Prof Prem Sikka: Political institutions must be freed from the clutches of private money

'We do not have a citizen-led democracy,' says Professor Prem Sikka

£10 notes pegged to a washing line

Former UK Prime Minister David Cameron is being investigated by the Office of the Registrar of Consultant Lobbyists, a parliamentary watchdog, to ascertain whether he has engaged in unregistered consultant lobbying.

The investigation arises out of revelations that Cameron secretly lobbied the UK Chancellor to secure government funding for Greensill Capital, a financial services company now in administration.

The office of the Registrar of Consultant Lobbyists was set up following the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014, which regulates certain types of lobbying. External lobbyists are required to register with the Registrar. In-house lobbyists i.e. employees are exempt. It is an offence to engage in certain types of lobbying without prior registration. According to Greensill; Cameron was a ‘Senior Advisor’.

Legislators for Hire

Cameron is not the first or the only former Minister to sell his services to big business. Sooner or later most join private sector for lucrative jobs. Their services are in demand because they have the political know-how and links to enable their clients and employers to shape legislation, regulation and law enforcement.

Threatening laws can be prevented and robust regulators can be neutered. This delivers competitive advantage for big corporations over those who can’t afford to buy political influence. It makes mockery of democracy as the choices of corporations are all too often dressed up as public policies.

It is not just past Ministers who collect vast sums for selling their souls. Private funding lubricates neoliberal democracy. Political parties are addicted to corporate money for their election campaigns. Trade unions have joined this auction too but corporate money far exceeds anything that they could muster. Ministers and party leaders are more likely to have lunches, dinners and meetings with corporate grandees than the victims of corporate abuses.

Numerous members of the House of Commons are engaged in private consultancies, which make them more in fees than the MP’s full-time basic annual salary of nearly £82,000. Most are only able to secure lucrative consultative because they hold the public office of a legislator.

Members of the House of Lords receive a daily attendance allowance rather than a salary, but many hold consultancies and directorships too. Such economic interests inevitably shape their worldviews and public policy preferences.

Grateful legislators amplify the interests of their paymasters. Little is done to tackle poverty, inequalities, organised tax avoidance, audit failures, banking frauds, low wages; erosion of employment rights or loss of employee pension rights.

We do not have a citizen led democracy and its possibilities are increasingly stymied by former ministers and current legislators selling themselves to the higher bidder, regardless of the adverse consequences for people. Urgent action is needed to remove the corrosive effect of private money from politics.

Some would like to ban corporations and rich individuals from funding political parties and providing consultancies to MPs. Such a policy would not be very effective, especially as the donors are adept at using clandestine routes to fund their preferred parties.

Freeing Politics from Private Money

.We can make a start with the following reforms.

There should be no bans on political contributions, but political parties should not directly receive any money from any private sources either. Those keen to fund political parties should make their payments to a newly created Foundation for Democracy.

Any call for banning consultancies for MPs is rebutted with claims that corporate connections somehow help them to improve the quality of parliamentary debates. We can accept that at its face value, but MPs should not receive any personal benefit from those consultancies as they are already well-paid for a full-time job. The consultancy monies should go to the Foundation.

There would need to be discussions about how to check the arrangements for the House of Lords and whether it needs to be on a similar footing as the House of Commons.

At regular intervals, the Foundation should allocate the money to political parties on the basis of a formula based upon their share of the vote in local, regional and national elections, and party membership. So a party improving the quality of life of the masses will attract a bigger membership, proportion of the votes and share of the funding from the Foundation.

Many corporations have got used to buying political influence and won’t like the above arrangements and may cease funding political parties. At least, this will show that their claims of serving democracy were just self-serving tosh. At that point, we can focus upon public funding of political parties. Data suggests that since 2010 UK political parties have received £541m in political donations i.e. a public funding of less than £1 a year per person can set the parties free from the clutches of big corporations.

All letters and emails from lobbyists must be published, together with transcripts of telephone conversations between policymakers and external and in-house lobbyists.

The above is not a comprehensive solution and a vigorous public debate to rebuild responsive democratic institutions is needed. Nevertheless, it takes first steps in freeing political institutions from the clutches of private money.

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