How to fund the political parties

The Labour Party has adopted with enthusiasm the proposition that if it can't any longer finance its activities by getting 'loans' from wealthy donors without needing to declare them, it can make up the deficit by getting itself (and the other parties) a compulsory subsidy from the taxpayer.  The idea is substantially to increase the (currently fairly modest) contribution to political parties from public funds.   At present a party in office gets very little state funding, since it can draw on many of the resources of government not available to opposition parties;  Labour seems bent on dispensing with this pesky distinction by adding a large public subvention to the advantages it already enjoys through being in office.

 This seems to me a thoroughly bad idea.  Polls suggest that most voters (and especially taxpayers) would object to their taxes being used to prop up political parties most of which they don't support and which have become so out of touch and tune with their own supporters that they can't raise the money they need from subscriptions and genuine donations.  As the Sunday Times editorial today comments, sensibly for once:

After this newspaper exposed the scandal over loans for peerages, which is still the subject of a police investigation reaching into the very heart of Downing Street, a little humility, even contrition, might have been expected from the Labour party. Far from it. Instead it sees the furore as an opportunity to make the taxpayer fork out for political parties. … Polling for this newspaper has shown that two-thirds are opposed outright to any extension of state funding for political parties, and that fewer than a fifth are in favour. … Voters do not want more state funding because they do not trust political parties. They also believe that political parties should in part be judged on how successful they are at raising their own funds. We need an end to cash for peerages and dodgy deals with the unions. But we need most of all honesty and transparency, not state handouts for parties that do not deserve them.

The Sunday Times also seems to advocate preventing the Labour Party from receiving funding from trade unions affiliated to it, which would be extremely prejudicial if the Conservatives remained free to accept donations from companies and rich individuals in the private sector.  But that's a different issue. 

Meanwhile the Labour Party has launched a 'consultation' with its members and  supporters about what advice the party should submit to the Hayden Phillips Review set up by the government in the wake of the 'cash for peerages' scandal to consider future arrangements for funding political parties.   The 'consultation document ' (pdf) on which comments are invited seems to me a pretty rum kind of consultation, since it appears to take it for granted that there is to be a significant increase in the funding of political parties from public funds, and confines itself to asking for comments on the various issues that this raises. 

Instead of running to Aunty State for money that it can't raise from its members (because it can't attract enough people to join the party and pay subscriptions, nor motivate enough individuals to make even modest contributions), the Labour Party surely ought to advocate —

  • Limiting the amount of expenditure allowed for election campaigning, nationally as well as by constituencies, and permanently, not just during an election campaign;
  • Limiting the amount of any individual donation (whether a gift or a loan) by any individual or institution, such as a trade union or company — not 100 per cent enforceable, but exploitation of loopholes could be publicised;
  • Banning extremely expensive forms of national campaigning, such as posters and perhaps party political television broadcasts;
  • Giving company shareholders the opportunity to vote on any proposal by their company to make a donation of any size to any party, to match as near as possible the opt-out available to trade unionists from the political levy to the Labour Party;
  • Making all donations and subscriptions much more transparent, with the information to be made public at the time, not months later in annual accounts;
  • Concentrating the minds of all political party machines on the need to attract many more members by being seen both to engage them in genuine consultations on policies and issues, and also, even more importantly, to listen to what their activists, grass roots members, and other supporters say to them, thus encouraging a large number of people to make modest contributions instead of a very small number of people making huge ones (and thereby expecting to buy a definitive voice in policy-making).

Taken together these measures ought to minimise the inevitable injustice arising from the ability of the Tories to raise much more money than the Labour Party (or the LibDems) simply because the Tories have many more ultra-rich members and supporters.  To allow the bulk of the funding to come from public funds rather than from members and supporters would tend to encourage even greater neglect of the relationship between the party leaders and their parties' grass roots supporters, causing further homogenisation of the main parties in their competition for the centre ground at the expense of their commitment to their natural core support, to the point where they become indistinguishable and thus deprive the eleectorate of any real choice.  (It's argued that parties can win elections by slanting their appeal towards their own core supporters rather than towards the centre ground, at any rate in situations where elections are won or lost as much by turn-out as by the distribution of such votes as are actually cast.  But experience suggests that in practice the temptation to try to capture the centre ground and to ignore one's own supporters is irresistible — one's own supporters have nowhere else to go and can thus be taken for granted, unless there's a financial incentive to cultivate and listen to them.)

