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How money talks to Labour and Tories

Robert Peston | 17:50 UK time, Tuesday, 31 August 2010

My analysis of the latest cash-flow figures for the two main political parties yields two stark conclusions:

1) Labour is dangerously dependent on funding from a tiny number of wealthy individuals and trade unions;

Canary Wharf2) The Tories still rely on contributions from the City of London and financial services, especially hedge funds and fund managers, to a considerable extent.

In the crucial second quarter of this year, from 1 April to 30 June - the general election quarter - the Tories and Labour received almost identical cash donations, according to figures supplied to the Electoral Commission. The Conservatives received £10.23m and Labour £10.3m.

The cash was much more important for Labour, because for some years now it has been lagging well behind the Tories in fund-raising. But when Labour's late surge came, some 68% or £7m of that £10.3m was provided by just four extraordinarily wealthy individuals and four trade unions.

Lakshmi Mittal, the steel magnate, Nigel Doughty, the private-equity pioneer, Lord Sugar's private company and Lord Sainsbury collectively donated £2.75m, with Mittal and Doughty each handing over £1m.

A further £4.2m came from the GMB, USDAW, Unite and Unison.

Now it's very doubtful that Labour's new leader, whoever that turns out to be, will believe it is good either for Labour or for democracy that Labour's financial fate - and by extension, its political fate - is in the gift of a quartet of plutocrats and a quartet of trade unions.

That said, it is not at all obvious how the new leader will be able to significantly broaden the party's sources of funding. And making the case for state funding would not be easy, under the long shadow of the parliamentary expenses scandal.

The Tories, by contrast, didn't receive a single seven-figure donation. In fact, six of the gifts to Labour were bigger than the largest single contribution to the Tories, which was £750,000 from JCB Research, an arm of the Bamford family's construction equipment business.

But the Conservatives would be considerably poorer if they hadn't received substantial financial support from City firms and individuals.

My estimate of what the Tories were given by City interests of various sorts is £2.5m, or almost a quarter of their cash receipts.

In that estimate, I've only included the names of donors whom I recognise. So my hunch would be that the actual amount of City money received by the Tories would be a bit more.

Why does it matter that the City is a substantial prop of the Conservative Party?

Well, there is an important debate taking place about whether the British economy is too dependent on the financial sector - and if it is too dependent, whether that dependence should be lessened by shrinking the relative size of the City or the absolute size of the City.

To state the obvious, those important City donors to the Conservative Party would presumably not be pleased if the coalition government became converted to the view that the absolute size of the City is too great.

However, it is striking that the Conservatives are not beholden in any way to the big banks. Neither an executive of a big bank nor a big bank as an institution has made a meaningful contribution to the Conservative Party.

So if the coalition were to bash the big banks - through additional taxes or by way of breaking them up - that would not (in theory) cost the party a penny in lost donations.

On the other hand, hedge funds and investment managers are a very important source of finance for the Tories.

Here are some of the well-known hedge fund names who have donated in the three months to the end of June, with their donations in brackets next to them: Jon Wood (£500,000), Michael Farmer (£258,000), Moore Capital (£200,000), Michael Hintze (£123,000), David Harding (£50,000), Michael Alen-Buckley (£25,000), and Manny Roman (£15,000).

The names of Wood and Alen-Buckley are particularly resonant, because their funds - SRM and RAB respectively - lost colossal sums as investors in Northern Rock after the previous government nationalised the Rock.

Of course that doesn't mean that David Cameron and George Osborne will bend over backwards to help hedge funds.

But the prime minister and chancellor do have a financial incentive to listen carefully to the hedge funds, in this the final stages of important negotiations on new European rules governing hedge fund regulation and remuneration.

Comments

  • Comment number 1.

    Maybe the parties could just spend less? After all the BBC give them enough free coverage, as well as the rest of the media - all telling us that there are only 3 parties - red, blue or yellow - all defending the current system.

    I see Clegg has been sounding off about taxpayer funding for parties. I thought that I was reading the daily mash.

  • Comment number 2.

    It is not that the city has grown large its the fact that the industrial "Made In England" sector of the ecomony has dramatically shrunk since 1997, much as a result of the Co2 derived industry being exported LSB,

    Where are the IK brunels, Whittels, RJ Mitchels etc.

    No wonder an Indian Iron magnet gave so much money to labour why did he not give that money to the indian people rather that UK state aid being used in India ?

  • Comment number 3.

    They say George W was the oil president and Obama was teh bankers president. Are we the traditional brits with the shopkeeper's PM?

    The next US President may very well be manufactured by drug runners who simply incorporate themselves in the US as a ltd company and can donate unlimted amounts of cash folowing the Supreme court ruling recently! Perhaps the Queen might like to invest and 'buy' them back, who knows.


