Party Funding
From Democracywiki
Central Lobby
 Our View When the Hayden Phillips process broke down, we predicted that if the parties didn't resolved party funding now, there would be another scandal within 5 years. In the event it was less than 5 weeks. It was clear that this situation was unsustainable two years ago and that a much tighter regime of capped donations and spending limits is long overdue. What we need is decisive action, not more reviews by ever more eminent judges and bishops which is all that has been promised so far. Despite this latest debacle, we still have one of the most sleaze-free political systems in the world. It is sad that a few foolish individuals seem so hell-bent on dragging the system through the mud. Unlock Democracy has published a number of reports and pamphlets on party funding reform including Preserving the link, Promoting Transparencyon Trade Union donations, Local Politics - a case for treatment?, [http://www.unlockdemocracy.org.uk/?p=611 Party Funding the view from the grassrootsand Life Support for Local Parties |
Contents |
White Paper on Party Finance and Expenditure
On 16th June 2008 Jack Straw, Lord Chancellor and Secretary of State for Justice made the following statement, summarizing the Government White Paper on party finance and expenditure in the United Kingdom. It sought to move on from the cross party talks that broke down during the recommendations proposed by Sir Hayden Phillips in 2007.
Jack Straw argued that new legislation was necessary because the present Political Parties, Elections and Referendums Act 2000 had not prevented the main parties from spending above the campaign limit. Spending by the two largest parties was £90 million in the 12 months preceding the 2005 election, up from £65 million in the 12 months before the 2001 election. That was despite the campaign limit being set at £20 million for each party.
The White Paper proposes to: -
- Strengthen the Electoral Commission: Will have robust civil sanctions to deploy, with criminal proceedings as an alternative. The Commission will have more effective investigatory powers, enabling it to access information from anybody when it suspects a breach of the rules.
- Appoint four commissioners to the Electoral Commission with recent political experience and fewer restrictions on staff appointments. This will give the Commission greater practical experience.
- Grant greater transparency to examine the original source of donations to parties.
- Reintroduce "triggering" as to regulate all candidates spending directed towards electoral success. A stronger, more focused Electoral Commission will help to avoid the previous uncertainty about the rules.
- Re-examine the list of activities that are defined as campaign spending.
The White paper would not impose a cap on donations in return for enhanced state funding at this stage. Mr Straw acknowledged that the proposal would require the support off all the main parties and the public.
Opposition Criticism
Francis Maude, Conservative Shadow Minister for the Cabinet Office argued that:
- Reintroducing” triggering" is designed to make it more difficult for candidates to campaign effectively. It restricts candidates in marginal seats but not sitting MPs
- Forcing restriction on what parliamentary candidates can spend from money they have raised privately is an “atrocious abuse of power”, while at the same time sitting MPs can spend ever-more taxpayers' money on promoting themselves, through the communications allowance.
Christopher Huhne, Liberal Democrat Shadow Home Secretary pointed out that the Government proposals:
- Contain nothing that will clean up party funding by capping big contributions. ‘There are no caps on donations or local spending, and public confidence is at a low because the Labour and Conservative parties are seen to be in the pockets of big business or the trade unions”.
