Insurance Post

Good news for the City: you won't need to bail out the Tory Party

The scandals surrounding the funding of politics will probably never go away but we really don't need to make it quite so difficult.

We have been here so many times before that we are all probably rather weary of discussing the fraught relationship between politics and money. Yesterday's excessively partisan exchanges in the House of Commons do not give any reason to think that we won't be back here again soon. For all the shouting, accusation and counter-accusation across the green benches there was no willingness on the part of the major parties to offer any real sacrifices to ensure that we move away from this scandal-strewn path. Without scarifices – by which I mean a fundamental change in the way politicians raise and spend money – this problem will never be resolved.

The extent to which this latest farce has shocked people might be rather surprising but it forms part of a broader political context already well formed by last week's Budget: it is the common view of the Conservative Party as the representative of the rich, acting in their own narrow interests. The appearance of ultra-successful foreign exchange dealer Peter Cruddas sounding like a second hand car salesman lying to get a sale (at least that what the Prime Minister said he was doing) has appalled most people and confirmed their worst stereotypes of what the modern Conservative Party is about.

Mr Cruddas's dire performance for The Sunday Times will also do further damage to the reputation of the City of London. It would be nice to think that someone at the Financial Services Authority is wondering whether Mr Cruddas is really a 'fit and proper' person to be running an large financial institution if that is how he plys his trade. If the reform of political party funding makes it less reliant on large corporate donations and people like Mr Cruddas then the City will find itself in a better place.

Politics should pay its own way
There is no coherent case to be made for state funding of political parties. If we want large political parties we should be prepared to pay for them ourselves. If political parties were to be funded by the taxpayer it would institutionalise the current political parties and exclude new political movements and groups with fresh ideas. This would be very damaging to democracy in the longer term.

Funding parties that win representation to help them hold administrations to account is a different matter and something we should continue.

What needs reforming?
We have a decent agenda for reform – at least as a starting point – in the recommendations from Sir Christopher Kelly's committee on standards in public life. It could go further, however.

The need for a cap on donations seems self-evident but scares the parties witless. The only debate should be the level at which it should be set with the range being from £10,000 to £50,000 a year. Somewhere nearer the higher figure would fund a mid-ramking post in party HQs and might be a sensible way of looking at this. This cap should apply to all individual and corporate donations.

The trade unions and Labour, of course, believe this would be unfair on them but this is really living in the past. The Kelly committee recommended that the political levy should be switched to an opt-in basis, a long, long overdue reform. Can you imagine Labour arguing for opt-outs in preference to opt-ins when it comes to consumer protection legislation? No? I can't either. It is hyprocrisy to defend the opt-out for the trade union political levy.

It is also an anacronism, harking back to an era when the relationship between trade unionism, socialism and the Labour Party was much closer than it is in the modern era. The trade unions will benefit from having a greater distance between themselves and the Labour Party as there are many people who need trade union representation who no longer join because of the links to the Labour Party. With core Labour support around one-third of the voting population (that equates to barely a fifth of the adult population as a whole) the trade unions are inhibiting their ability to represent much larger numbers of people.

We should also link the Kelly agenda to other much needed political reforms. Abolition of the House of Lords and the ending of all honours for poltical service would be a good start. We have suffered over a century of open abuse of these two avenues of political patronage and it is now time to call a halt to both. No modern democracy can defend an appointed legislative body anyway.

It is not just about how they raise money but also about how they spend it
It is clear that if we go down the route suggested by Kelly that we will end up with political parties operating from a much smaller revenue base. Perhaps we should help them adjust to that world.

Kelly proposes some modest limits on spending outside elections which do not go far enough.

Party political broadcasts should be abolished. I have never been clear on why they were introduced in the first place: why should one form of media be obliged to carry political propoganda when others aren't? Getting rid of PPBs would instantly save the parties huge sums of money. With the advent of the leaders' debates and the influence of social media in politics PPBs have long since served whatever purpose their instigators thought they were serving.

A similar leftover from another era is the election addresses that the Post Office is obliged to deliver for every Parliamentary candidate. In the digital era these are far less relevant than they might once have been and you do have to question why a public service should have to deliver election literature. If a candidate does not have enough support and organisation to get their message to the electors in their constituency then they do not deserve to win.

These measures would be a good start to cutting the cost of party politics but you can already hear the vested interests protesting at such radical suggestions.

Will we have better politics as a result?
We will certainlly have cleaner politics which will be a big step forward.

We will also have less expensive politics with far less money spent at the centre. This, in turn, will be a huge boost to local campaigning. MPs love rattling on about the importance of the constituency link, local issues and so on but almost all are elected or defeated on national swings which have got progressively more uniform over the last 50 years. Cutting the millions spent on national campaigning could reinvigorate local campaigning and might be just the boost that politics will need as it tries to recover from another deep, self-inflicted wound.

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have an Insurance Post account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: