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27 March 2012

Labour and the Tories must accept state funding

The political class is in denial over the need for democracy to pay for democracy.

By Denis MacShane

The latest sleaze scandal is a symptom of a chronic malady which will not be cured until all parties accept that external financing of democracy inevitably opens them to the accusation of exchanging influence over policy for receipt of cash. Every continental and commonwealth parliament has gone through the same agony of political scandals arising from parties having to raise cash for core democratic activity from external sources. Every country has had to come to terms with the need for democracy to pay for democracy.

British political parties remain in denial on this issue. The Conservatives remain addicted to big donations from rich business chums. Labour depends on trade union cash and even if the cheques are an aggregate of small payments they allow a small number of union leaders to wield influence and have access.

In the past two decades, both parties have been rocked by allegations over cash for access and influence, or the undemocratic concept that appointment as a legislator may be connected to payment to political parties.

I have seen in so many other countries the same process of parties defending occult external financing and then, as scandal after scandal broke, coming round reluctantly to accept full democratic funding.

The Conservatives would benefit as people would no longer see the party as being the servant of the rich. Labour would benefit as the accusation that unions dictate candidates and policy would fall away. Wealthy businessmen and major trade unions would of course support the Tories and Labour, and campaign for causes and policies just as is the case in other countries. But the public would no longer believe that money-rich donors have undue influence.

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I urged these measures after 1997 but failed to persuade Labour ministers. I put up papers to Robin Cook with whom I worked at the Foreign Office but despite Robin’s commitment to radical reform he was too nervous of making the case for democracy paying for democracy. At the time, Labour was awash with external business donations even though the £1 million offered by Bernie Ecclestone marred Tony Blair’s first term. That should have been a warning but Labour refused to embrace party funding reform. This denial ended with the disaster of the police investigation into the loans for peerages scandal that blackened the last years of Labour in office.

I tried to persuade Labour ministers to amend the seriously defective Political Parties, Elections and Referendums Bill to bring some extra money for policy work. It was an attempt to augment the already existing level of state funding available.

But Tony Blair and Gordon Brown (and to be fair most Labour ministers) were locked in denial on the need for more state funding. They did not want to provoke rows with trade unions and thought the cash from pro-Labour wealthy individuals would keep on flowing in.

Yesterday in the Commons, Francis Maude for the Conservatives proved that he, like his Labour predecessors, remains in denial on democracy paying for democracy as he continued to denounce the idea of state funding. Labour is enjoying the Tories’ discomfiture but no Labour MP urged democracy paying for democracy in the exchanges in the Commons.

The most recent scandal is very damaging to David Cameron but Labour’s current Schadenfreude is transitory. The only way this problem has been solved in other countries is full democratic, transparent funding for political party work. The rest of the world has learned that lesson. It is worrying that British politics remains in such denial.

Denis MacShane is MP for Rotherham and a former Europe minister. Follow him on Twitter: @denismacshane