Corruption and Party Funding Reform Ben Lao TODAY ED MILIBAND has attempted to outflank the Conservatives on party

funding reform by offering to support a cap of 5,000 on individual donations, including those from Trade Unions the main sticking point in previous negotiations over party funding. The cap of 5,000 is well below the Conservatives suggested level of 50,000, but in reality Milibands offer is substantially less noble than it appears because it excludes the compulsory political levy on union members, the main source of union funds for Labour, applies only to donations paid directly from a unions central treasury. It will be interesting to watch how the Conservatives respond to Milibands challenge. The question of party funding is indeed an urgent one, and reform is desperately needed. Public funding, however, must be definitively ruled out because it will only exacerbate, and forever enshrine, the total severing of all links between British political leaders and the people; itself the real cause of the cash crisis parties face, along with the accompanying corruption than entails. The mountain of evidence accrued over the last twenty years that influence and access can be bought (cash for honours, F1 tobacco advertising etcetera) is the symptom, rather than the cause, of the real crisis in British democracy. In his excellent book The Triumph of the Political Class, veteran journalist Peter Oborne plainly describes the real source of the problem: The Labour and Conservative parties both collapsed in the sixty years that have passed since the end of the Second World WarThe Conservatives peaked at 2.8 million members after the Second World War, while Labour also had well over 2 million members in the 1950s. Since then, memberships have slumped to approximately 10 per cent of what they were, with the Tories claiming around 250,000 and Labour just under 200,000 membersThe collapse of the membership base has had a disastrous effect on the income of both the Labour and the Conservative Party. The mass parties of the midtwentieth century were able to appeal for funds to their millions of members, as well as affiliated organisations such as trade unions. Further-more, twentieth-century political organisations enjoyed ready access to a pool of volunteer workers. These no longer exist, forcing modern parties into capitalintensive methods of communicating with voters, such as phone-banks, advertising and focus groups. The cost of running a political party has therefore risen very sharply, at precisely the same time that income from membership has fallen. (p78-80) Hence, big business, wealthy individuals, trade unions and well-resourced issue groups have stepped in to fill the funding gap left by the mass exodus of grassroots members. What happens now is simple patronage: businesses receive favourable terms and government contracts, whilst the trade unions (overwhelmingly representing public sector workers) secure pay and protection for their members from state employers. Both main parties (and the Liberal Democrats) are complicit in this corruption as they are all equally dependent on it as a source of revenue; as Oborne compellingly demonstrates by exposing the cross-party attempt to discredit Police Commissioner John Yates during his investigation into the Cash for Honours scandal back in 2006 and 2007.

The evidence for the death of Labour and the Conservatives as political forces in their own right is plentiful, for those willing to take even the most cursory glance. Take the Bradford West by-election, for instance: not only did Labour lose control of a safe seat in their heartlands in the midst of a politically disastrous week for the coalition government, but their information on the ground was so poor that they did not even realise they were going to lose right up until the polls closed. On the ground, we are dying, explained one Labour source. The local parties that once rooted Labour amongst the working class communities of Britain have shrivelled and died, leaving the party to float disconnected in the political ether. One can safely assume the Conservatives, and more recently the Liberal Democrats, are faring little better on this front. Oborne does not mince his words: the two main parties are husks, reduced to mere fundraising and campaigning vehicles operated by an elite cadre of professional politicians their powers and responsibilities as democratic institutions in their own right have been utterly abolished. Where once ordinary party members controlled party policy and the selection of candidates for Parliament, these functions have been entirely annexed by the respective party leaderships. They have no ideology, no beliefs, no purpose save to provide power and patronage for their operators. Seen in this light, state funding of political parties once a reform I felt resigned into supporting as the only way of controlling this rampant corruption would be disastrous. This policy would amount to nothing more or less than artificially reanimating these rotting political carcasses with undeathly vigour. Revitalising these corpses with stolen life will not restore democracy: it will complete the deterioration of the last sixty years by completely liberating them of any need to appeal for financial support from anyone at all. This will reduce the kind of corruption we have seen, true, but at the cost of completing the degeneration from inclusive, mass-based democratic organisations into elite, authoritarian, self-serving monsters. The two main parties are already de facto established and preserved in law by the first-past-the-post electoral system, which ensures and safeguards their dominance in elections no matter how tiny their actual popular appeal is (as reflected by both their membership and their share of the vote). Indeed, their combined share of the vote in general elections has sharply declined; from an average of 93% in the 1950s with an average turnout of 80% to a mere 68% in the 2000s with an average turnout of 62% (turnout, I suggest, has collapsed alongside support for the two main parties because our electoral system effectively denies the voters an alternative). So first-past-the-post already acts as a form of life support for Labour and the Conservatives, despite their death and burial long ago as genuine citizens movements, and this perpetuates the situation we find ourselves in, where power is monopolised by two parties almost identical in policy and composition, each equally in hock to special interests and equally contemptuous towards the needs and views of their grassroots members and traditional supporters, each equally autocratic and arbitrary in its internal governance, and each equally disconnected from and reviled by the bulk of the electorate. State funding will only drag out their grotesque state of life-in-death. Were their dominance to be assured forever by both the electoral system and public funding, they would not only have no use for grassroots members but would actively attempt to be rid of them entirely, and thus rid themselves of all the embarrassing conference rebellions and demands for internal party democracy that inevitably accompany them.

How, then, are we to prevent the selling of influence? Four reforms are needed. Firstly, individual donations must be capped at a very low level: say a maximum of 500 per person per 5-year Parliament. Setting the cap at this low level would force parties to appeal to as many individuals as possible, rather than a few wealthy interests. Secondly, organisations such as unions, charities and companies should be banned from making donations, as they could easily be used as proxies to funnel wealth from individuals (for example, I could register 100 companies and use them to give a combined 50,000 to a political party, thus working around the donation cap). Thirdly, since FPTP effectively entrenches the two main parties in residence as the permanent government and government-in-waiting, it is imperative that they themselves must be democratic bodies. Registered political parties must be legally required to democratise their internal procedures (just as trade unions are) and give their grassroots members ultimate control. Fourthly, all loans to political parties must be capped at no more than twice the donation cap (so around 1,000) as in the past, suspiciously generous loans have been used as another way of getting around party funding rules. Fifthly, the spending cap on party election campaigns (19m for general elections) should be abolished or raised, because if the cap is lowered (either by law or inflation) all it will do is make small donations relatively larger achieving nothing other than allowing influence to be bought for less (if the cap were lowered to 2m, for instance, a 20,000 would likely become the new Premier League donation, down from 200,000). For the foreseeable future, we will continue to be governed primarily by Labour and the Conservatives. First-past-the-post effectively guarantees that the leaders of these parties will be our Prime Ministers and Ministers, without requiring that they have any real popular appeal or offering their members any real input in the formation of policy. The political pressure for party funding reform, and public weariness with scandals and corruption, must not result in the state funding of political parties. State funding would just be another shot of formaldehyde into the death-tank in which the cadavers of these two parties float, and would do nothing to address their deterioration as inclusive mass movements, the real cause of corruption and elite rule. Sunday April 15th Liverpool