Our View Commenting on the Secretary of State for Justice's publication today of a white paper on party funding reform, Director of Unlock Democracy Peter Facey said: "After three years of a string of damaging news stories on party funding, this report is a wasted opportunity that will come back to haunt the political class in years to come. "While we welcome the long-overdue proposals to beef up the Electoral Commission's role, this is in itself a minor step. The rest of the paper is a muddled mix of excuses for not taking action and even proposals to go backwards. "It is simply not true to claim that there is no public support for caps on party donations and spending to political parties. Polls have repeatedly demonstrated the opposite, suggesting that two-thirds of the public would support caps on donations. "The proposals to bring back 'triggering' defy belief. The triggering rules, whereby expenses limits on candidates only kicked in once they officially declared themselves, were abolished in 2000 because they were widely known to be unenforceable. Candidates simply got around the rules by referring to themselves as 'parliamentary spokespeople' or 'local champions.' This will be completely symbolic legislation that will achieve nothing. "The self-serving nature of the political class was made clear when Jack Straw stated that caps on donations could not be introduced due to a lack of cross-party consensus. Yet the government is quite prepared to force through its plans to compromise centuries-old civil liberties such as habeas corpus in the face of cross-party opposition. When governments consider the interests of political parties as more sacrosanct than the rights of individuals, we are truly lost. "There is a perfectly sensible way forward: introduce a citizens' assembly on party funding, as has just been announced in New Zealand. The Ministry of Justice has repeatedly expressed its support of such forms of decision-making over the past twelve months; it is time it matched words with deeds. "Simply cherry picking from Sir Hayden Phillips' review process, as Jack Straw has proposed doing today, will simply entrench public cynicism and guarantee another major round of scandals within five years. At a local level, political engagement will continue to decline. We can only hope that more enlightened parliamentarians will seek to strengthen these proposals when they go through Parliament." Unlock Democracy commissioned an ICM poll on public attitudes to party funding proposals in March 2007. You can see a summary of the figures, and Unlock Democracy's report "Party Funding: Supporting the Grassroots" here: http://www.unlockdemocracy.org.uk/?p=718 |
Unlock Democracy's 6 point plan
When the Hayden Phillips process broke down we predicted that without reform there would be another party funding scandal within five years. Even we were shocked that it took less than five weeks.
In 2004, we published a "six-point recovery plan for politics". We have updated and republished it now, in response to the breakdown of the Hayden Phillips process and the recent party funding scandal. The harsh reality is that nothing has changed since 2004 other than a deepening of the public’s cynicism about politics and politicians as a result of repeated scandals.
The trend towards highly centralised, media-driven campaigning must be reversed, yet the way parties are financed and elections are organised prevents this from happening. We therefore call on the government and the Electoral Commission to introduce the following reforms:.
Matched funding / registered supporters
Donations from individuals should be matched by public funds up to a limit of, for example, £100. This would provide parties with an incentive to recruit and retain members, rather than rely on relatively few major donors.
While matched funding will help stablise the situation, if we are to see a significant increase in the number of people engaged in party politics a registered supporter system should be considered. Under this system, parties receive limited public funding (e.g. £20) for each registered supporter. In return for accepting the money, parties would have to ensure that registered supporters received certain privileges, such as the right to vote for candidates or to have a say in policy matters.
UPDATE: The Power Inquiry proposed a similar system of "voter vouchers". Sir Hayden Phillips proposed a system for matching the first £10 donated by an individual to a political party.
Caps on individual donations
The Electoral Commission should cap donations from individuals, groups, companies and trade unions at an upper limit somewhere between £5,000 and £10,000. This will challenge the public's perception of sleaze and buying votes.
UPDATE: The Hayden Phillips cross-party talks revolved around a cap of around £50,000. The talks stalled on the issue of how the cap would apply to trade unions. We believe the Labour Party must accept a system of individualisation. Unions must be able to demonstrate that each member contributing funds to the party has given their informed consent. The same rules should apply to all other companies and associations giving money to political parties to ensure that they cannot be used to protect donors' identities.
If a lower cap on donations is not adopted, which remains our preferred option, all donations above £10,000 should be referred to the Electoral Commission before the party has access to it. The Commission should be given investigatory powers and a statutory duty to investigate all such donations and satisfy itself that the donations are legitimate within a fixed time period (e.g. 30 days) before releasing it to the party.
Reduce national spending limits; increase constituency limits
Reduce the National Campaign Limit from £20 to £10 million pounds. Simultaneously increase spending limits at constituency level by 20% (roughly £10,000 to £12,000 on average, depending on number of constituents).
UPDATE: The cross-party talks considered a proposal to introduce a spending limit for non-election periods. We would support this but feel it would have to be set separately for Scotland, Wales and the English Regions, if not by constituency. Setting the limit at a UK level could have the perverse effect of encouraging parties to focus their spending on marginal constituencies to an even greater extent than they do currently.
Voter Guides
The voter guides used in the London Mayoral elections allow all candidates to promote themselves to the electorate who would otherwise have been excluded using the election address system used for Westminster elections. Similar voter guides should be used in all parliamentary, assembly and primary council elections.
Additionally, the voter guide and polling card should also promote a website containing full information about the running of the election, the candidates and links to candidate websites.
Rebates on Constituency Campaigns
Candidates/agents should be able to reclaim up to 50% of the money declared in their election returns. This allowance would give parties greater incentive to spend money in local campaigns.
