Decimating the Labour party’s income would be bad for our democracy - Democratic Audit’s Stephen Crone looks at the coalition’s latest party funding cap plans.
Stephen Crone is a research associate at Democratic Audit
Figures published by the Guardian today suggest a £50,000 annual cap on donations to political parties – whether from individuals, companies, trade unions or elsewhere – would have led to the notional loss of 72 per cent of Labour party income over the past five and a half years.
This is a staggering figure, and appears all the more stark when compared to the 37 and 25 per cent of donation income which the Conservatives and Liberal Democrats would have forfeited over the same period, respectively.
Yet these are not findings which will come as any great surprise to many, given the Labour party’s well-publicised dependence on large trade unions donations. Indeed, research published in a Democratic Audit report of last year came to very similar conclusions as the Guardian – as have various other articles published in the recent past.
Instead, what is of real interest in today’s Guardian article is the information it purports to disclose from an anonymous source close to the Committee on Standards in Public Life – the body which began an official inquiry into party funding last autumn and is set to report at some point in October this year.
Little coverage has been given to the committee’s inquiry since it started, and little revealed of the recommendations which it is likely to make when it concludes.
However, based on the information revealed to the Guardian by its unnamed source, it would now appear the committee is at least seriously entertaining a package of measures which might not unreasonably be considered a ‘doomsday’ settlement for Labour, in which donations are capped at £50,000 across the board and there is no compensatory scheme of direct public funding.
The shortcomings of this approach – should the Committee recommend it – would be enormous.
Firstly, as Democratic Audit has previously argued on Left Foot Forward, an annual donation cap of £50,000 is highly unlikely to assuage public fears of a ‘big donor culture’.
Not only is it a sum which is completely beyond the means of the vast majority of people, but it is also high enough to be effectively circumvented by super-wealthy individual donors through the ‘bundling’ of donations from family members or businesses, while at the same time forcing parties reliant on large institutional donations – such as Labour – to face disabling financial hardship.
Secondly – and just as importantly – it would also arguably overlook the fact that, as Professor Keith Ewing argues in a new book published this week, trade union funding of political parties is exactly the model of broad-based, transparent and democratic funding which ought to be encouraged, not stifled.
Unless of course the Labour party is willing to happily assent to its own financial disablement, it is highly likely, moreover, that any such settlement will have to be achieved by abandoning the well-established convention that party funding reforms be achieved on the basis of cross-party agreement.
There have been suggestions in the press, earlier this year, that the coalition may be willing to countenance such an approach.
However, this would probably, again, be the wrong way to proceed for a government committed to ‘remove big money from politics’. An imposed settlement which devastates the Labour party financially would not only open the coalition partners to charges of cynical opportunism, but is also likely to prove unsustainable in the long-term.
As we show in a Democratic Audit briefing (pdf) published today, this contention is supported by evidence from Canada, where the fallout from non-consensual party funding reforms passed in 2003 is still evident today.
Based on experiences there, we conclude that while it would clearly be easier for the coalition government to pass far-reaching reform of party funding law without the agreement of its main political rivals, the major parties might be better off sticking to a policy of negotiated settlement – however frustrating such an approach may prove to be.
36 Responses to “Coalition’s party funding cap plans would be bad for our democracy”
Dave Citizen
Looks like our democracy is headed for another bit of tinkering based on narrow party interests, just like the pathetic ‘AV referendum’ options put to the country by Cameron and co.
I don’t doubt that party funding is in urgent need of reform but let’s do it based on independent advice and a clear remit to minimise anti democratic manipulation. Oh, and the best way to deal with the distortion of democracy by the super rich is to tackle extreme inequality – no one works hard enough to earn the millions these people misuse to extinguish democracy.
nonny mouse
Correct me if I am wrong, but aren’t union members are asked if they want to donate into a political fund (yes/no answer) and then the union bosses decide how to spend it?
I am suggesting that a) they can pick any party and b) that it goes straight to the party.
The benefit is that politicians from all parties would need to campaign to get the money and listen to the needs of the union members, not scratch the back of the union bosses. It would end the current system of the use and abuse of member money for union bosses to bribe the Labour party into giving safe seats to union bosses.
nonny mouse
>>Looks like our democracy is headed for another bit of tinkering based on narrow party interests, just like the pathetic ‘AV referendum’ options put to the country by Cameron and co.
Actually, the AV referendum was in the Labour party mainfesto. It was backed by Ed Miliband (who wrote the manifesto) even if not by his MPs or party members.
splem
>>Correct me if I am wrong, but aren’t union members are asked if they want to donate into a political fund (yes/no answer) and then the union bosses decide how to spend it?
There is a secret ballot to allow donations to even exist, then anyone who doesn’t want to gets to contract out, and it is spent by the elected officers they voted for.
>>It would end the current system of the use and abuse of member money for union bosses to bribe the Labour party into giving safe seats to union bosses.
Which doesn’t happen actually? Is Mark Serwotka a labour MP?
But Lord Ashcroft is an expatriate millionaire who illegally funnels money to the Tories in shell corporations. He got in the Parliament of a country in which he doesn’t pay taxes and lied about it for a decade. Then the Tories made him DEPUTY CHAIRMAN. Half of tory donations to 2010 came from one industry alone – BANKERS. Half of that came from just ten millionaires.
It says so much you want to “sort out” unions with ridiculously biased laws that already exist – and they have for two decades! The media have this laughable dinousaur bias against unions that’s just so completely out of date. Even BBC journalists use the word “bloc vote” like he knows what it means. It hasn’t existed for twenty years.
splem
@nonny mouse
Sorry, to be a little more polite, yes, you’re correct. There is a yes/no ballot first. Then individual members are permitted to “contract out” and their dues can’t be used. Their representatives then make such donations.
In Labour itself, the reps do nothing in the the leadership ballot that elected Ed. There is no block vote and the votes were cast by individual affiliated members
The problem with the “Union muscle runs Labour” idea is that it seems like it should make sense, but it doesn’t actually happen in reality. After all, the Tories are bought by the banks and in return they get a party that will shield them from all responsibility for the bailout, and new reform and sabotages international tax agreements for them.
But what do unions get from Labour? The RMT is so pissed off at sending them millions over the years and getting nothing for it they just gave up and disaffiliated. Thatcher’s anti-union laws on funding, striking, organising at all are untouched for over a decade. Labour have a massive temptation to rewrite the laws to favour unions – so massive it’s overwhelming. And yet they just bloody don’t. Why can’t the right admit that? The tories says “Red Ed” is bought by the unions. What did union money buy? The guy who came out against his biggest donor during the big strike this year.
Unions have a huge role in Labour’s electoral fortunes both financially and in organisation. The fact that Labour politicians give them nothing in return tells us the Harriet Harmans of this world are either a) idealists who refuse to rewrite the laws to bias a massive special interest on whom they depend or b) in hock to anti union politics just as much. Labour politicians have always bit the hand from which they feed. They might even go along with this ridiculous proposal just to prove “their independent principles” and add another discriminatory law to the slate.