofadonorregister-toactasadisinfectant?

Note

CampaignspendingfigurestakenfromtheElectoral

Commission.Partyspendingfiguresderivedfromtheir

accounts.FreepostageaHomeOfficeestimate.Values

ofPPBsandPEBsestimatedfromInstituteofPublicPolicy

ResearchandIndependentTelevisionAssociationestimates

respectively,adjustedforinflationbytheAdvertising

Association'sindexofTVrates.

Estimated cost of party politics in anelection year with percentagecontribution by the State under

present arrangements

Fig.5


24/39 March 200322

Sadlyno.Ifitcouldreasonablybearguedthattheseinitiatives-theestablishmentoftheNolan,Neill,FilkinCommitteesandthecreationoftheElectoralCommission-hadrestoredpublicconfidenceIwouldprefertoleaveitatthat.Buttheyhavenotrestoredpublicconfidence.

Onthecontraryandparadoxically,thesereformsmayhavemadethingsworse,forseveralreasons.First,thenewcommitteesareinadvertentlyaggravatingtheperceptionofsleaze,bydrawingthepublicsattentiontoevenrelativelyminortransgressions.Thesecommitteesareasdependentuponmediaattentionaseveryotheractorinpubliclifefortheirworkandthemobilisationofawide

publicsapprobationforit.Andthemedia,understandablyenough,knowthatnewsworthinessdoesnotlieinameasuredreportbutinemphasisingandexaggeratingeveryshortcomingwhichthesebodieshavespotted,howevertrivial.Itwouldbeveryworryingifthedisinfectant-theMajor/Blaircommittees-mayinadvertentlybecontributingtothedeathofthepatient-cleanpartypolitics.

Thereareotherreasonswhyweneedtothinkcarefullybeforeempoweringandenlargingtheanti-sleazecommittees.Thecombinedannualcostofrunningthesesleaze-bustersat15-20

million,isprobablyroughlythesameasanyreasonableincrementinstatefundingimpliedbymyproposals.Ofcourse,thatisnottheendofthestory-onecouldnotmerelybesubstitutedfortheother.Somemonitoringwouldstillberequired;nordoesstatefundingnecessarily

eradicatesleaze,asrecentGermanscandalsillustrate.Nonetheless,anyvalueformoneyassessmentofanti-sleazefundingneedstotaketheburgeoningcostof thesleaze-bustingcommitteesseriouslyandweighitagainstothermethodsofrestoringpublicconfidence.

Secondly,thereformshavedestroyedthebroadbaseoffundingthathadexistedbydeterringmostfirmsfrommakingdonations.This

hasleftthemainpoliticalpartiesinthehandsofadwindlingnumberofwealthyindividualdonors.Theelectorateareevenmorelikelytodistrustdonationsfromthisselectgroupthandonationsfromlargecorporations.Itisaskingalotoftheelectoratetobelievethatthesepeopleneverbendanear,hintatadealorangleforagong.Idont.

Thirdly,thepartiesthemselvesdonthelp.AnynumberofWicksCommitteesonstandardsinpubliclifeorFilkinesquesleaze-busters,willnotbeabletodomuchtohelpifpartiesaredeterminedtomakepoliticalcustardpiesoutoftrivia.

WecantstaywhereweareandImconfidentwewont.Whateverthereformroutetakenitisessentialthatfirmcapsbekeptontheoveralllevelofcampaignspendingatnationallevelthisiswidelyacceptedinmostcountries.Moneyshouldneverbeabletobuypower.

ThetragedyisthatpoliticsasawholeinBritainisprobablylesscorruptthaninanyothermajordemocracy,notjustthecivilservicebutparliament,too.Aseriesofmainlyminorscandalsoverthepastdecadehaveencouragedanorgyofpartypoliticalmud-slinging.Thepublichavebeenleftwiththeimpressionthateveryoneinpubliclifeisonthemake.

Theoppositeisthetruth.TheMPsIknow,onallsidesoftheHouse,arededicatedanduncorrupt.Butthecurrentstructureofparty

fundingisnowencouragingthewrongconclusiontobedrawninthepublicmind.

Wemustcleanuptheimageofparties.Partiesmatter.AsDisraelisaid:withoutpartiesparliamentarygovernmentisimpossible.He

mighthaveaddedthatwithoutpublictrustinthemdemocracycannotfunction.


25/39 March 2003 23

Fig.6

Notes: ExcludesTradeUnionaffiliation,whichhasalsofallen.

