Analysis: State-funded political parties pose huge problems

Should taxpayers pay for the activities of Britain's political parties?

By Dr Matthew Ashton

One of the biggest current problems in British public life is the low level of trust for politicians and political parties. Partly this is because of the way they're funded.

Generally Labour are the first to accuse the Conservatives of being bankrolled by a few rich millionaires and billionaires, while the Conservatives respond by claiming that Labour are heavily in debt to the trade union movement.

As is usually the case with these things neither position fully reflects the full story, but amongst the public the suspicion lingers that parties are more responsive to the people who hold the purse strings then the voters who support them at the ballot box.

Last week there were various stories in the newspapers discussing the plan to introduce state funding for political parties. This is an idea that has been floating around for a few years and is now being pushed by the Liberal Democrats due to their own money issues.

Actually, all of the big three parties in Britain today have recently faced funding worries. Despite the fact that British elections are significantly cheaper than their American counterparts, each campaign usually leaves the parties having to make savings. State funding might solve this problem as well as making the parties significantly less dependent on a few rich donors.

While on the face of it this plan appears attractive, it's actually fraught with problems.

First and most obviously is the argument that after the expenses scandal, and new questions being asked about politicians' pay, it's highly doubtful whether the public would approve of their tax revenues going towards political parties, especially in the amounts needed to make an impact. In an age where we're constantly being told of the need to make savings, and that 'we're all in it together', any party that tried to push for a couple of million in state funding each year would instantly run into trouble. Equally many would feel uncomfortable with any of their taxes going towards funding parties like the BNP.

Another issue is that it's highly doubtful whether this would make the parties any less dependent on big donors. The current proposals mentioned a donation cap limiting the amount of money any individual could give to a particular party. One figure mentioned was £10,000, with the Conservatives immediately claiming that this was too low and should be raised.

Even if it was higher there are plenty of ways round it. American fundraisers have become experts in finding and exploiting the loopholes that exist in US donation rules. For instance while they limit the amount individuals give, there have been plenty of examples in recent years where millionaires have given the maximum amount, as have their wives, children, grandchildren and gardener. That and the confusion between hard and soft money makes any attempt to limit donations difficult at best. Unless the rules were watertight there would be plenty of room for such abuse in Britain.

There is also no evidence that state funding would do anything to reduce levels of political corruption. Germany has some of the highest levels of public funding for parties in the world since the 1950s, yet they've also had some of the biggest scandals; for instance the Flick affair of 1982 and the Kohl scandal of the 1990s.

Finally there is the risk of the parties abusing state funding to create a sort of political cartel. Germany's main parties have been repeatedly challenged in the country's constitutional court over the years because they created a set of rules that benefited themselves at the expense of smaller rivals new to the system. Smaller parties in the UK like the Greens are already hugely disadvantaged by our first-past-the-post electoral system.

I doubt the major parties would be keen on any system that benefits their ability to challenge them at the ballot box. Without clear independent oversight any such system runs the risk of being abused by whichever party is in power.

Ultimately the idea of state funding for political parties does have its advantages, but – as other countries around the world demonstrate – badly applied it can cause just as many problems.

Dr Matthew Ashton is a politics lecturer at Nottingham Trent University. Visit his blog.

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