I surely cannot be alone in thinking that reports of Lord Levy coming out in support of capping political donations and increased state funding for political parties amounts to little more than another nail in the coffin of political satire.

And yet for all the mock outrage that surrounded the so-called ‘cash for honours’ investigation the reality is that ,throughout its entire history seats, in the appointed portion of the UK’s legislature, the House of Lords, have been bought and sold as a matter of routine for all that the currency of such transactions – cash, political support, vacating a safe parliamentary seat at an ‘opportune’ moment, turning a blind eye while the king engages in Ugandan discussions with your wife – varies from case to case.

The investigation into the funding of, primarily, the Labour Party (although the Conservative Party received some modest measure of police scrutiny too) and the alleged relationship between a number of loans made to be party and subsequent nominations for honours was, in truth, less a scandal than an all-too-brief window into a world that the political classes do their level best to conceal from the vast majority of the electorate out of deference to the illusion of popular sovereignty. The notion that party political peerages are ‘earned’ by way of a little ‘quid pro quo’ is anything but an aberration, its inherent in the very design of a legislative chamber in which the majority of its membership owe their position and status to political patronage.

The House of Lords is, in its present form, not merely an anachronism but a curious inversion of once common and wholly discreditable ‘feature’ of the UK Parliament, the rotten (and pocket) borough. This long discontinued electoral ‘vehicle’, the last of which was abolished in 1867, afforded landowners – many of whom were peers of the realm and, therefore, members of the House of Lords – the means to effectively appoint a significant cohort of the membership of the House of Commons. Today it is the members of the House of Lords who owe their position to a small number of members of the House of Commons; to the Prime Minister, whose authority under the Royal Prerogative provides the means for such appointments, and to the leaders of other political parties represented in the Commons, in whom the power to put forward individuals for membership of peerage is vested. The practice may have flipped through one hundred and eighty degrees over the last century or so but the underlying principle remains the same; political peerages are, by and large, rewards for services rendered and a, in many cases, a down-payment on services yet to be rendered not least amongst which is dutifully voting as directed by party whips. To profess, therefore, to have been ‘scandalised’ by the recent allegations of, and investigations into, the conduct of a small number of politicians and party functionaries is to miss, almost entirely, the larger and more important point; that it is the system that lends itself, all too readily, to what, in the public eye, would seem to amount to corruption.

In the absence of a prosecution of any kind, the most direct consequence of the investigation into ‘cash for honours’ has been the review of party funding carried out by Sir Hayden Phillips, a process that is perhaps most notable for having stalled, perhaps fatally, in the face the determination of both the Labour and Conservative parties to view it as a gilt-edged opportunity to advance their own partisan interests rather than consider the more important question of what may serve best the interests of democracy.

I won’t trouble you with the details of either the review or the ostensible reasons why Phillips has failed to secure cross-party agreement on package of reforms – there’s a fair overview, by Peter Facey of Unlock Democracy, to be found on Comment is Free for those intrigued by the detail. Instead, I’d like to suggest that you consider a more radical interpretation of the review process, one that proposes that the entire review is – and has been from start to finish – an abject failure and that its suggested answers to the questions about party funding raised by the ‘cash for honours’ scandal are not only fundamentally wrong but deeply and perniciously undemocratic to the core.

I should say, right from the outset, that the problem is not Phillips, himself, or the manner in which he has gone about trying to seek agreement for a package reforms from the main political parties. Rather the problem is inherent in the review itself inasmuch as, right from the outset, it has been asked to consider entirely the wrong set of questions.

In what sense are Phillips’ headline proposals – caps on donations and election spending – democratic?

I suppose one might reasonably argue that caps on election expenditure serve some useful purpose in limiting the capacity of political parties to exert too great an undue influence over the electorate by means of lavish spending on promotional activities and public relations far beyond the means of their rivals, but in the context of Britain and its current political system how significant an advantage does that kind of spending confer?

