Labour's "loans for honours" troubles have kept the issue of party funding in the news. And another official review is reporting in December. Is it finally time to put a cap on individual donations and consider proper state funding?by Justin Fisher / November 19, 2006 / Leave a comment
Party funding in Britain is a problem that will not go away. Despite the biggest overhaul for over a century just a few years ago, events in 2006 have led the prime minister to order a further review, which is being carried out by Hayden Phillips, a former senior civil servant, who will report in December. The review is charged with evaluating the case for further reform, and brokering a consensus between the political parties.
How did it come to this? After all, the reforms introduced by the Political Parties, Elections and Referendums Act 2000 (PPERA)—see the short history at the bottom of the page—have worked: party funding is far more transparent than it was, and the danger of an election spending “arms race” has been averted. When asked about “cash for peerages,” it may be inappropriate for Labour politicians to claim, as they do, that it was they who passed the legislation that made party funding more open, but it is true. Reform was extensive and, critically, was achieved through consensus. Unlike the 1980s Conservative reforms to union funding of the Labour party, PPERA was not seen as partisan and the new electoral commission established by the act devoted much effort to working with all parties to ensure that the reforms worked.
But funding remains on the agenda. Why? First, the new transparency rules have encouraged more stories about party finance and therefore more public, or media, unease. Although the reporting of donations is quite legitimate and desirable, the tone has not always been reasonable. Large individual donations are not new—they began to surface in the mid-1990s. But the new transparency means that there is usually a story about a large donor each time donations are declared by the electoral commission. Days before the 2001 election, for example, the Tory party received a £5m gift from Paul Getty. Equally, Labour has received three £2m-plus contributions from Lord Sainsbury since 2002, totalling £6.5m. All three big parties have received a number of large contributions (£500,000-plus) since transparency began in 2001.
Second, the national spending limits on elections introduced by PPERA have not reduced the parties’ demand for money. Parties now campaign in even more elections, partly as a result of devolution. At the same time, membership decline (a trend all over Europe) and a fall in corporate donations, caused principally by changes in corporate structure and the growth of…