Jacob Rowbottom: Cash for access and the problems of party funding


Following the Sunday Times cash for access sting, political parties are reported to be putting negotiations on reforming party funding on the fast track. Such discussions among the parties do not have a good record of success. The breakdown of negotiations over the Sir Hayden Phillips proposals in 2007 is well known. The report from the Committee for Standards in Public Life (the Kelly Report) published last year had two notes of dissent from the Labour and Conservative members. It is difficult to see what will be different this time around.

The government is pushing for a £50,000 cap on political donations. There are some obvious difficulties with this proposal. Donations of £50,000 may still give an impression of undue influence and privileged access. Parties can also give special status to those donors that pledge to give £50,000 each year over a 5-year period. A cap at this level does not prevent promises for very large donations being made.

While the proposal would at least cut out the million pound donations from individuals, it might make matters worse in other respects. Being unable to pick up the phone and ask certain committed multimillionaires to bankroll the party, parties would be under a stronger pressure than ever to fundraise. However, the incentives would not be to rely primarily on a mass of micro-donations of, say, £100. Instead fundraisers would seek as many donations of £50k (or close to that limit) as possible. Yet I imagine getting people to part with £50k is not easy and guess there are only so many ideologically committed donors to go round. Getting this sort of money means more fundraising dinners and meeting opportunities, the sort of things that have caused all the current controversy. If a donation limit is to be imposed at all, it needs to be set low.

Cash for access highlights not just the difficulties in limiting political donations, but of regulating lobbying in general. The government is currently consulting on a statutory register of lobbyists. But as several commentators have argued, it is not clear whether the individuals involved in the ‘cash for access’ controversy would fall under the definition of a ‘lobbyist’ under the current proposals. The success of a register also depends on what information is disclosed. While formal meetings with ministers are made public (and now the identity of large donors attending fundraising dinners are being disclosed too), no transparency regime can demand full disclosure into every possible social contact, phone call or conversation between a politician (or an aide) and an outside interest. A register of lobbyists is a necessary step, but there will always remain corners that are off the radar.

One issue missing from the current debate about party funding is freedom of expression. That right was not discussed in the Kelly Report. Yet it might have a big impact on the regulatory framework. A few weeks ago, the case of Animal Defenders International was argued before the Grand Chamber of the European Court of Human Rights, with the applicants arguing that the current ban on political advertising on the broadcast media is a violation of Article 10. I have written elsewhere why the Court should not accept that argument. However, judging from past decisions, the odds are that the Strasbourg Court will find the ban to be a violation of Article 10.

What would the implications of such a ruling be? One possible implication might be that political parties (along with other political organisations) would be free to advertise on TV and radio. While limits on the amounts that could be spent on such advertising could still be imposed, the current election spending limits might need to be raised to allow a sufficient amount advertising to be bought. In any event, there would still be money spent on advertising on off-election years (when spending limits do not apply). Allowing the parties to advertise on the broadcast media could increase the parties’ demand for money, and increase the pressure to fundraise.

If the Strasbourg Court finds that the blanket ban on broadcast advertising violates Article 10, then an alternative response might be to enact a partial ban – one which permits advertising on political issues, but not on electoral matters. That would mean political parties cannot advertise, but political interest groups can. The difficulty with that approach is that it might lead to political money flowing to independent political organisations, which are often closely aligned with certain political parties (or factions within a party). The problem is already present in the current controls on party funding. In a previous ‘cash for access’ scandal, one former minister suggested a donation to a think tank (which is not required to disclose donations, as political parties are) as a way to secure access to a politician.

So, these developments might lead to a situation for political parties where donations are capped, spending is limited, contacts are transparent and TV advertising is banned. By contrast, think tanks and pressure groups would not be required to disclose detailed information about sources of funding, not be subject to spending limits and (if my expectation on Animal Defenders International is correct) free to advertise on TV. That contrast would provide an incentive to creative an alternative market for political finance outside the formal party framework, but would arguably be just as harmful to the democratic process.

Reforms to political finance are necessary. My point is that we should be realistic about what reforms can achieve and think more broadly about the knock-on effects reforms can have. Do the proposals currently being floated really solve a problem or just move it elsewhere? A set of reforms passed quickly to mop up the scandal of the day are unlikely to deal with these questions successfully.