Paul Tyler writes… Party funding: dilemmas and delays

Since so many of us have fought elections against extremely well-funded opposition candidates, Liberal Democrats are naturally and rightly exercised by the matter of campaign finance. Though Labour made some modest progress with its Political Parties, Elections and Referendums (PPERA) Act, back in 2000, the Act’s focus was transparency, rather than regulation.

When I chaired the party’s policy group on Better Governance in 2007, we set out an objective that no donor should be able to buy influence in the political process, and no party should be able to buy elections. This was the approach we took in the cross-party talks led by Hayden Philips, but both other parties were found wanting when it came to any commitment to real reform. Labour (and to some extent, we) blamed the Conservatives at the time for walking away from the talks – a move which was uncannily timed to coincide with an increasing tide of donations from Michael Ashcroft. But Labour was hardly beyond reproach either; their attachment to lumpen trades union political funds, where members contribute unwittingly to the Labour Party, is not a great deal more reasonable than the Conservatives’ attachment to offshore benefactors.

In 2009, the Labour Party introduced its Political Parties and Elections Act, which made a few baby steps – some in the right direction, some the other way. It created a new pre-campaign expenditure period, to limit the tide of direct mailings candidates could wash over their putative constituents in the months leading up to an election. Curiously, though, the measures had no effect in parliaments which do not run for the full five years, since they only come into effect in the 55th month after the last general election. Now, of course, the Coalition is setting up a fixed term parliament of five years, which will square this circle. If you hear Labour MPs ask why we favour a fixed term of five, not four, years, you might remind them of their own campaign finance legislation, which needs five year parliaments to work effectively. On the other side of the ledger, the Act increased thresholds for declaring donations, which seemed a step away from transparency.

So now the Coalition is left with a mess. Donors can still unduly influence parties; the outcome of elections is still disproportionately influenced by money. Our calls for a cap on donations by individuals of £25,000 a year (an astonishing sum to most people anyway) and for limits on constituency expenditure should continue. Yet there is now more delay since the respected Committee on Standards in Public Life (CSPL) have decided to hold an inquiry into party political finance. The Government is more or less obliged to wait and see what it comes up with, but that means further delay until the Spring of 2011 at least – probably longer.

Meanwhile, the Government (also under PPERA, as amended by the 2009 Act) brought into force in October “civil sanctions” for those local parties and officers who transgress the rules on party finance. The order should give us pause for thought. It enumerates 69 offences which people can fall foul of.

As I pointed out in the Lords, this really highlights a dilemma at the centre of the debate on party finance, and exposes a failure of Labour’s approach. The existing system has created burdens on local parties, and their volunteers, but has failed to solve the fundamental problem, which is the ‘arms race’ in campaign spending. The civil sanctions which come into effect in December are there to deal with people who have not “knowingly or recklessly” committed an offence (those who have done so can still be prosecuted). By definition, therefore, this is about people – many of them volunteers – who make mistakes.

Once the CSPL has reported, and the Government can finally get on with reforming this unhelpful regime, it must make the burden fall on central parties and ensure attention focuses on large donations and ludicrous expenditure, not on overstretched volunteers.

When I raised this in the Lords, the House took a brief break from congratulating itself on its own eminence and expertise to acknowledge the work of volunteers in all parties, all over the country. You can read the debate here.  Meanwhile, the Minister’s response (our Minister, Tom McNally!) was positive; it seems, at last, we do have a Government which won’t rest at talking about how important funding reform is. There’s a chance we might just do it.

Lord Tyler is Liberal Democrat Constitutional Affairs Spokesperson in the House of Lords

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This entry was posted in Op-eds and Parliament.


  • It is not true to say that union members contribute “unwittingly” to the Labour Party. Members have a choice of whether to pay the political levy or not.

    Labour’s problem is that the Tories want the limit to apply to union donations as well as individual donations. They are right to object. If the limit is £25,000, a union with 100,000 levy-paying members will be donating just 25p per member. The Tories obviously hope that unions will decide it’s not worth the administrative costs of collecting such a trivial sum thus cutting off a significant supply of money to the Labour Party.

  • The Democracy Card seems hugely convoluted to be a necessary GB solution. Plus we don’t have the Supreme Court decision as a constraint, where money is seen as speech (which is odd since the US Supreme Court seems comfortable with restricting the press which would also count as speech, in my view). I think we could go for something much simpler, and that is we have a cap on what any one individual or entity can contribute to any party over any given time. Surely this would preferable to the logistical complexity of the suggestion made above.

  • toryboysnevergrowup 11th Nov '10 - 5:50pm

    Just to support Simon G’s point Union’s which use there political levies to affiliate to the Labour Party are also required to periodically ballot their political levy payers as to whether they wish to continue to affiliate. Where, I think there is a point about Unions having undue influence is not with regard to these arrangements but in the manner in which Union leadership are able to vary the timing and amounts of the political levy which is paid over to the Labour Party. There is nothing wrong with Labour unions being able to influence the Labour Party by the way – just that it shouldn’t be through financial means.

    On the legal responsibilities placed on volunteers I sure that the answer is in adopting a “safe harbours” approach, as is also applied with some complex financial regulation, whereby immunity is given from prosecution if the person concerned can demonstrate that they have taken certain basic procedures. Standardised reports and accounts might also be of some assistance in avoiding confusion.

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