Should the state fund political parties?

Six years ago, the former Conservative Cabinet Minister, Ken Clarke, reignited the debate over whether the state should fund the UK’s political parties, in light of the row over ‘rich tax dodgers’ and the role of hedge funds bankrolling the Tory party.

In 2018 the Tory Party received an eye watering donation of £52m from big business according to the Electoral Commission. The enormous amounts received by the Conservatives places the party in a grossly advantaged position over its nearest rival, Labour.

Historically, the Conservative Party got a lot of its income from big business and the Labour Party from affiliated trades unions. Since the 1990s there have been some modest changes. It’s true the Tories were reliant on big business support (and still are) and personal donations, whilst Labour got the bulk of its money from the unions, party members and a fifth from sympathetic ‘business donors’ in 1997.

But declining membership of both major parties, alongside a sharp drop in trade union membership who pay the political levy, has forced them to adopt a more commercial approach to fundraising, especially in the last decade.

A number of minor reforms were produced in 1999, initiated by the Neill Report, in direct response to how much parties spend in general elections and how they are funded, partly as a result of financial scandals such as the Cash for Questions and the Bernie Ecclestone affair.

Neill recommended that big parties should limit their spending to £20m per general election; put a stop to foreign donations and increase state funding for opposition parties. Little has happened since, until Clarke inadvertently opened up the debate as to whether the state should step in and increase funding for political parties.

Let’s examine both sides of the argument. Those in favour of state funding argue that sleaze and scandals involving large amounts of cash being directed to the major parties is a key factor for the electorate’s growing distrust of national politicians. State funding would ‘clean up’ politics as it does in Canada and Germany.

Likewise, it would help to create a healthier democracy giving all parties a level playing field. In short, it would mean that parties such as the Greens, which now have 65,000 members, will finally be able to compete on an equal footing.

Overall it’s argued this would assist the parties to operate more effectively enabling them to ‘re-connect’ with the public. Declining membership, together with rising costs to fight elections could lead to a ‘slum democracy’ with parties poorly staffed and ill-equipped for government. If parties aren’t funded by the state, they will be funded by single-issue interest groups. State funding would allow UK politicians to focus more on representing their constituents.

However, critics who are vehemently opposed to such arguments, maintain, with some justification that state funding would have to come from taxpayers. Opinion polls suggest this would be deeply unpopular. Why should taxpayers bankroll parties that they may not support?

Political parties could lose their status as free institutions and would simply become part and parcel of the state. This could produce complacency, reduce the role of party activists, and therefore reduce fund-raising activities. Similarly, politicians could become isolated. It’s good that pressure groups and campaign bodies are at the heart of UK government. Parties will always have unequal resources, even if finances are tinkered with in this way.

In addition, it’s suggested, the gap between the two major parties and small ones could widen even further, depending on the system used to implement it.

There’s no clear answer to this issue. But many analysts are of the view that current system of party funding can’t go on. With Conservative Government sleaze back on the agenda, radical reform is urgently needed. Even Ken Clarke recognises this. Whether this takes the form of a major cap on donations from very rich people, or partial state support of UK parties, it will remain the subject of debate for months to come.