Big money politics is ripe for funding reform

Philip Collins 
If every party donor were like Stuart Wheeler then British politics would have no funding problem. But they are not and it does. Mr Wheeler, who died last week, was generous with his fortune in pursuit of causes he championed but, in his singular and remarkable way, he wanted nothing in return beyond victory for his ideas. When Mr Wheeler offered £5 million to William Hague’s Conservative Party in 2001 it was on the strict condition that he should receive no honour, direct influence or favour of any kind.

Few donors, however, have such pure motives. Most gifts to political parties are offered on the basis that there should be a return. The exchange is never explicit and very often donors end up disappointed. But there is no doubt that many donations are offered in the hope that a place in the House of Lords, or some favourable policy, might be forthcoming.

This is why it matters, as the intelligence and security committee’s report on Russia pointed out, that political parties are exempt from the requirement for transactions of more than £10,000 to be reported to the National Crime Agency. The report showed that “several members of the Russian elite . . . are identified as being involved with charitable and/or political organisations in the UK, having donated to political parties . . .”. The coffers of the Conservative Party, for example, have been replenished by gifts of £1.7 million from Lubov Chernukhin, whose husband is a former deputy finance minister in Moscow. In 2014 Ms Chernukhin paid £160,000 to have a game of tennis with Boris Johnson and David Cameron. Alexander Temerko, a former Russian oil executive, has also donated a great deal to the Conservatives. Brandon Lewis, the Northern Ireland secretary, Alok Sharma, the business secretary, Simon Hart, the Wales secretary, Rishi Sunak, the chancellor, Robert Buckland, the justice secretary, and Anne-Marie Trevelyan, the international development secretary, have all received funding from these sources.

The problem with this is less exotic than it looks at first sight. The point at issue here is not nationality. Ms Chernukhin and Mr Temerko are British citizens and all the donations are clearly within the rules. The problem is that rich people can buy access and influence. That is how our politics is funded. We need political parties and they need to be funded in order to be able to operate. Yet we do not like the way we do it. Seventy-five per cent of respondents to a survey by the Electoral Reform Society said they thought donors had too much influence on our politics. Sixty-five per cent said they thought knighthoods were up for sale and 61 per cent believe that the system of party funding is corrupt.

Yet it is a lot easier to complain about party funding than to know how to fix it. The amount that any individual or organisation can give could be capped at a low level but this will inevitably lead to a funding shortfall. In 2011, Labour’s general secretary told the Committee on Standards in Public Life that the party would have folded if a proposed cap on donations of £50,000 had been introduced years earlier. Such a limit would reduce the influence purchased but, unless the public start making voluntary donations to political parties in their millions, it halts the necessary funds.

The only other option is to lay the burden on the taxpayer, which is hardly the most popular of options. It is, in fact, standard practice in many places for the taxpayer to make a direct contribution to the funding of democracy. In Germany it is written into the federal constitution that any party gaining more than 1 per cent of the vote is entitled to state funding up to a maximum of 50 per cent of its income. About a third of party income in Germany comes from taxpayers. Popular outrage after a series of funding scandals led the French, in 1988, to introduce public funding. The Australians did the same in 1984 and Canada did likewise in 2003.

Britain actually has its own version of state funding already. Since 1975, the official opposition has been given a grant which is known as Short money in the House of Commons, and Cranborne money in the House of Lords. Opposition parties receive £18,044.80 for every seat won at the last election plus £36.04 for every 200 votes gained by the party. They are entitled to travel expenses of £198,231.77 between them, apportioned in line with the number of votes won. The opposition leader’s office is awarded £840,712.01 towards running costs. Sometimes, when opposition parties are shunned by donors, these sums mean they become, in effect, state-funded. Between 2001 and 2003, the Tories received more in public grants than in private donations. The argument about state funding is not whether we should introduce it. It’s about whether we should extend it.

There is a strong argument that the financial weakness of a party is a consequence of its political weakness rather than a cause. The inability of the Labour Party, since the departure of Tony Blair, to attract much funding from business is not just an accident. It is an accurate description of the kind of party that it has become. There is an argument that the need to seek funding from donors is a way of keeping a party honest. It is surely preferable, too, for voluntary associations to be funded out of private resources rather than to rely on public funds.

That said, it is a matter of concern, in a time when the reputation of politics is low, that such a critical discipline should be thought to be corrupt. The ideal outcome would be a cap on donations, complete transparency for all gifts — and not just those above £7,500 as at present — but sufficient breadth of donors that enough money comes in. But if that does not produce a formula that makes democratic politics possible there is only one way to solve the problem and that is to call on public funds. State funding of political parties is a rotten idea but it may not be quite as rotten as bankrupt politics.

When William Hague received Stuart Wheeler’s donation and the insistence that there must be no strings attached, he is said to have grinned and said that it was rather like a visit from Father Christmas. Stuart’s wife Tessa apparently phoned one of their daughters to let her know. “Darling,” she said, “we have to face facts. We are now the wife and daughter of a madman.” They weren’t. They were the wife and daughter of a good man. There are never enough like him and there is one fewer now he is gone.

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