    Why do they need money, and just who exactly do politicians work for?

    Just to remind people. Us, the electors. That is who they work for and not some hedge fund, not some guy living in Jersey to avoid paying taxes and not some guy running a glorifed corner store. They work for each adult who is a citizen residet in this country and listed on the voters' rolls. They are paid to do our bidding. Not the bidding of some guy with expensive cuff links sitting in a snazzy boardroom.

    The BBC broadcast their election campaigns at our expense. Standing on a soap box doesn't cost a candidate anything more than the bus fare to get there. What do they want, money for sandwiches and a flask of sweet tea too?

    But if they really want money then they can get their measley little paws on it like this. All parties should be restricted to small donations from UK citizens resident in the UK (no tax dodgers please, they can buy their own island and be the head of their own like kingdom if they want, but not here). Keep it restricted to no more than the unemployment benefit handed out to someone who can't find a job, has just left school and can't find a place at Higher or Further Education establishments. So what is that, short of £60 for someone over 18 and what £35 for a 17-year old? If it is enough to live off for a week, it is more than enough to donate per election cycle to a party IMHO.

    After all, how much does a twitter account cost - saves trees and landfill by not sending us all through that guff, doesn't it! Surely if the State can be small, so cheap and run by the Big Society volunteers surely the political parties can do so too. If no one volunteers, then that will be because no one likes them. They'll just have to be nicer to the population to attract helpers.

    Introducing appropriate legal changes would ensure the elected officials listen to those who have votes rather than those who have money.

  • Comment number 4.

    Shrink the size of the city ? When will that be after Conservatives shrink the size of the Public sector that run away under Labour? I cant see that any government would want to stop anyone earning money and paying taxes so may be the city shrinking idea is just a silly season idea put about by had up hacks.

  • Comment number 5.

    However, it is striking that the Conservatives are not beholden in any way to the big banks. Neither an executive of a big bank nor a big bank as an institution has made a meaningful contribution to the Conservative Party.

    So what kind of company does Boy George plan on taking up a directorship from when he's finished driving us down the well?

    In the US no company buys a party, they buy a candidate and usually one of each just to be sure!

  • Comment number 6.

    Good evening Robert, I hope you had a good break. Some people were plotting revolution while you were away.

    Surely it is a good thing that the city backed party is now in power as a strong city is a strong England. Pro-city policies (continuation of QE, low interest rates etc.) will help our great banks get back on their feet and do what they do best, lend which creates jobs for the poor and profits for the rich. Tis the way it always has been and the way it always will be.

  • Comment number 7.

    Murdoch gets to decide who is in power then the sponsors get to decide policy.

    What a way to run a country!

  • Comment number 8.

    The problem with democracy is that the people will not pay for it as those engaged in it do not inspire much, except derision from all sides.

    We have two tory parties enthral to the rich and wealthy - this is unfortunately the model of so called democracy all round the world - it is corrupt, but it is the least worst system!

  • Comment number 9.

    Given the lack of support for Scottish industry by the City of London then the Tories shouldn't be surprised that for them Scotland is a no go area.

    In fact it's quite interesting that Labour was given funding by a major private equity company. Neither of them are of any benefit to the economy.

  • Comment number 10.

    2. At 6:26pm on 31 Aug 2010, IR35_SURVIVOR wrote:

    "Where are the IK brunels, Whittels, RJ Mitchels etc."

    Awaiting planning permission

  • Comment number 11.

    "2) The Tories still rely on contributions from the City of London and financial services, especially hedge funds and fund managers, to a considerable extent."

    ...and the cuts are in the wider publics interest???

    The cuts are designed as a 'return on investment' by the city - at least the Tories got the donations! - Clegg and his liberal lemons get all the pain and none of the gain.

    That's the price of selling your principles for power.

  • Comment number 12.

    Political party funding should come from the state apart from individual party membership fees which should have a maximum voluntary donation of 100 pounds each year.

  • Comment number 13.

    Fortunately - whilst these donors are vey, very rich, they are also very, very arrogant.

    This arrogance leads them to be foolish and forget the 'unforseen risk' - which is that their 'investment' will only see a return if neo-liberal democracy remains. They don't realise that we are Governed by consent, and that we can withdraw that consent whenever we choose.

    That's when you'll see privatised law enorcement, to ensure those investments are protected. Already RBS head offices look like military compounds - to keep the people out!
    Rest assured - the people can't be kept out.

    I shall enjoy watching those towers of Babel falling and watching the wealthy rush around in panic.

  • Comment number 14.

