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Party funding, the media exemption and Murdoch

July 25, 2011 Leave a comment

My article in The New Republic on how the party funding laws preserve the power of the press has just been published – I made similar points in my written evidence to the Committee on Standards in Public Life last year.

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Categories: Media, Party funding

Donations from the City

February 9, 2011 Leave a comment

The Bureau of Investigative Journalism reports that more than 50% of Conservative Party donations come from the City. Not sure this is news to anyone – though the report does give some details on some of the largest donors.

The report in the Guardian comments:

The study shows the impact that Michael Spencer has had on party funding. He was appointed by Cameron as Tory treasurer in an attempt to reduce the influence of Lord Ashcroft, the party’s former deputy chairman. Spencer was asked by Cameron to increase the number of relatively small donations of £50,000 to curb the influence of large donors such as Ashcroft, and for these smaller donations the City was place to look.

While the focus in the headlines is with the big donors, the comment above suggests that the Conservative are already preparing for donations to be capped at £50k or £25k. If such a cap is imposed, they will be in a position to tap into a pool of donors from the City that can contribute the maximum sum each year. If other sources of funding (whether union, company or public) are restricted, then the other political parties may well struggle to match that fundraising effort.

Categories: Party funding

The super-rich paying and playing politics

August 20, 2010 2 comments

The connection between the super-rich and political power is back in the spotlight through several news stories. The first story is about David Rowland´s decision not to take up the post of Conservative Party co-treasurer. The reason is that he wishes to develop his business interests. While that is the official position, the media coverage is focusing on Rowland´s former tax status. All this is a legitimate area of concern for the media. However, even if we put the tax issues to one side, we might still ask what message such an appointment sends out. This is not to criticise Rowland, but rather to question the criteria used by the Conservatives. By appointing a multi-millionaire donor to a senior role in the party, doesn´t it show that: a. those who make large donations do well in the party hierarchy, b. that the party is keen to maintain its existing funding model (i.e. appoint a rich donor, with all the right connections, who can raise funds from similarly wealthy individuals). The appointment of party donors to such roles is quite common (and is by no means unique to the Conservative Party), but isn´t the government supposed to be reforming the system of party funding and changing the political culture?

Compare this with John Prescott´s Guardian article, in which he is campaigning to become treasurer of the Labour Party. He says the party needs ´to campaign in a smarter and more cost-effective way.´  In this he refers to certain activities being funded through small donations made via the internet (which is something of the holy grail for political parties) and relying on technology to cut costs. I have some scepticism about the latter point, as while certain activities become cheaper as the technology develops, new costs are introduced. All of this may be a matter of necessity for a party that is out of power and struggling financially, rather than a stand based on principle. Prescott goes on to write:

Labour’s finances have always depended on trade unions, small donations and high value contributions by party members.

Their value and role will be even more significant as the ConDem coalition looks to tackle party funding to our disadvantage.

The statement shows how the forthcoming review of party funding will be a deeply contested process, with high stakes for all the parties (how could it be anything else). The Committee on Standards in Public Life will have a difficult job. The statement also shows that Prescott too seems committed to continuing the role for ´high value contributions.´ Again his message is to cut spending rather than change the funding model.

The other big story on the super-rich and politics concerns Sir Philip Green, who has been asked by the government to review spending cuts. Like Rowland, the media focus is on Green´s tax arrangements (although for a counter argument, see here). I can see why the media are attracted to this line of argument – it generates a sense of outrage and provides a simple argument. But there is a bigger point, which has little to do with his tax arrangements, and that is the flow of wealthy individuals and businessmen into government. This shows how the path for the wealthy to gain political influence is not just through political donations or lobbying (while Green is reported to have paid to play tennis with Tony Blair, I don´t think he is a big donor to the parties), but through the government´s love of and seeming dependence on such people. The super-rich  don´t need to court government to gain influence, those in power seem to gravitate towards them. Green is just one example – for another take Lord Browne´s role in the university funding review.

Contact with such people clearly is necessary in terms of their expertise and the importance of their activities to the economy. Yet there are questions as to whether they should get such a central role in government affairs and also whether the experience in the private sector equips them to tackle public sector issues. This trend is discussed in Stephen Armstrong´s book, The Super-Rich Shall Inherit the Earth, which discusses the ´British oligarchs´and dedicates a whole chapter to Sir Philip Green. The connection between the rich and politicians was well-known with the Labour Party, so it is not a criticism of just the present government. So while the parties in office change, a small elite group of people still continue to wield influence. The point is not new, but I think it is more important than any individual´s tax affairs.

Party funding – a new inquiry, but any progress?

July 9, 2010 Leave a comment

I haven’t seen the transcripts yet – but from the news reports of the hearing held yesterday by the Committee on Standards in Public Life, it sounds like there will be another inquiry on the funding of political parties. I think the Committee is the body to look at this issue, which should consider evidence from a wide range of perspectives (and not merely thrash the issue out among the major party leaders).

According to the BBC website, Jack Straw responded to criticisms of Labour’s link with trade unions, by saying:

there had been “no scandals about trade union funding” and he said he was sceptical about limits on donations because they could lead to avoidance, and “front organisations” set up by those seeking to dodge the rules.

Mr Straw added that the Conservatives enjoyed a higher “wealth base” among their supporters.

On the latter point, it is true that a cap of £50k on political donations per year would not make the system fair. Parties that can attract more supporters who can each donate the best part of £50k will be in a much stronger position – this is something I discuss in chapter 5. With such a cap, there may not be a multi-millionaire bankrolling a party, but inequalities in wealth could still shape a party’s fortunes.

