Should public trough feed political animals?

The Cost of Democracy
July 20, 2007

Cash for coronets; cash for access; cash for jobs; cash for policy. That is how one newspaper has described party funding in Britain. In March 2006, Tony Blair, then Prime Minister, appointed Sir Hayden Phillips, a retired Permanent Secretary, to clean it up. While Sir Hayden was carrying out his investigation, the police arrested Lord Levy, Blair's chief fundraiser, and Ruth Turner from the Prime Minister's office, although neither was charged. Blair himself had the dubious distinction of being the first sitting Prime Minister to be interviewed by the police in 10 Downing Street in relation to possible offences committed by those working for him.

The Cost of Democracy is, therefore, very timely. Keith Ewing, who is professor of public law at King's College London, brings a wide comparative knowledge to bear on the problems involved in reform. For nowhere, perhaps, is the law of unintended consequences more apparent than in party finance. In recent years, the Labour Party has sought to reduce its reliance on trade union money. The consequence, however, is that it has come to rely to an unhealthy extent upon large donations from wealthy individuals. Ewing rightly regards this as the crucial weakness in the current system of party finance.

Yet if the donations were to dry up, there would be a funding gap. How can it be filled? Only, Ewing suggests, by state aid.

Of course, in an ideal world, political parties would be financed entirely from membership subscriptions. That ideal, however, is not actually met in any known democracy. The issue, therefore, is whether membership subscriptions are to be supplemented by handouts from millionaires or by state aid.

The parties already benefit from state aid in the form, for example, of free party political broadcasts, financial support for the opposition parties in Parliament and policy development grants. More aid, therefore, would be the extension of a principle already accepted, rather than the introduction of an entirely new principle.

Ewing argues with some force that state aid should not be unconditional but should be linked to some index of popular support, such as party membership, but he does not spell out precisely how this might be done.

He is, in addition, far too kind to the trade unions. He argues, as the Labour Party did after the publication of Sir Hayden's report earlier this year, that a cap on donations of, say, £50,000, would be unfair to the party because it would intrude on its relationship with affiliated unions. It is not, so it might be argued, for the state to determine how a political party should be organised nor how it defines eligibility for membership.

Sir Hayden sought to meet this argument by suggesting that payments by individual trade unionists could be regarded as individual donations "if, and only if, the decisions reached are clearly transparent". They are far from being transparent at the moment. The interim report of the Phillips inquiry suggested that just 10 per cent of all trade unionists opted out of paying the political levy in 2006. It would, however, be implausible to suggest that the remaining 90 per cent of trade unionists all voted Labour. Therefore, some trade unionists who do not support Labour find themselves contributing to its funds.

In Canada, as Ewing notes, the quid pro quo for state aid has been that contributions to political parties from companies and trade unions have been banned. There is no reason why a similar solution should not be applied in Britain.

These criticisms do not, however, detract from the value of The Cost of Democracy , which provides an authoritative account of party funding. It deserves to become the standard work on the subject.

Vernon Bogdanor is professor of government at Oxford University.

The Cost of Democracy: Party Funding in Modern British Politics

Author - Keith Ewing
Publisher - Hart Publishing
Pages - 2
Price - £30.00
ISBN - 9781841137162

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