    Hi Robert,

    You make an interesting point about party funding, both paries are in a lot of debt so they understand the need to keep interest rates low, which we are all agreed is good for the country. The political landscape has changed much over the past 13 years, so much so that there wasn't much difference between Labour and Conservative. For his many faults, Gordon Brown made the BoE independent which has lead to a decade of low interest rates and for that he should be lauded. Also, despite receiving so much funding from the Unions, Labour kept the ban on secondary action and did not repeal much of Thatcher's Union laws, so they didn't just bow to the Unions wishes. I do hope that the new government protects the hedge funds as well as our great banks as they are institutions to make England proud.

    Welcome back Lindsay, you were sorely missed. How's Switzerland?

  • Comment number 15.

    Dot your tease & cross your eyes.

    A comment first on what appears to be an ignored and quite possibly suppressed web site that has just attracted its 7th millionth hit. Feel the pain dot com petions that all senior government and Civil service leaders should accept pay cuts commensurate with those introduced to their departments and responsibilities. It is hardly surprising that flag is not be being flown by our brown nosed news media industry but of course brown is no more, it is the old black. Or is it red? We enjoy an era of cuts, a nick here, a nip there, tuck it in and chin out - look straight ahead and not into their eyes as a half million civil servants exchange working wage for job seeking rewards. That is the saving being made to maintain triple A's, so that funds can be borrowed at cheap AAA rates. The savings are not the clear cut equation they might seem, are most certainly (tehee) required to enable tax cutting which should ensure dear David's continuance at the helm. Those cuts in tax should materialise just in time (oooh eee!) to ensure and bribe an electorate to do it again. The entire administration of officials and those elected to office should be taking the cuts both to income AND their numbers and those cuts should be large - if they truly believe that that is the way things must be. Cut, cut them and cut them down to size.

    The puffy dark cloud on that horizon is the intrinsic tension that exists between stauch, blue blooded liberals and their weasel partners in coalition. There will be blood letting sooner or later on the matter of tax cutting, carried under the guile of growth, getting the economy going, which we all know is absolutely, utterly, completely the thing to do. Twenty percent growth for seven years should do it. Unfortunately, penny pinchers rule the roost and those pinchy fingers are on steroids. It is truly an insane world where inflation is in truth measurable deflation - that is a little hiccup that hasn't yet been spotted, let alone realised but currant prices are actually remarkably stable, so pass the pudding. Spotted dick and creamy custard please with a lovely broad slab of cornish ice cream melting over and covered with runny devon toffee. Thee........... he said runny. Again, and even spelt it properly.

    Flab..... or is it flub...... ergasted, l was, a while back. Totally rolexed..... Lord Turner was up their, long time with the twinkling stars, per ardua ad astra.... etc. etc.

    OFGEM spake and there is a hole......... an energy crunch to come. An investment hole of sum 200 billion required for a new generation of generation. T'is a thorough and wonderfully con-dusive document, with options galore to rattle branches of the apple tree.

    Unfortunately, here on the street and in the living room, on planet earth, it is obvious to each and everyone of us poorer by the minute, uneduacated and unwashed ejits that 200 billion pounds is enough of Wanda's wonga, too, ................ build 100 (one hundred) nuclear power stations. D-- OFGEN, brush up on the mathematics and addition. This is not a with profits option. So sad!

    Credit crunchiness is the product of asset devaluation. That is what it is. Whether assets were over priced is a point that should have been openly debated but wasn't - some assets were over valued, many were not. The problem was handed to the people who caused it in the first place, for them to sort it out and of course they balled it up royally. Accountants plaes step forward and take a bow, after we all sharpen our axes.

    An IFS study of PBR planning shows a 42billion, 11percent cut over 4 years in government spending. Eyewatering prospect, it really, truly is. This pain should be parcelled back to where it belongs and all finance, most certainly the bonused up, highly clevered up over valued private equity finance that actually and truly does inflate the entire economy in leaps and bounds, should be subject to VAT at full rate. Everyone else pays it and buying and trading businesses is no different to walking the isles of Woolworths.. whoops.......... erm, Tesco's. 17.5% up front fromthe lender and the borrower because - that is what is going on, behind all the fancy jargon and the accountants just blow the value bubble ever bigger until it bursts or someone ends up bankrupted.

    The inflation which occured during the last 10 years, the stuff which did the damage was private equity leveraging in spades as banks, finance and hedges bonused our economy into oblivion and got away with it because of the taxes generated but even that was a stiffy because more lucre went offshore than stayed legitimate and was then recyled back into the system to continue the asset bubble infltion of bonuses and IPO woohoo..... i'm filthy rich.