Straw has a point about ‘front organisations’ but I disagree that this alone is an argument against regulation. Even if not perfect, a cap would at least set a standard signalling that large donations are not an acceptable part of politics. Straw’s point can be made against the current rules on the disclosure of donations, which have been evaded through front organisations too – but I think most people would accept that it is still important to have those disclosure rules in place. (I think the point depends on whether the harm brought about through the evasion of a donation cap would be worse than no cap at all.)

As for the trade union link – i think the role of all institutional donations needs to be considered (which I have written on before, on trade unions and companies).

I’ll wait to read the transcript before commenting further – but from the newspaper reports it seems like the same issues will continue to be sticking points for the leading parties.

Categories: Party funding

Coalition agreement and clean politics

May 20, 2010 Leave a comment

In the coalition agreement, there are several proposals that impact on money in politics. The agreement sets out broad principles rather than policy details, as the section on transparency includes:

We will regulate lobbying through introducing a statutory register of lobbyists and ensuring greater transparency.

We will also pursue a detailed agreement on limiting donations and reforming party funding in order to remove big money from politics.

As I have said before, the significance of the reforms depends on the details. The effectiveness of a register of lobbyists depends on what has to be disclosed and who is subject to it. The line on party funding refers to ‘detailed agreement.’ This was pursued under the Sir Hayden Phillips Review several years ago, but no agreement was achieved. Is there any reason to think common ground can be reached now? More importantly, something like party funding reform should not simply be hammered out through bargaining among the parties. One criticism of the Hayden Phillips Review was that it had an appearance of collusion among the leading parties. Hopefully that approach will not be taken this time. While the coalition has been criticised for referring too many issues to commissions, there is an argument that party funding would be better handled by the Committee on Standards in Public Life, just as it was in the late 1990s.

If a cap on donations can be agreed, a further sticking point is whether more state funds should be granted to aid the political parties. The parties will argue that they need such funds to make up for lost income, but in the current political and economic climate selling that policy to the public would be tough.

That said, the question of state subsidies to political parties has arisen in other contexts. The Liberal Democrats have argued that they should continue to receive Short Money, despite being in government. This argument reflects that party’s reliance on Short Money for a substantial portion of their income,  lacking the private donations of the other two parties. Public funding to the parties can also be found elsewhere in the coalition agreement:

We will fund 200 all-postal primaries over this Parliament, targeted at seats which have not changed hands for many years. These funds will be allocated to all political parties with seats in Parliament that they take up, in proportion to their share of the total vote in the last general election.

The goal is to fund a new activity for the parties. The impact will depend on what is being funded and how much money is made available. Before the election, it was estimated that this pledge by the Conservatives would cost £40k per constituency. If primaries are held in 200 constituencies, this would cost £8 million in total, which represents a significant subsidy that will help the party to publicise its activities. As with other subsidies, care needs to be taken when distributing the funds to ensure that smaller parties are not put at an unfair disadvantage.

Categories: Lobbying, Party funding

Donations to parties in week 2 of the campaign

April 27, 2010 Leave a comment

In the second week of the campaign, political parties received over £3.8 million in donations reported to the Electoral Commission. The Conservatives reported 47 donations which added up to £2.2 million, Labour reported 14 donations coming to a total of £1.49 million, and Lib Dems received 3 donations totaling £120k. This is not the total donation income, but only those donations above the threshold for reporting to the central party (and doesn’t include donations to constituency parties or candidates).

Many of the big donors are familiar, such JCB Research’s £250k to the Conservative Party, which also received significant sums from a number of past individual donors. The Labour Party received £400k from Amshold Group Ltd, £200k from Sir Gulam Noon, and £500k from USDAW. The biggest Lib Dem donation, £95k, came from Alpha Healthcare Limited.

Given the post-debate attention given to the Lib Dems, it is surprising they did not receive more money. However, these figures do not include smaller donations that do not need to be disclosed, so the figures don’t show whether any of the parties have benefitted from a surge in small sums.

Stricter spending controls in the ‘short’ general election campaign

April 9, 2010 Leave a comment

Once Parliament is dissolved, the official campaign period begins. This means stricter controls on party funding and campaign spending.

– Candidates are subject to lower spending limits from the day after dissolution – candidates can only spend £7,150 (plus 7p for each registered voter in county constituencies and 5p per registered voter in borough constituencies). Candidates have already been subject to a separate limit for the ‘long campaign’ – but, rather confusingly, a new set of limits will apply once the ‘short campaign’ starts.

– Third parties (those other than candidates or political parties) can spend only £500 on materials to campaign for or against a particular candidate (see s.75 of the Representation of the People Act). So if a person spends money on a website that is used to promote or oppose a candidate between now and the election, it will fall within this limit – though not sure how many would come close to that amount.

– Political parties will have to provide the Electoral Commission with weekly reports of donations received (s.63 of the Political Parties, Elections and Referendums Act 2000). Once published by the Electoral Commission (check their website each week), these figures will provide a regular feed of  party funding stories, which will no doubt continue to make headlines.

Don’t forget that it is still an illegal practice to make or publish ‘any false statement of fact in relation to the candidate’s personal character or conduct,’ ‘for the purpose of affecting the return of any candidate at the election’ unless it can be shown that the publisher ‘had reasonable grounds for believing, and did believe, the statement to be true.’ (s.106 of the Representation of the People Act). While the offence of criminal libel was abolished last year, this law restricting false statements remains on the books (and can lead to prosecution or an injunction). I guess this law is not stringently enforced, but I wonder how many times we may see it being potentially breached.