Electoral Reform
Ultimately, if people are to be reconnected to politics, they must feel their vote is worth casting. Turnout increases where there is genuine competition, yet the current political system forces parties to run centralised campaigns and only actively compete in the most marginal constituencies.
So as well as changing the funding system, we need to reform the electoral system to ensure that votes in all areas count. Systems that ensure better representation of all people's views are likely deal with perception that "all parties are the same".
UPDATE: Electoral reform in the UK has continued, with the Scottish local elections using the single transferable vote system for the first time in 2007. The Councillors' Commission singled out the single transferable vote system. We await the Ministry of Justice's review of electoral systems with great interest
The history of party funding reform is littered with reports and commissions that were ignored. It is essential that we seize this opportunity for reform. We are looking forward to the Government’s proposals in the New Year and hope that the consensus reached in the Hayden Phillips process can be built on.
For more information on party funding please see the Unlock Democracy website
Opposition Day debate
The Conservative Party held an Opposition Day debate on party funding and specifically the recent disclosure that the Labour Party has accepted donations from David Abrahams whilst reporting them to the Electoral Commission as having been from some of his business associates.
In a bad tempered debate, Francis Maude began by underlining the fact that “Only one party is being accused of lawbreaking and only one party's leader has admitted that the law was broken”
Maude was noticeably less comfortable when dealing with the question of Lord Ashcroft’s tax status, saying that
He described as “literally incredible” the assertion that neither Jon Mendelson or Peter Watt knew that the practice of concealing a donors identity was illegal, before shrugging of charges of corruption relating to Asil Nadir and a “Chinese drugs baron”. Maude then asked what Jack Straw knew about the Abraham’s donation given through Mrs. Kidd, before implicating Harriet Harman in the affair by deducing that if Baroness Jay, Peter Watt and Jon Mendelson knew that Mrs. Kidd was not a genuine donor then it must have been eminently possible for Harman’s campaign team to find out.
He then raised the Wendy Alexander issue, claiming that she lied about her knowledge of the legality of a £950 loan taken for her leadership campaign. He asked if Jack Straw
“Can...really say to the House that he believes Peter Watt's claim that he did not know that the practice was illegal?”
He then went on to discuss the stalled Hayden-Phillips talks, claiming that Labour is “in hock” to trade unions, and that £8m is funnelled annually through trade union contributions. Furthermore, he added that the system of levies used by unions is unfair as it does not allow an easy method for opt outs. This has led to problems with ascertaining accurate figures for the level of contribution; apparently, 109.4% of Amicus members and 104.1% of CWU members contribute to Labour.
Calling for a £50,000 cap on donations, Maude intimated that Labour’s refusal to modify its’ funding arrangement with the Unions had been at the heart of the stalemate. Quoting Sir Hayden he said “It will be a matter for the party itself to decide how to disaggregate its spending”, before adding that
“There must be not a penny more of additional state funding for parties without comprehensive reform that addresses the concerns that the public have about party funding”, concluding that recent events have amounted to “a sorry tale of lawbreaking at the highest levels by one of Britain's major parties.”
Jack Straw answered by saying that there was a need for accountability and transparency on all sides before politicians could regain a level of public trust. Adding that “while there is a remarkable absence of corruption” in UK politics “it is right, too, that when issues have arisen, the House has sought to deal with them.” However, when asked whether Labour had returned the £650,000 of donation made by Abrahams he replied that he did not know.
The Hayden Phillips Review
The then Prime Minister, Tony Blair, set up The Review of the Funding of Political Parties in the aftermath of the cash for Peerages scandal. Sir Hayden published a report and chaired a series of cross party talks which broke down in October. Full details can be found on the The Review of the Funding of Political Parties page.
April 2008
On 25 April 2008, there was a short debate on the issue of funding for the Mayoral Election campaign. Greg Hands MP expressed concern over the lack of transparency in funding for mayoral elections. He claimed the public need to know who is providing funding for candidates for directly elected office, especially if that office comes with significant planning powers, such as those of most directly mayors. Mr Hands said it was worrying that Londoners did not know who was funding Ken Livingstone, because he suggested donations to him were coming from unpopular organisations such as tube trade unions or wealthy property developers.