    BasleII is a nightmare in the making. It will not solve the banking crisis that continues on its merry little way, chundering along. BasleII, is the knee jerk reaction, the oh! Aren't we so clever concept response to a problem that was caused by the gnomes coming up with the answers to the problem they caused. Stupid, as in respectably thick as a brick, geniuses of global regulation, academic purists, who have ne a clue. Where, oh where, oh where, are all these new liquid capital requirements going to be - when it is needed. What does anyone think will be done with these vast amounts of ..... ??? iinsurance ??? Insanity rules. Ha! Ha!

    Basically, those who bonk with others mony, must hold larger reserves to cope with runiness, that perfectly horrid moment when the underlying concept that enables bonking, reveals its soiled bloomers to those burning midnight oil at the Temples of Lucre. Panic, panic, panic - we want our money back, all of us and we want it now. :) Sorry chaps - our ting doesn't work that way. That is the up and down of ir, whether ye be long, short and pruned hedging of it. A minor and brief aside, if you will permit as is allow, allow - listen closely. I shall say this only wernce............... During a recent claret conversation with severl financial oligarchs turned to enterprise and the freedoms that are opportunity. It was impressed upon me, not quite forcibly, how those who developed for themselves imaginable wealth in margins surrounding others wealth, were the cherished of our world - sublimely entitled to take, take again and then yet again, whilst also enduring rewards and remunerations that they, themselves considered profligate but their actual right of rite. l am reasonably assured that none of these fine gentlemen dress to the left.

    Shot across the bow time. Economists should study the wonderousness that is the prospective NEW LOOK IPO. Nice work if you can get it and the bonuses and fees will be huge. 600m of the expected 650m the offer expects to clean up, will clear up a deferred debt used in 2006 to pay a special dividend to owners. Interest accrues until the business is sold or the due date falls on the loan. Hmmm............ 2006 - 5 year loan anyone - pre credit crunch valutions...... ha ha he he he he he........... jingle balls, jingle balls, jingle all the way. 450m debt will remain on the books, call it an inheritance. :)

    This and its ilk - is what destroyed our economy, wide boys, private equity, bonused finance and accountants who belong in rooms with bars on the walls. Bright people, the really clevr ones mixed up with and worshipping money, lucre are all actually insane and treated by one and all as something rather special.... spit! Hang em out to dry and the the bottom out of their sad little bottoms.

    I ramble............ let's rumble. Governments and international Institutions have plowed unimaginable resources into stabilising the world banking system. Banking is in all honesty, sorely misnamed - surely it should be the Bonking Industry.

    The problem, since 2005/2006 was value - valuations - the value of things, which those up top got worried about. The process of valuation is basic accounting - DONE BY ACCOUNTANTS - the mess we are in the middle of today was caused by accountants and their tricks with valuations - which allow people, business, corporations and governments to borrow money. It is a jolly well paid form of piracy that wrecks economies. Now, after huge investment to stabilise the financial system, those who raped it turn their sights upon sovereign democracies deemed to be profligate with spending.

    Enough is enough - it is a game that goes on, a finesse of finance, piracy. All banking and finance should be subject to the same basic revenue collection process that apply to everyone, everywhere. Here in europe that means VAT on all that lovely borrowed at .5% from Government lolly that sloshes around the coffers and.......... a tax upon all derivative trading. This situation should continue until such time as ............ governments finances are restored and the situation can then be reviewed. The tail is wagging the dog and governments cow towing to International financiers and the valuation fiascos that cause financial disaster id disgusting. Games are being played by clever conmen to value, devalue and revalue - value. Value must be defended because what will be payed for something is actually arbitrary in benefit to profit. It is the customer who always pays from the bottom of th feeding frenzy and they have no choice, that is bunkum. Now taxpayers are hobbled for a decade into the future and the funny money games are up and running again.

    Accountants were asked to sort out the mess they caused... ha ha, hehehe.... it's enough. Oi vey!

    This is an insane rant but is about as sane as it gets.

    Defend VALUE - and lock up those who play games with it.

    On the night of Sep. 23rd, some years back, Cox, Chairman of the Securities and Exchange Commission (SEC), was walking on his way to the Congress Hall. Although prepared for the incoming hearing, he felt upset about the upcoming debate over fair value. The plunging stock market had already put him under great pressure. To make things worse, some Wall Street bankers and congressmen had started to challenge the Federal Accounting Standards (FAS). They blamed FAS 157 (on 'fair value' of financial assets) for worsening financial crisis and the pricing mechanism did not work. Cox had a mixed feeling towards this Federal Accounting Standards 157 passed less than a year ago. The unique feedback effect of FAS 157, plus the extreme prudence employed by accountants and auditors after the Enron scandal had all come together to fuel the ongoing crisis. All these seemed to underpin the appeal by bankers and congressmen to abolish or suspend FAS 157. As the boss of SEC, Cox felt badly embarrassed by the growing pressure. How should he respond--- remain unbudged or pass the buck onto the Congress? Cox expected to find the answer after entering the Congress Hall.