ThereisabreakinLabourPartycomparabilityfrom1980.

TheLiberalDemocratswereformedin1989.

Sources: LabourPartyNECreports.

Whiteley,SeydandRichardson,True Blue.

MPinto-Duchinsky,British political finance 1830-1980.

PersonalCommunicationLiberalPartyLeader'sOffice(1980).

ConservativeCentralOffice.

LiberalDemocratPartyHQ.

ButlerandButler,British Political Facts, 1900-2000.

NCSR,British Social Attitudes, 2001/02 edition.


26/39 March 200324

Parties

Membership

Approximately73,000members,belowthe1990speak.


TheLiberalDemocratshaveneverhadaccesstofundsonthesamescaleasthetwolargerparties.Theirtotalelectionspendintherun-upto2001wasintheregionof4million,againstaround20millionforLabourandtheConservatives.

TheirlargestprivatebackeristheJosephRowntreeReformTrustLtd.

Othersupportersarewealthyindividualsandasmatteringofprivatecompanies.Recently,therehasbeenarapprochementwiththeunionsandUNISONhasprovidedaround60,000offundingtotheLiberalDemocrats.


TheLiberalDemocratsreceivethesecondlargestshareofShortMoneyAndCranborneMoney,toassisttheiroppositionworkin

Parliament.TheywillalsohaveashareinthepolicydevelopmentfundadministeredbytheElectoralCommission.


TheLiberalDemocratsarethepartymostinfavourofreformingthefundingsystem.Theyhaveattackedbothlargeprivatedonationsandthecreepingextensionofexistingblockgrantsfromthepublicpurse.MatthewTaylor,theLiberalDemocratsShadowChancellor,recentlyproposedacapondonationsaccompaniedbymatchfundingofsmallcontributions.


TheLiberalDemocratscampaignexpenditurereachedover1.3million.Mostwasspentontransportat593thousand,andthemediaat230thousand.Costsforadvertisingwere196thousand,ralliesandothereventswere73thousand,andpartypoliticalbroadcastswere55thousand.Manifesto/partypolicydocumentamountedto91thousand,andmarketresearch/canvassingwas

66thousand.Unsolicitedmaterialtoelectorswaspricedatover54thousand.

Liberal Democrats


24


27/39 March 2003 25

Matthew Taylor MP

is the Liberal Democrat

member forTruro & St

Austell

Thefundingofpoliticalpartiesandinparticular,ofelectoralcampaignsisbecomingan

importantissueinalldemocracies.ThisisespeciallytrueintheUK,wherethemajorpartiesarebecomingincreasinglydependentonatinynumberofpersonallywealthy

individuals.Inmyview,thisprocesshasadetrimentaleffectonthereputationofallpoliticalparties,anditistimeforittoend.

Atthelastelection,someindividualsmadesingledonationsofasmuchas5million.ThatsmoreinonedonationthantheLiberalDemocratscouldspendintotal,infact,morethantwiceasmuch.Suchhugedonationsraisethequestionofwhatindividualswantandwhatmightbe

giveninreturn,addingtoageneralbeliefthatpoliticiansarecorruptandthatfavoursareofferedinreturnformoney.Mostpeoplewontdrawagreatdistinctionbetweendonationstopoliticalorganisationsandthethoughtthatthepartymightbeinsomeoneelsesbackpocket.

FewofusbelieveacashstrappedPartyTreasurerwillnotleavewindowofopportunityforanindividualorgrouptopushforsomethingthatis

intheirinterests.Attheveryleast,theywillhavealevelofaccessthatnootherpersonislikelytohave.AseatatthetoptableorpersonalmeetingswithCabinetMinistersmaybe

intendedasnomorethanaThankyou,butitlookslikespecialaccessandinpracticeislikelytobejustthat.

InresponsetosuchconcernstheNeilCommitteerecommendedthatalldonationsshouldbepubliclydeclared,butthishasnotdelivered

thesolutionthatwasanticipated.Itcertainlymadetheprocessopentopublicscrutiny,butthepublicdidnotlikewhatitsaw.ThereisanelementoftruthwhenMinistersarguethereasonthisGovernmenthasbeenattackedsomuchissimplybecausetheyaretheonlyGovernmenttohaveputtheinformationsopubliclyontherecord.Theresultofthisincreasedscrutinyisthatfewbusinesseswillnowmakeadonationtoanypoliticalparty,andmeanwhile

membershipofallpoliticalpartiesisnose-divingaspoliticsbecomess

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