Home > Election, Party funding > Labour’s funding shortage – a concern for democracy?

Labour’s funding shortage – a concern for democracy?

The Labour Party is likely to be outspent by the Conservatives in the coming election, according to David Blunkett. The Guardian reports:

The Conservatives are understood to be on course to have a campaign chest of £18m – the maximum amount allowed in the election period starting 1 January – whereas Labour has about £8m secured so far, mainly from unions.

On one point of law – the limits on spending in support of the party (set at about £18 million) apply in the 12 months before the general election. So these controls apply to election expenditures that have already been made. By contrast, the limits on spending in support of a candidate take effect nearer the election.

If the reports are correct, should Labour’s shortage of funds be a concern? Does Blunkett have cause to complain? In the New Statesman blog George Eaton argues that the disparity makes an ‘unarguable case for state funding.’ – I think there is a case for state funding, but I don’t agree that it is unarguable or that it is made out by these figures alone.

There is a point about the competitiveness of elections. Parties need similar resources to keep each other on their toes and fully debate the claims being made. If one party can radically outspend another, then debate may become one-sided. You could make a similar point on Obama outspending McCain, and whether that campaign was really balanced – but few here cried foul then.  The Liberal Democrats could also argue that it is not fair that they are outspent and that they don’t have a chance to compete.

Not every party is entitled to the same level of funds. So the question is whether the source of the funds and differences in spending power are fair. This explains why fewer people were critical of Obama – the reliance on small donors was seen to make the spending power fairer. Several points can be made about Labour’s lack of funds.

First, Labour’s complaint is not simply that it lacks funds, but that the Conservative Party has an unfair advantage because it relies on Ashcroft, etc. The level of funding needn’t be directly linked to the level of support for a party, but may rest on whether a party can command the support of enough wealthy individuals to bankroll the campaign. This might call for controls on the sources of funding (eg a cap on donations), rather than automatically leading to state funding.

According to The Guardian, Labour  hopes to respond by building up

an extensive network of people willing to give between £10,000 and £20,000. Prominent business people as well as entertainers such as Eddie Izzard and Jo Brand attended the first meeting last week.

This is hardly people-power or grassroots activism. It calls on another set of wealthy individuals to donate sums that most people cannot afford. Other political parties could argue that this is still not fair – as Labour would get its resources advantage from the support of businessmen and celebrities.

If all you need is a limited number of wealthy supporters to fund a party, then you might ask why Labour is struggling for money. A party does not need to do well in the polls to be rich.

One view is that the scandals, such as cash for peerages, have discouraged some individual donors who want to avoid the publicity. This would, in theory at least, apply to every political party so doesn’t explain the differences in funds (although you might argue Labour has been most closely scrutinised in this respect).

A second possibility is that the lack of funding is indirectly related to poor performance in the polls. If Labour is expected to lose the election, then people have less incentive to make very large donations (as there is less in it for a donor to be connected to a party that has just been voted out of office).

A third possibility is that the support for the parties has split along more traditional economic lines – that the Conservatives have more support from wealthier individuals (who can make large donations), whereas Labour’s support comes from those on lower/middle incomes. This argument would probably appeal to those advocating a ‘core vote’ strategy for Labour. 

All of this is highly speculative and no doubt there are many counterexamples. But it goes to show how the trends in funding are open to interpretation and that it is not clear what conclusion can be drawn from the differences in funds.

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