    In this unfolding financial crisis, accounting received so much attention that it reminded everyone of the Enron scandal several years ago. How can FAS 157 stir such a storm on the Wall Street? Is the fair-value accounting principle the culprit or just a scapegoat? A close-up of the provision is badly needed." This article - By Xin Lian is out there on the web for those that wish to find it.

    At this time the US property market is down still by six or so trillions and that is as conservative an estimate has ever been issued by a modest monk living on Mars, viewing earth through binoculars. At the height of the felony, almost a trillion a month was wiped of that markets valuation. There lies the problem, it has not been solved and no one, anywhere, actually knows yet, why it happened. That is why in the sense of who and how it actually came to pass. A handful of oriental academics, members of a very elite and bright shiny think tank come consultation enterprise have very much the exclusive rein on this knowledge. Advisers and participants amongst the coterie of bum sitting, wine sipping lunch time advocates throwing tripe into meetings held by the FASB just before and as melt down occured. No one will ever get to the bottom of it because no one wants to own up to the greatest regulatory disaster in history. FAS157 is no more - it morphed into Topic 820 and is currenty breeding a plethora of new little topics.

    When all this wonderful Basel regulation of everything financial and bonking has achieved its occurence and everything financial has accumulated reserves of capital to ensure liquidity - where will that liquidity be, when the next melt down develops?

    Let me tell you, it will be melting down along with everything else it is supposed to rescue. It is bright idea until you actually consider it for more than thirty seconds. The concept is insane and also those who curry it. They would be the people who believe that the real economy and the monetary economy are divorced entities. Why then does the real economy support the monetary economy while the monetary economy supports the monetary economy. That is what happens.

    As sure as god made little green apples, the UK's AAA credit rating is a piece of history that simply has not occured yet. This is because government will continue to spend more than it gets, the coaltion are just beginning to learn that fact of political survival.

    There is a realistic yardstick for the Uk in the current Greek economies struggle with reality and how things go there will mirror in spades here because the UK is doing what Greece is but doing it in spades. As GDP shrinks, profits will grow. Send in the rocket scientists.

  • Comment number 16.

    Political funding should go into a pot and then be distributed to political parties. The current system of donation to a party of choice is simply an insult to democracy and probably illegal.

  • Comment number 17.

    14. At 7:38pm on 31 Aug 2010, Sam_From_Hendon wrote:

    "Welcome back Lindsay, you were sorely missed. How's Switzerland?"

    Good thanks, I'm over in NYC for the US Open at the moment. I built up airmiles through expenses.

    I take it you got the press release from everybody else again?

  • Comment number 18.

    16. At 7:45pm on 31 Aug 2010, purple wrote:
    Political funding should go into a pot and then be distributed to political parties. The current system of donation to a party of choice is simply an insult to democracy and probably illegal.

    .....
    Great idea.

  • Comment number 19.

    I meant before everybody else! Typing too quickly between sets!

  • Comment number 20.

    #13 WOTW

    Dear Sir,

    I've just come across this blog and you seem to suggest that there will be a revolution in this country. Let me put you straight on that, there will not be a revolution in the UK for the next 100 years, so please take your picture of Che Guevara off your wall and re-enter the real world. This country saw Marx for what he was, an antisemitic sponger who got his house keeper pregnant and who never did a day's work in his life. He lived off inheritances and this country saw through him.

    Thank you,

  • Comment number 21.

    Robert....you are awful...but you are nice!

    You surely deserve a wooden spoon for this piece.

    But a well deserved one.

  • Comment number 22.

    20. At 8:29pm on 31 Aug 2010, Roger Knight

    I bet the Jewish Karl Marx will have a bigger/better headstone than you'll get!

    Let us judge your assessment of relative achievemants after then.

  • Comment number 23.

    ...and let us not forget who is bank-rolling David Miliband (who has the same ethnic background as Karl Marx btw)...

    http://loveyourpolitics.co.uk/?p=1295

    'Next up comes a £50,000 donation to Miliband’s Labour leadership campaign fund from David Claydon, a leading British banker.
    Claydon became a Morgan Stanley managing director in 2005, where he stayed until he joined Union Bank of Switzerland this May.
    Both Morgan Stanley and UBS were deeply involved in the financial crisis, both losing hundreds of millions of pounds thanks to overextended loans. UBS is also one of the government’s advisers trying to privatise Royal Mail.'

