Some political controversies are complicated. The row about offensive remarks made by Frank Hester, a businessman and Conservative donor, is not in that category. What he said was simply racist – declaring an impulse of hatred for all black women induced by the fact of Diane Abbott MP being a black woman. He says he abhors racism. Downing Street belatedly acknowledged the problem, although some Tory MPs still don’t get it. The main reason for such obtuseness is also not complicated. Mr Hester gave the party £10m.
The pernicious influence that big money can have on politics is something voters intuitively understand and don’t like. Not all party donations are crudely transactional. Some philanthropists feel a duty to finance democracy. But there are all kinds of access advantages and policy favours potentially available from proximity to power that might make party funding feel like a worthwhile business investment.
Fixing the problem is not simple. Reasonable people from across the political spectrum recognise that the funding system breeds mistrust. There have been cross-party talks on reform in the past, most substantively in response to Sir Christopher Kelly’s 2011 report for the Committee for Standards in Public Life on “ending the big donor culture”. Sir Christopher recommended an annual cap on donations of £10,000, which would be high relative to countries with similar regulations.
No deal was reached. Subsequently there have been only minor tweaks to the rules. Last year the government raised the threshold up to which small-scale donors get anonymity, from £1,500 to £2,230 – a move away from transparency. Tory attachment to high-rolling donors is not the only sticking point. For Labour, a cap on single donations would mean restructuring the way trade unions contribute to party coffers.
Large democratic movements should ideally be able to sustain themselves with voluntary membership fees, but the sheer cost of modern politics is such that, realistically, capping large donations would probably require more state funding. Labour and the Tories spent a combined £28.5m on the last general election campaign. Voters who recoil from big-donor culture might balk at the idea of their taxes subsidising candidates they don’t like.
State funding for parties is common in the rest of Europe. Public finance, allocated in proportion to electoral performance, is already a feature of the UK system via “Short money” for opposition parties. But it would take an effort of political will to sell the idea of a more universal subsidy.
There is no perfect system. Wealthy individuals with incentives to influence politics will strive to work around any regulation. But no one, apart from plutocrats, is satisfied with the current arrangements. The Tories plainly will do nothing about it with their remaining time in office. Labour has an interesting programme for political reform, but party finance is notably absent from it.
Viewed as likely to form the next government, Labour is attracting its own big donors, any one of whom might some day be the cause of embarrassment. Mr Hester’s case has its own particular tone of nastiness, but the underlying dynamic of the scandal is hard-wired into a system of party finance that means analogous controversy is certain to recur. The government is caught in that trap now. The opposition would be well advised to consider today how reform might spare it a similar crisis in future.
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