Recently, politics has been dominated by allegations that HSBC helped clients evade tax. With it, we have seen further debate around party funding, particularly as a number of the clients named in allegations also give sizeable donations to their party of preference.
Labour has sought to attack the Conservatives on this basis. They believe that tax avoidance and evasion scandals damage the Conservatives the most; they are ‘the party of the rich’ after all. By criticising Lord Fink (one of the named), a Tory donor, Labour Leader Ed Miliband would have thought he had delivered a killer blow. Of course, he did not. The Tories identified Labour donor Sir David Garrard as also being named in the allegations.
The truth is that such scandals damage both of the ‘Big Two’ parties and are more likely to help fringe parties or lead to lower voter turnout. Party funding scandals certainly won’t help in Scotland, where anti-Westminister sentiment is boosting the SNP vote. It is thought that the SNP could now take around 30 seats in Scotland. This hurts Labour more than anything the Tories could do.
The crux of the issue is trust. When wealthy people are found to have avoided or evaded tax, it leads to a perception that there is an elite group to whom the rules do not apply. They already believe MPs are part of this group; connections to wealthy donors only reinforce this perception, as does the recent ‘cash for access’ scandal involving Sir Malcolm Rifkind and Jack Straw.
The public expresses this distrust through protest votes for their fringe party of choice: UKIP, the SNP or the Greens. This used to be fertile ground for the Liberal Democrats; after being in Government for almost five years, they are now just the ‘same as the rest’.
People often express their distrust of the current party funding system. As Marcel Mauss hypothesised, gifts come with the expectation of reciprocation. People know donations come with a price, whether explicit or unspoken. The Conservatives are therefore the party of millionaire hedge funders and Labour are controlled by the Unions; these allegations are repeated almost weekly at Prime Minister’s Questions.
Some have proposed publically funded political parties as a solution to unrepresentative asymmetries in funding. Based on the £31 million spent at the 2010 General Election, public funding could cost around 50p per person. It is already the status quo in Germany, France, Australia and Canada. Funding could be allocated according to membership or votes.
David Harding, Chief Executive of Winton Capital and a Tory donor, supports such a change. Nobody wants to be branded a ‘dodgy donor’ and Harding has said “I rather wish it was all funded some other way and that would remove the whole issue.”
Funding asymmetries also affect how governments are made. For example, the Conservatives have the biggest campaign war chest. This means they would be most able to fight a second election this year, which works as a disincentive to a coalition that may be the democratic will of the people. Instead, the Conservatives would think it politically wise to govern as a weak minority that could last only months and create economic instability.
However, while the arguments for public funding are strong – politicians would be able to spend more time working on important issues and engaging with constituency interests – the public is not supportive of such a reform. A mid-term poll by YouGov found that 80 per cent of those surveyed thought that political parties have given peerages in exchange for donations and 56 per cent thought the two main parties had changed their policies in return for money. However, only 20 per cent supported state funding. If you don’t trust or like a political party, would you want to your money to go to them?
It is an issue that needs to be addressed; though the inertia exhibited by the ‘Big Two’ on issues like devolution and electoral reform doesn’t bode well for this issue. They receive the most in donations so why help their opponents by providing them with a steady, reliable source of funds? Last week, the Electoral Commission reported donations totalling £8,345,687 for the Conservatives and £7,163,988 for Labour. This is significantly more that the Lib Dems (£3,038,500), UKIP (£1,505,055) and the Green Party (£248,520).
The funding system is unrepresentative and unless there is a change, disillusionment with politics will increase, voter turnout will decrease and our politics will be the worse off for it. The issue will not be resolved before the election, so expect fringe parties to struggle towards the end of what has already been a very long campaign. If there is a second election – and this is possible – it is likely support for fringe parties falls away and the ‘Big Two’ to move closer to a majority. With the advent of multi-party politics in the UK, this would appear a strange outcome. Though, we shouldn’t be surprised if this comes to pass. Money talks and politicians with money talk the most.