  • Comment number 24.

    DebtJuggler,

    Nice logic and even better spelling. I prefer to judge people by what they do, rather than their headstone. Headstones and statues are temporary - look at Stalin and Saddam Hussein. Actions and hyprocrisy are permanent.

  • Comment number 25.

    Interesting.
    Nothing like knowing which Party is beholden to whom.
    Though I don't like Labour, which I always tend to think about as representing "labour" being beholden to a tiny number of wealthy individuals, I see the Tory funding as far more alarming.
    I'm talking about hedge funds and fund managers. The EU is pretty wise to the shananigans of hedge funds and keeps them on a short leach, but the UK has not bought into EU regulations.
    May I ask what the UK is trying to do? Is it trying to let hedge funds gamble at will, hoping to make enough money clear the deficit entirely in short order?
    Hedge funds deal in derivatives, derivative swaps, default swaps; they bet for or against, and they are dangerous investments.
    I should hope that the new Labour leader will be very concerned about the four-person plutocracy that may well run Britain; it will take a strong leader to hold out against that.
    Regardless of any scandel, including the parliamentary expense scandal, I truly believe that funding for all political parties should be state funding and that it should be fairly restricted; this eliminates the pull of a few donors and improves democracy.
    About those hedge funds/Tories, the British economy is too dependent on the financial sector and should not be dependent at all on hedge fund management. There is too much room in hedge funds for hanky-panky that will really tie the Tories to financial services - like in the grip of a killer bear.
    However, it is striking that the Conservatives are not beholden in any way to the big banks, but hedge funds are not necessarily big banks. So, yes it's possible that bank bashing could happen without loss of Tory dollars. Your identification of some well-known hedge fund names proves my case: Jon Wood, Michael Farmer, Moore Capital, Michael Hintze, David Harding, Michael Alen-Buckley, and Manny Roman - not one bank among them!
    Of course that doesn't mean that David Cameron and George Osborne will bend over backwards to help hedge funds. (Oh? I think they'd do that just to frustrate the EU and show thre world how different the UK is from the EU.)
    Listening carefully to hedge funds is what swallowed our little PIGs. Hedge funds could yet swallow the UK.

  • Comment number 26.

    Isn't it time we took the seedy contributions out of politics and agreed that

    1 - each contender for party leadership received a lump sum to run their campaign paid by the taxpayer.

    2 - each party received a lump sum to run an election campaign paid by the taxpayer.

    I know it would be difficult to give a different amount to each party but maybe this can be based on the membership of the party ?

    I would be willing for this activity to be paid from the taxpayer - how the detail is worked out ? that's for a committee to determine.

  • Comment number 27.

    This article perhaps means that, for those of us who still believe in democracy.

    We are left wondering on the legitimacy of the current, and past government.

    Who are we actually being governed by?

  • Comment number 28.

    After ploughing through the comments already posted it seems that the essential facts about political funding have not been grasped by the majority of correspondents. So, to be helpful I'll spell it out.

    Political parties are what the name implies, a conglomeration of people with similar views on the issues of the day and in broad agreement on the way these issues should be addressed. Therefore they band together to ensure their views are heard, and if possible by winning a parliamentry majority, carried through.

    State funding of political parties is too dangerous to contemplate. Just imagine what could happen: Labour gets in again( heaven forfend!)and hits on the plan to change the law and make it illegal for the state to fund an opposition party.

    You think it's unlikely? Well some of us remember Tony Benn (or Viscount Stansgate as I prefer to call him,) stating some years ago that it might be necessary for some future Labour government to suspend the normal democratic process indefinitely if an election meant that parts of a "progressive" Labour manifesto would not completed by the end of a normal parliament.

    Get the message folks?

  • Comment number 29.

    26. At 9:55pm on 31 Aug 2010, easy solution

    There is a problem with that - what about Independents? There are no rules that say you have to be part of a political party to stand for election to coucils, devolved parliaments or to the UK Parliament.

    It's one of the reasons why I think the little amount of money they really need to should be limited to tiny donations from voters - and all of it transparent.

    So the GP standing for election to save his hospital wouldn't have 'members' but he'd raise enough money to run for election and even win if the locals felt he really was fighting 'the good battle' for them.

  • Comment number 30.

    So our politicians are still hanging onto the coat tails of the vested interest 'money men' ... What's new?

    Now who was it who wrote in their election manifesto ... something to the effect of ... "We will tackle the vested interests"?

  • Comment number 31.

