Party Funding Reform

Lord Oates Excerpts

Thursday 3rd November 2016 Lords Chamber

[Lord Oates (LD)]

My Lords, the rules that govern the funding of political parties are a barometer of the health of a democracy. Where lack of transparency and the domination of big-donor funding prevail, politics is undermined and democracy sickens. One only has to look across the Atlantic, as has been alluded to by other noble Lords, at what is going on in the current US election to understand the corrosive dangers of big money distorting democratic ideals and undermining popular faith in what, until recently, has been the remarkable genius of democracy in America.

We have been relatively fortunate in that our party funding rules, the relative transparency of our system and the general practice that has been adhered to compares favourably with many other democracies in Europe and around the world, but we should not be in any way complacent. There is a crisis of democracy around the world and we are not immune from it. Public faith in politicians is at an all-time low, brought about in part by a series of scandals and suspicions around party funding. No party is immune from error in this regard and it would be a brave person who would preach from the mountain top on this subject when, too often, party funding rules have operated in the valleys. Political parties want advantage and money buys advantage, whether through more party staff with greater skills, a bigger budget to deliver direct mail into the homes of constituents or the funds to buy social media advertising. Increasingly, it buys the capacity to crunch bigger data and tailor individual messages.

So it is no surprise that parties want the money to out-compete one another. Nor is it any surprise that the party with the advantage is unlikely to wish to give it up and almost by definition—although not quite—the party with that advantage is most likely to be the party in government, and therefore in a position to make or break party financing reform; which, with honourable exceptions they nearly always break. At each election in recent years the main parties have promised comprehensive party funding reform but almost always it does not happen, although it should be noted here that the Labour Party in power after 1997 did much to make our system more open and transparent and got precious little thanks for it.

In 2010, the Liberal Democrat manifesto promised that we would:

“Get big money out of politics by capping donations at £10,000 and limiting spending throughout the electoral cycle”.

The Conservative Party manifesto boldly proclaimed:

“We will seek an agreement on a comprehensive package of reform that will encourage individual donations and include an across-the-board cap on donations. This will mark the end of the big donor era and the problems it has sometimes entailed”.

Labour’s manifesto stated rather more modestly:

“We will seek to reopen discussions on party funding reform, with a clear understanding that any changes should only be made on the basis of cross-party agreement and widespread public support”.

In doing so, it gave the Conservative Party the perfect let-out during the coalition talks on this subject, which it eagerly took advantage of. Undaunted by the failure to reach any sort of agreement or understanding in the 2010 Parliament, the parties were back at it in their 2015 manifestos, although the Conservative Party, having spent some time in government, had rather more modest promises this time.

Despite all that, nothing has happened and nothing looks likely to happen. The Conservatives currently hold the advantage and, as the rather extraordinary complacency of the speech of the noble Lord, Lord Leigh, suggests, they have absolutely no intention of giving it up. This is worrying because while we may fare better than other countries around the world, we have done so because we have had comparatively tight rules on election funding at constituency level and because the transparency rules and other changes introduced after 1997 helped shine a light into hitherto dark corners.

If a democracy is to function in the interests of the electorate and not of a wealthy few, it is imperative that it cannot be bought by wealthy individuals. Here the funding and expenditure rules drive each other. Back in 1997, when I was first an election agent, the rules on constituency expenditure were pretty tight and were carefully monitored by all the parties. The amount you were allowed to spend was modest and it was possible for anyone who had significant public backing to raise funds for a constituency campaign. Rules on national spending in constituencies were adhered to, so that direct mail funded from party headquarters could not mention anything that would identify it as relating to a particular constituency.

Those rules were largely adhered to in 1997, 2001 and 2005, when I was last involved in running a campaign. But at some point after that, either the rules changed or the parties’ interpretation of them did, because in the 2015 general election there was a deluge of nationally funded literature into marginal constituencies from the Conservative Party. I was deluged with a large number of letters and leaflets from Mr Cameron, telling me that while I might very much like my local Liberal Democrat MP—as it happens, I did; I was his best man—in Kingston and Surbiton I simply could not take the risk of Ed Miliband and Alex Salmond running the country. In case I was in any doubt as to how ghastly a prospect that would be, these letters and leaflets were helpfully illustrated with a picture of Alex Salmond and Ed Miliband standing on the threshold of No. 10. I have never asked my Conservative friends why it was Alex Salmond instead of Nicola Sturgeon but I think I probably know the answer. More pertinently, I am not quite sure why they thought that the Deputy Prime Minister’s chief of staff was a potential swing voter, but that is a whole different matter.

The serious point here is that the volume of direct constituency-focused mail is significantly distorting the political process. We have recognised the principle of limiting constituency spending in law but that principle is no longer adhered to in practice, and the impact is to make national funding of political parties a much more significant factor in the election of our local representatives. Therefore, the need for funding reform is even more acute. It is not just the funding of political parties we should be concerned about. As my noble friend Lord Wallace of Saltaire has outlined, the funding of the recent referendum campaign is a cause of very serious concern. As he said, popular sovereignty it certainly was not.

We have the basic building blocks of a fair and equitable funding system via the 2011 Committee on Standards in Public Life report, although we believe that additional state funding is not required and the redistribution of existing funding could work. We need to act now; if we do not, our system will increasingly be distorted by big money. As the governing party, the Conservative Party needs to live up to its 2010 manifesto commitment to end “the big donor era”.