To a considerable extent, I suspect that the answer is ‘not as much as some think’ and ‘much less than in the United States’, the latter being the general basis on which most parallels around election spending are drawn. Britain is not America and in terms of election spending and the extent to which it can (and does) influence and shape the political agenda, the great leveller and counterweight that exists in the UK (and which is largely absent in the US) is its national media; the BBC and other national terrestrial broadcasters and, of course, a range of national newspapers for which there are few, if any, real parallels in the United States. Come election time, money may well ‘talk’ in the UK, but nothing like to extent it does in the US, precisely because Britain’s national media organisation provide an effective alternative conduit for political information that is not reliant exclusively on financing by political parties and politicians.

That said, the really affront to democracy here is the suggestion that political donations should be capped.

Why? What purpose does this serve?

Ostensibly, the suggestion is that limiting donations to a maximum of £50,000 will reassure the electorate that political parties are not being unduly influenced by a small number of wealthy individuals and vested interests, the implicit suggestion being that what the people want/need most, if they are to be confident in the workings of parliamentary democracy, is a mechanism that affords politicians a veneer of respectability rather than the clear and unvarnished truth as to whose interests may be influencing the agendas of political parties and the right to make up their own mind about the relevance – or otherwise – of those interests.

Which is the more democratic notion? One that maintains the pretence that politicians – and parliament, of course – operate exclusively under a bounden duty to represent the ‘will of the people’ or one that freely admits to the many interests that bear more heavily and influentially on the thinking of politicians and political parties that ever do, or have, the concerns of the individual elector and which then permits voters to decide for themselves whether those interests coincide with their own.

Personally I would venture that the latter is the more democratic (and honest) course and would admit, as supporting evidence, the not inconsiderable track record possessed by politicians and political parties of all persuasions when it comes to concealing and obfuscating the true nature and extent of their relationships with the pipers who are, in reality, calling the tune.

Reading the text of Phillips’ ‘draft agreement‘ as it relates to donations one can smell the exploitable loophole straight away. The suggestion is a cap of £50,000 on donations but the precise basis on which such a cap would operate is, in the draft agreement, entirely unspecified.

So one has to ask, immediately, whether this is envisaged as an annual cap or merely a cap per donation – the latter would merely have the effect, of course, of replacing large single donations from a single source with a stream of smaller donations from the same source.

And what, then, of the source of these donations? The current regulations permit any UK registered company (as but one example) to make donations to a political party – what suggestions does Phillips have for limiting the scope for wealthy individuals to route sums far in excess of the cap into their preferred political party by way of a string of cash shells?

Phillips’ draft agreement is silent on such questions and, having taken the time to review the relevant committee proceedings and debates (from 2000) on the Political Parties, Elections and Referendums Bill (as was), one has to be just a little suspicious and wonder whether this is precisely the kind of omission that those negotiating with Phillips on behalf of the two main parties might have hoped no one would notice; much as no one seemed to notice that disclosure of the identity of loanees was omitted from aforementioned and, seemingly, never even discussed as it made its way through Parliament.

The Phillips review is flawed to the point of failure precisely because it was provided with terms of reference that required the issue of party funding to be treated as a bureaucratic question and has inevitably, therefore, produced a series of bureaucratic solutions; more regulation, more state funding of political parties and caps on donations and expenditure. However, if we consider that the manner in which political parties are funded and how this may serve to shape (and distort) their respective agendas is a democratic question – and I do – then what is required are democratic solutions; openness and transparency as to the manner in which parties are funded sufficient to permit the electorate to reach their own judgement as to the extent to which they wish to accept or reject the perceived influence of such interests when the enter the privacy of the polling booth.

The democratic solution is, therefore, a simple one in principle.

Political Parties should be compelled to reveal, fully and explicitly, the identity of those who finance their activities, up to and including to the extent of stripping away from party donors (and loanees) the relative anonymity they currently enjoy by means of hiding behind a variety of different (and permissible) corporate entities. If, for example, a limited company makes a donation to a political party then on the register of donations maintained by the Electoral Commission, alongside the name of the company, should be published also the names of its directors and, where relevant, of any major shareholders who were party to the decision to make the donation.

Only then can voters consider the questions that may arise from the manner in which political parties are funded is truly democratic manner.

About the author
'Unity' is a regular contributor to Liberal Conspiracy. He also blogs at Ministry of Truth.
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Story Filed Under: Blog ,Conservative Party ,Labour party ,Westminster

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