    27. At 10:02pm on 31 Aug 2010, Dempster wrote:
    We are left wondering on the legitimacy of the current, and past government.
    Who are we actually being governed by?
    -----------------------------------

    I'd say a bunch of satanists, and it goes all the way back the ancient Egypt and Babylon. Ever wondered why do we have so much Egyptian statues and an obelisk on the Thames banks?

    But you wouldn't believe me, of course, it's 21st century, after all, the era of the TV enlightenment.

  • Comment number 32.

    There is a simple solution having big donors buying influence. Cap the contribution from individuals and organisation to £1000 Maximum! This will ensure that political parties do genuinely have a wide base of support. As someone pointed out, political parties are coalitions of disparate interest groups. If they cannot raise the required funds they cannot contest elections.

    State funding of political parties is fraught with problems. However you do it, this mechanism will reinforce the status quo and divorce the career politicians from reality that face individuals and enterprises.

    So, if the Conservatives or Labour wish to spend £10M, they would need to find at least 10,000 donors who will back them. This I think would be a Good Thing! Also, it will make the party organisations think several times before bloating their party organisations with bureaucrats and researchers. Further, it might encourage some so career politicians to have a spell with a real job before entering politics as the usual route of political interns and party posts will no longer be available.

  • Comment number 33.

    Nice blog Robert.
    If I'm reading you right you are pointing out that democracy in the UK is a farce.

    I liked the bit about Lord Sugar's companies being one of Labour's biggest donaters. They figured out that they give the peerage 1st, then they get the dosh.

  • Comment number 34.

    This is froth, you the people vote for parties, and so it matters little what is paid to the party, as long as you know who paid what and to whom, then 'you takes your ballot paper and you makes your choice'. The worrying thing is how the parties buy votes or fiddle votes, and no one seems interested in that, I've heard little or nothing about the 'big stories' of election night, and the postal vote irregularities - were they not true, or are they simply no longer of interest given that the party of the main suspects is now in opposition?

  • Comment number 35.

    How about this idea? Every candidate should have 100 nominees who provide £50 (better still 1000 paing just £5) to pay for election expenses (people on benefit can pay at £5/wk) making a maximum of £5000 for a local campaign. For every 50 local candidates that want to form a regional or national grouping the Party gets £1 000 000 from the taxpayer to spend on national or regional campaigning. Rules would have to be drawn up for payment in kind, which should be limited to provision of facilities and possibly individuals' time (I'm thinking about an Ad Executive providing 'free help' not knocking on doors).

  • Comment number 36.

    re #26 & 29
    While broadly sympathetic to the thoughts of these posts, I think the statutory form of state funding suggested would also provide support for parties that a taxpayer might dislike, such as the BNP, Communist Party and Socialist Workers Party.

    If there was a way of directing the 'State' taxpayer support to a specific group via the Annual Tax Return that might help. Then, if there was also a box marked INDEPENDENTS it might also demonstrate to the existing parties each year, how the taxpayer was evaluating their efforts to date.

    But with a so-called State funding system in place, what could be done to prevent the brown envelope stuffed full of used tenners being dropped into individual and Party pockets? And policy being influenced thus?

    Hey! Let's be careful out there, today.

    (Oh! I have missed typing that for the last six weeks! Sgt Phil Esterhase is back! Whoopeeee! Now, where's Rita?)

  • Comment number 37.

    Interesting Blog, Robert. Welcome back.

    It is fascinating to know who is keeping their hands firmly in their pockets. No substantial money from footballers and other sports people, agents, pop stars, comedians, actors and other film and theatre luvvies, lawyers, accountants and ... rich politicians ... and bankers!

    Now there's a thing!

  • Comment number 38.

    This is all part of the gentle massage into having the voter pay for party funding.
    Just tell me how the Commons could vote against it? Who has the bottle within the sacred temples of Westminster to argue against such greed.

    The best defence I heard -if you can't block 'state' funding of the parties- was to add a section on the ballot paper asking which %age of your 'contribution' should go to which party/candidate*. If you include a box for NONE, then the overall total party shares gets reduced by the commensurate amount. If enough people said none, then we would get rid of all these pathetic billboards & wretched flyers, and remove a whole raft of slimy advisors.
    Setting the total annual funding figure would be the challenge, and it should be set by a non-parliamentary council (and then halved).

    * Candidate then decides if he will give it to the party, means independents get a fair share.

    Regards,

  • Comment number 39.

    Tories bankrolled by the spivs? I think I've said that a few times lately. The description in this article doesn't mention direct cash to individual tories acting as 'non-executive directors' or 'parliamentary advisors' to the same spivs.

    Of course, all of this money from hard headed businessmen is entirely altruistic. No payback in policy or insider information whatsoever. Ho, ho, ho.