Anyway, I have posted a comment in the consultation forum which, unsurprisingly, seems not to have been selected for publication there (or not yet, anyway).  So in case the party censors suppress it, I reproduce it here:

There is absolutely no case for increasing the subsidy already paid to political parties out of public funds.  Any increase will be seen by the majority of the electorate as a lazy (indeed, sleazy) device by the party machines to avoid the need for building a constructive relationship with individual party members and supporters (including the trade unions in the case of Labour), whose commitment to the party's principles and policies will motivate them to pay subscriptions and make donations sufficient to pay for the party's needs.  The current "New" (!) Labour leadership has alienated, apparently deliberately, a high proportion of the party's membership, including numerous activists: if it needs more money, it should seek to re-establish a relationship with them by listening to them and taking some notice of what they are telling you, not by raiding the Exchequer for more money from the taxpayer. 

Any increase in public funding, quite apart from enraging most of the population and further increasing people's disillusionment with politics, will raise a host of insoluble questions about the criteria for payments, the basis on which the new money should be distributed, the safeguards to ensure that it is properly spent, the arrangements for excluding 'extremist' parties without introducing an element of suppression of free political activity and outright political discrimination, the timing of payments, and ways to avoid giving whichever party is in government an even bigger advantage than it already has over opposition parties by the mere fact of being in office.  There can be no satisfactory answer to any one of these questions because the measure proposed is itself inherently unsatisfactory, misconceived, unsaleable, discriminatory, lazy, greedy, unprincipled, and supported by a lot of waffly high-minded rhetoric which stinks of hypocrisy. 

I first joined the Labour Party in 1955 and have supported it all my adult life.  It saddens me to see my own party stooping to this sort of thing.  Tell Sir H Phillips that we won't touch additional public funding with a barge-pole.

In fact, I reluctantly acknowledge that there is a case for some public funding as a way of avoiding the purchase of influence on policy with party leaders by rich donors.  But I suggest that there are better and more generally acceptable ways of minimising that risk than using taxpayers' money in the teeth of the strong objections of the majority of those who provide the money through their taxes.  Including me! 


5 Responses

  1. Rob says:

    I have no idea how you'd make this work – although it doesn't seem totally mad to think that it could be made to – but what would you think about people being given some kind of tax rebate or benefit which could be used exclusively to fund political parties. It wouldn't need to be very much for each person – I'd guess about a couple of pounds a year, but to be honest I've no idea exactly how much political parties spend collectively each year – and then, rather than the state funding parties on some basis it calculated itself – proportion of seats in the Commons, proportion of the vote at general elections, presumably – which is both conservative and distanced from the views of the electorate – we could have vaguely accountable state funding of parties. I'm not sure how you'd work this with private funding – maybe that'd have to be capped – or decide exactly what counted as a political party, but some kind of fix could be worked for both of those I'm sure.

    Brian writes:  This seems to me a distinctly promising and suggestive idea, Rob.  I think, though, that it couldn't be an automatic levy on every person or taxpayer, earmarked for the political parties,  because that would just amount to a new poll tax — and made the more objectionable because it would be a tax for a specific purpose of which a majority of people disapprove, and because it would involve hypothecation (to which the Treasury rightly  objects since it limits government flexibility in determining spending priorities).  But I can't see any objection to a tax rebate for all voluntary contributions to political parties, including membership subscriptions, or alternatively a refund to the recipient political party of the tax paid on the contribution (like donations to charities).  This would increase the value of all contributions and encourage people to join and contribute to political parties: and it would constitute a modest funding of political parties from public funds but without any element of compulsion.  But I don't think it could be applied to donations or loans made by institutions such as companies or trade unions, since companies pay tax but trade unions (I assume?) don't.