Mr Hands highlighted the fact that Mr Livingstone had not declared any donations for mayoral elections since the Political Parties, Elections and Referendums Act 2000 (PPERA) began just after his election in 2000, where as Boris Johnson had declared 58 donations, totalling just under £440,000 for the current Mayoral Election. The reason for this, according to Mr Hands, was that the Livingstone team declares that the rules do not apply to him, as it says that all fundraising is carried out in the name of the Labour party, with different regulations applying to parties and individual candidates.
The effect of this, according to Mr Hands, is that it is impossible to see who is funding the Livingstone campaign separately from any general Labour party funding, the frequency of declarations is only quarterly, not monthly, with the names of donees not being known until 27th May 2008 (i.e. after the Mayoral Election) and the threshold above which any donation needs to be declared being £5,000 rather than £1,000.
It was Mr Hands’ contention that this had worrying implications for the Mayoral contest. Firstly, he suggested that Mr Livingstone and been receiving campaign contributions from unpopular trade unions such as the hated tube unions, ASLEF, and wealthy property developers, such as Gerald Ronson and Irving Sellar. Mr Hands was adamant that people have a right to know about these contributions, because they could be affecting policy, particularly in light of the Greater London Authority Act 2007, which gives the Mayor the power not only to refuse an application of strategic importance but to approve one. He claimed this was “an invitation to corruption and conflicts of interest on a massive scale in meetings taking place in secrecy.”
According to Mr Hands, failure to submit the appropriate donation report is an offence under the PPERA. However, he was frustrated that the Electoral Commission saw no evidence that a single donation had actually been made to the Livingstone campaign that has not been declared. Mr Hands claimed that because of Mr Livingstone’s refused to report any donations, it was impossible to discover a donation. It was Mr Hands’ view that the PPERA was therefore not being properly enforced.
Bridget Prentice MP (Parliamentary Under-Secretary) (Ministry of Justice) retorted that the PPERA rules had not been broken because all the money was given to the Labour party in London as a whole. As the Electoral Commission found no fault with donations, she claimed that Mr Hands was tarnishing the name of Mr Livingstone and the House, saying “I often fear for democracy when undefined allegations, which lack evidence, are thrown around in the heat of an election campaign, thus undermining the whole process.”
She also pointed out that the reason Boris Johnson had declared his donations was that as a Member of the House of Commons, he has to make declarations in the Register of Members' Interests.
February 2008
On February 28, Andrew Rosindell (Conservative) asked Peter Viggers, representing the Speaker's Committee on the Electoral Commission, what progress the Electoral Commission had made on clarifying the rules governing the funding of political parties. Peter Viggers (Conservative) replied:
January 2008
On January 7, Francis Maude MP (Conservative) asked what assessment the Ministry of Justice and the Hayden Phillips review had made of parliamentary candidates' spending during the last general election. Lord Chancellor Jack Straw replied:
On January 22, Lord Maginnis of Drumglass (Crossbench) asked whether the Government had reviewed the workings and efficiency of the Electoral Commission, whether there would be a further review, and whether the review would consider the Commission's impact on small parties. Parliamentary Under-Secretary of State Lord Hunt of Kings Heath replied:
December 2007
On December 11, David Heathcoat-Amory MP (Conservative) asked what guidance the Ministry of Justice had published on compliance with the laws on political party funding. Lord Chancellor Jack Straw replied:
On December 11, Jim Sheridan MP (Labour) asked whether changes to the laws on party funding would apply throughout the UK. Lord Chancellor Jack Straw replied:
On December 11, Francis Maude MP (Conservative) asked what research the Electoral Commission had undertaken into trade union funding of the Labour, Conservative, and Liberal Democrat parties. Peter Viggers MP (Conservative), representing the Speaker's Committee on the Electoral Commission, replied:
November 2006
On November 19, Francis Maude MP (Conservative) asked whether the government planned to consult before publishing proposals for party funding reform. Lord Chancellor Jack Straw replied:
June 2006
In a written answer to Philip Davies (Conservative, Shipley) Jack Straw said
March 2006
Answering David Winnick (Labour, Walsall North) the Deputy Prime Minister John Prescott said
November 2005
In a written answer to David Taylor (Labour, North West Leicestershire) Rt Hon Harriet Harmen MP, Minster of State, said