    We now have our single issue government hyping up a bogus crisis as an excuse to make millions unemployed and transfer billions to the same bunch of spivs. Millions from the spivs to the tories: billions from the tory government to the spivs. No connection here.

  • Comment number 40.

    I reckon the best way to influence funding of political parties is at the ballot box.
    If you don’t vote for them, nobodies going to want to fund them.

    If you want to stop political corruption, don’t vote for the corrupt.

  • Comment number 41.

    Pnatters wrote:
    I liked the bit about Lord Sugar's companies being one of Labour's biggest donaters. They figured out that they give the peerage 1st, then they get the dosh.

    Inaccurate and unfair to both Lord Sugar and the Labour Party.

    Alan Sugar showed his support for Labour long before he gained a peerage.

  • Comment number 42.

    "two main political parties"

    Surely the current main political parties are those in Government?

    I would like to see how this compares to all of the other parties. Do the Lib Dems get anywhere near as much and from what sources and how much did the Green party have to raise to get their first seat.

  • Comment number 43.

    Well, this is a knotty one. How should political parties be funded? Clearly not as now. I have a great deal of simpathy for trade unionists, the political levy paying sort, it is supposed to be the 'Labour Movement' after all. But two of the 'big four' listed, both whose titles start with 'U', have a poor record of looking after their own full time employees. I don't think wrongful dismissal sits very well with trade union ethos. As for the Tories, any well healed type can buy direct access to the ear of Mr. Cameron by donating £50,000. Be your own lobbyist perhaps. Maybe it's the smaller parties that show the way to go. Too much is spent by the biggest parties anyway. There are other ways of reaching the electorate these days.
    Regards, etc. RWWCardff.

  • Comment number 44.

    40. At 09:09am on 01 Sep 2010, Dempster wrote:
    I reckon the best way to influence funding of political parties is at the ballot box.
    If you don’t vote for them, nobodies going to want to fund them.

    If you want to stop political corruption, don’t vote for the corrupt.


    ---------------------------------------------------------------------
    We need to have good alternatives to vote for.

  • Comment number 45.

    It is naive to believe that politicians are not influenced by those who fund them and their parties, or that even most contributions are made without the expectation of political advantage.

    It is often reported that the wealthy pay a smaller proportion of their income in tax than the moderately well off. This is not surprising because any Chancellor thinking of changing this situation is bound to realise that his party's donors would suffer and maybe stop their donations.

    Our political system is permeated with corruption. The money for honours scandal is just the tip of an iceberg. Future generations will wonder why this system was tolerated for so long.

  • Comment number 46.

    re #45
    When higher taxes on higher incomes are merely hinted at, there is an instant media response (both print and broadcast) detailing how talent will be lost overseas, how little money will be raised, etc. So, in private there is pressure, in public there is pressure - it will take a brave and strong Chancellor to want to live between rocks and hard places!

    How will the political funding alternatives affect that?

  • Comment number 47.

    jon112uk wrote reference tory spivs and favours for donations.

    I've only got one thing to say to that. Labour......Hinduja Brothers and passports.

    Or has your memory failed you?

  • Comment number 48.

    I think it's a bit unfair to compare union donations to those from wealthy individuals. The four mentioned represent about four million people. Surely that's democracy in action?

  • Comment number 49.

    Its worth mentioning that under Tony Blair there was a huge surge in the number of business donations and celebrities donating to the party.

  • Comment number 50.

    How money controled and controls Labour and Tories.

  • Comment number 51.

    Legalised favourtisms to a few are the mark of dark political corruptions way beyond brown paper envelops and cabbings.

  • Comment number 52.

    Would severely limiting sources of funding reduce corruption and maybe spell the end of party politics and lobbyists?

    If so it sound like a winner.

    I'm wary of continuing down the American route where money rules politics and it takes a fortune to get elected (and let's face it most people want a return on an investment).

    .. but then I also dislike the idea of state funding - what basis would it be on? How would it be fair to all candidates without being wasteful?

    Perhaps we should look at this another way and limit what can be spent on political advertising (including political posters by unions and others).

    Perhaps politicians actually talking to the electorate (and not getting excessive TV time for stage managed events) would be a step towards actual democracy' we've already moved to televised debates (although they were a very restricted format).
    Maybe we could limit the use of researchers, paying people to become indoctrinated into the political system after they leave their politics degree, before they stand as a councillor / MP and eventually end up with less professional politicians and more MPs with real world experience.


    Surely we need to limit the size of donations from any single individual or organisation (including "individual" donations collected via another organisation), which would at least reduce the appearance of undue influence.
    [..but then the same goes for "gifts" and "trips" provide by lobby groups from various interest groups both domestic and foreign).

 

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