  2. Dan Goodman says:

    I can understand your point about New Labour's motives for this and I agree that the party leadership is very antidemocratic, but suppose you had lowered spending limits combined with equal state funding for all political parties over a certain minimum size (not too large). Wouldn't this be good for democracy? In principle, this has the benefit of not favouring the status quo (which all other funding options do), eliminating bias in favour of wealth, and encouraging the formation of new parties which in turn widens political debate and options.

    Brian writes:  Yes. I can see some benefits from this — which is pretty well what the government seems to favour.  But I also still see three substantial disadvantages in it.  One: it will tend to de-couple the party apparatchiks from their natural constituencies in the electorate by removing the need to cultivate and listen to them in order to secure their allegiance and financial support.  Two, by liberating the apparatchiks from their need for financial support from their natural supporters, it will tempt them to adjust their policies, values and ideologies in such a way as to maximise the votes they can attract from 'the middle ground', which will become the target of competition from all the other parties for the same reasons, thus increasingly eliminating any real differences between them.  And three, it flies in the face of strong opposition from a sizeable majority of voters, who see no reason why their taxes should be purloined for the benefit of political parties which they don't support to relieve them of the obligation to work hard to raise money to finance their activities like any other voluntary organisation.  Working to raise money and encourage membership and the subscriptions that members pay is an essential discipline for political parties because it keeps their feet on the ground and forces them to keep in touch with their supporters out in the sticks.  I prefer the modest programme suggested in my post. 

  3. Absolutely not.  There is no case whatsoever for the state funding of political parties – if a political party cannot generate the requisite support and enthusiasm of members and supporters, it is not a political force to be reckoned with, it is a movement whose lifecycle and relevance has ended.  State funding of the larger parties would simply consolidate their grip on power – Britain would in effect be a one-party state (one party with two, possibly three competing brands).

    I think the idea of a tax rebate to fund the party of your choice is an interesting one, but it still boils down to state interference in political activism.  State funding of political parties has NO place in a democratic and free society.  But then the same can be said for detention without charge or trial, ID Cards, dawn raids, shoot-to-kill, curfews, house arrest, restrictions on protest and free speech… feel free to add further examples of this Government’s totalitarian aspirations.  Why not go the whole hog and cancel elections?

  4. Rob says:

    I still think my idea’s better – well, I would, wouldn’t I. I want the degree of compulsion, because I want everyone to have an equal say on the funding of political parties: money is not speech – although whether that would help it in this context anyway is far from clear – and so on. That’s why the question of what counts as a political party comes up, and why what to do with "private" donations is an issue. I don’t think the compulsion is anything anyone could reasonably complain about: a couple of pounds a year is hardly a substanial cost to impose on anyone in Britain, and whilst it may be a poll tax in the sense that it counts heads, it’s not a poll tax in the burden it imposes, in two separate ways – people get to choose how to spend it themselves, and it wouldn’t, because of the size of the burden, be anything like as regressive as the poll tax.

  5. Dan Goodman says:

    Brian, don't you think that the Labour party is already rather distanced from its members, and don't they already make policies to pick up middle ground votes? It certainly seems like they do to me. I guess our difference of opinion here is partly to do with our feelings about the Labour party. I'm not interested in the fate of the Labour party per se.

    Brian replies:  Dan, of course I think that the Labour Party, or rather the soi-disant "New" Labour leadership and apparatus, is already and increasingly distanced from its membership in the country (what's left of it), and already distorts its ideology (what's left of that) to try to appeal to what it thinks is the middle ground.  My conviction is that greater reliance on state funding instead of reliance on financial backing from Labour Party members and supporters on the ground will accentuate these malign tendencies and rapidly make them irreversible.  I am deeply concerned about the fate of the Labour Party per se, but also about the state and future of British politics, which inescapably involves being interested also in the fate of the Conservative Party. 

    I'm sure you've read an extremely insightful and interesting piece in today's (6 June 06) Guardian by Neal Lawson, Chair of Compass, taken from the Guardian blog Comment is Free where there are also some almost equally interesting comments on it.