A step in the right direction for party funding

This is a guest blog by Paul Tyler, Liberal Democrat Constitution Spokesperson in the Lords. 

On January 20 the House of Lords approved a motion to set up a special Select Committee to assess the impact of two clauses of the Trade Union Bill in relation to the report of the Committee on Standards in Public Life (CSPL) on party funding.  The motion was moved by the Leader of the Labour Peers but it followed almost exactly – by agreement – one I had tabled the previous week.  It secured an impressive majority of 93, not least because we had the support of a majority of Crossbenchers. 

Perhaps unsurprisingly the House has put me on the new Committee, and we have already started work.

This issue that confronts us in this Bill is one of fairness, as I discussed in Preventing the Tories tilting the political scales (again). The CSPL report, Political Party Finance: Ending the Big Donor Culture makes significant recommendations for reform including; as their first recommendation a donation cap of £10,000 for individuals, companies and trade unions, an eminently sensible suggestion. The report later goes on to discuss ‘opt in’ measures for trade union funding to the Labour party;  however this is intended to be taken hand in hand with a cap for individuals and corporations, to maintain a level playing-field.  This section of the report the Conservatives seem to conveniently forget.

This Committee (which ironically has only five members who supported its creation) will seek to rebalance the scales and ultimately, it is my hope, help solve the party funding crisis more generally.  What is required is a shift away from big donations, from whatever source. Another slightly more controversial recommendation is that of tax relief for party donations, as for charities. In principle this makes sense; after all democracy is a human good and therefore funding it FAIRLY can be seen as a charitable effort. The controversy here comes with the cap at which donations cease to attract tax relief. The report recommends this cap to be £1000.   This is nearly 4% of the average Briton’s gross income, an unreasonable sum. If the cap was limited to a more feasible amount, £100 per year, this would encourage parties to be funded by a myriad of small donors. This could well have an additional benefit: political parties would be funded by millions of small donations rather than a small number of millionaires. This would be a significant improvement over a system where the Conservative Party, in particular, represents a handful of wealthy people and businesses. 

The ultimate goal of this committee is to once and for all address the issue of party funding; this doesn’t just cover donations, as the CSPL report points out;

‘Political parties only raise money in order to spend it. The less they spend, the less they need to raise.’

The amount of spending jumped significantly between 2001 and 2005 and the trend has continued since, for all elections.  The recent report of the Electoral Commission of the amounts spent leading up the 2015 General Election makes scary reading. The majority was into a few marginal seats, with no effective local accountability.

This is not the way democracy should function - as a bidding war, attempting to buy constituencies. Non-party campaigners are now restricted in what they can spend locally, the parties should be too. This is not just an issue for the “Westminster Bubble”:  it is of vital concern to all true democrats.