Tuesday, 26 June 2012

political party funding

There are basically three political parties with MPs in England - the Conservatives, Labour and the Liberal Democrats. Though the parties have split and reconfigured somewhat (most recently a faction of the Labour party split off at the SDP before eventually merging with the Liberal party to form the Liberal Democrats), this troika has remained more or less the same for over a hundred years. They are the only parties ever to have been in government during this period.

This means that anyone wanting to make a career in national politics is faced with a choice between joining one of these parties, or standing outside. Sure, there have been a few independent MPs, and minor parties like the Greens and RESPECT have seats even today, but, as they say, the exception proves the rule.

This has been a fairly stable system for a couple of interlinked reasons. Firstly, electoral success breeds success, because of our voting system. You have to use your one vote carefully. If a voter was operating entirely in isolation - that they didn't know that the real choice in the constituency was between the Three Parties, then they might come to an entirely different conclusion about who to vote for on the basis of their manifesto. Voting for the least evil out of Conservative or Labour is tactical voting.

This sort of distortion would probably have a tendency to happen even without the second reason, which is that running an electorally successful political party takes money. Only so much can be done with volunteer work in terms of organisation, and there are billboards, leaflets, posters, transport and so on to pay for. It takes fairly big amounts of money - in total the three main parties spent nearly thirty million pounds at the last general election. Let's be crude here - the Tories spent £16,682,874, Labour spent £8,009,483 and the Lib Dems £4,787,595, so the going rate for an MP is £30,000 to £84,000. (It's interesting that the Conservatives seem to spend more money per MP than the others. Either they're ineffectively spending it, or they have a harder sell?). Notably, the only other political parties to pick up MPs in Great Britain - the SNP, Plaid, and the Greens also spent six figure numbers. The only party to have spent more than £50,000 but failed to get an MP was UKIP, who are geographically spread thinner than the others, but are Most Likely New Party To Get An MP In 2015 in this blog's view.

Political parties aren't really mass membership organisations in the UK in the same way they used to be - Labour and the Conservatives both have short of 200,000 members, way down from their historic peaks in the 1950s. So, that's forty to eighty quid each, just for the campaign - whereas most members will be "lurkers" who pay the membership fee and are not involved in the party structure. Those numbers are why political parties are so desperate for large donors. Fairly obviously, organisations with cash to spare seeking to influence the result of general elections are not going to bet on a fourth horse. They'll go for the parties where there's an actual chance they'll influence the result, rather than the ones that match their principles most closely. It would, after all, a violation of their duty to their shareholders to disperse funds on a whim. Individual people with fortunes are less picky - witness the Referendum Party. But, by definition, those with money to spare, whether corporate or personal, on such things must already be doing quite well. Those who the system is failing will have less to spend.

Now, any Americans reading this will be laughing at these sums of money. Election campaigns are much more expensive there, because of paid political advertisements on television. We don't have those here - we have party political/election broadcasts. Paid political ads are banned, and parties get free slots on the five public service television channels. It's a bit hard to calculate how much these slots are worth, because they don't act like adverts much, but it's clearly a lot. Significantly, the BBC broadcast them, and money can't buy that. This airtime is a hidden subsidy provided by the television stations to the big parties. Now, you might be wondering at this stage - who gets the broadcasts? Well, the big established parties, of course. They give one miserly broadcast to any party who has nominated candidates in 1/6th of the seats. In a discussion paper from December 2001, the Electoral Commission noted that

The effective raising of the threshold for small parties to qualify for PEBs, from 50 seats to one-sixth of contested seats, was made partly in order to deter organisations from fielding candidates so as to qualify for a PEB for their own publicity purposes rather than for genuine electoral purposes.
So, apparently PEBs do accrue significant publicity benefits other than for the current electoral campaign, enough to change the system to disbenefit parties who did that. But don't the big parties also do well from the ongoing publicity?

The current ITC Guidelines specifically say that account should be taken of "significant levels of previous electoral support, evidence of significant current support". In other words, if you have support already, you can use the free publicity provided by the TV stations to bolster your support! If you don't, you'll somehow have to get your support above that threshold before you get treated like a big player. If I made a board game like this people would say it was rubbish. So why is our political system set up like that?

Why do we have rules against outright bribery and buying of votes anyway? Is it because we find that particular act abhorrent in itself? Or is it that we think that in calls into question the fairness of elections if it is possible for wealth to be used to influence the result. I say, the latter. This is supported by electoral law, which bans "treating", as well as explicit vote-buying. Additionally, it is wrong for the state and the media to give certain political parties an in-built advantage in fundraising and publicity. Politicians lament the decline in turnout, and the decline of party activism, and wonder what they can do about it; while soliciting multi-millionaire donors. I think it's no surprise that this happens when it comes down to a battle as to who can spend the most money. Yes, they need the cash and that's a low-effort way of getting it, so I can't fault them individually necessarily.

But the system is broken, and they need to see the bigger picture, and admit that and make some severe structural reforms to it. State funding based on previous electoral success will undemocratically further lock in the big parties. A donation cap of £5,000, as supported by Labour, isn't even close. It should be set at an amount someone on an average wage could afford. It'll annoy their current donors, of course. But we need to do this to get the money out of politics and get people back on the doorsteps.


  1. I think that companies can pay political donations without asking the share holders. There has been debate about making donations deductable from dividends and giving share holders the right to opt out in the same way that political donations are part of the membership fees that union members can opt out of (yup union donations are from the members by choice, a minor item the conservatives overlook)
    Note that Senator John McCain demonstrated his maverick credentials by co sponsering a reform act that in part restricted corporations ability to fund the political parties (http://en.wikipedia.org/wiki/Bipartisan_Campaign_Reform_Act_of_2002).
    But then recently the supreme court recognised corporations as individuals with first amendment rights (http://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission). I can only imagine restrictions on corporate donations being gradually reversed by the Conservatives due to their instinctive urges (see the ten deadly sins and later additions for a list)

    1. They may not strictly have to ask, but if they started donating large amounts of money to UKIP or the Greens I think the shareholders would get upset.

      Similarly, if the shareholders really cared they could do something about executive pay. It's just that sacking the board is a bit of a nuclear option.

  2. You write, "Politicians lament the decline in turnout, and the decline of party activism, and wonder what they can do about it; while soliciting multi-millionaire donors. I think it's no surprise that this happens when it comes down to a battle as to who can spend the most money. Yes, they need the cash and that's a low-effort way of getting it, so I can't fault them individually necessarily. But the system is broken, and they need to see the bigger picture, and admit that and make some severe structural reforms to it."

    I think the politicians are well aware of the bigger picture. But the big-picture problem, as they see it, is not how the system could be made fairer for minor parties or less wealthy individual electors, but rather how to preserve their existing oligopoly while maintaining or increasing (at least the appearance of) widespread public support for it. If they were serious about the former problem, then certainly they would make some major reforms to the political donation and advertising regulations. But they're not, and so what we can probably expect instead is something like the institution of mandatory voting. A reform whose only effect would be 100% voter turnout in each and every election would give the major parties the trappings of support without undermining their hold on power.

    1. There's certainly widespread agreement on the principle of a donation cap - there are remaining issues about what it will be, and how the union political levy interacts with that, and that might derail it, but I think it's gonna happen.

      They don't see themselves as having an oligopoly - they are for the most part genuine believers in what they spout. As such they can sometimes be persuaded on the merits. "Are you saying you *wouldn't* be able to win an election if you just had to argue out your case and persuade the public? What are you, chicken?"