Thursday, September 03, 2009
The effects of a party funding cap
The idea most commonly proposed around party funding reform is a donations cap. A £50,000 annual limit on donations from any individual or organisation was recommended by the Hayden Phillips review a while back. But there are plenty of disputed issues, not least whether trade union donations to Labour (or in theory any other party) should have the same limit applied or be treated as aggregates of many smaller individual donations, with the cap applying separately to these.
The Electoral Commission produced its latest set of donation figures last week, so I’ve taken a look at how either reform would have changed things. In the chart above, I show the actual donations (cash and non-cash) received by the three main parties over the year to June, as well as how the figures look if you cut out all donations from any given source above £50k, and how things would look if union donations were in effect exempt from this cap.
It’s no surprise that the Tories favour capping union donations: at present, they’re getting just under half the donations received by the three parties. With a blanket £50k cap, they’d go up to a massively dominant two-thirds. And it’s no surprise that Labour wants to keep its union funding.
My own view is that it’s reasonable for union party affiliation fees to be treated as aggregates of smaller donations as long as each individual member is explicitly giving a particular amount for this purpose, but for other contributions that are made by the union collectively to be treated as coming from a single donor. The result of this would put Labour’s funding somewhere between the second and third set of numbers in the chart.
If we assume that there will be no reforms before the election, that the Tories are very likely to win, and that they’ll take a self-interested view of funding reform, Labour and the unions will need to rethink their set-up if they are to retain significant financial links. What springs to mind is for union political activities to become much more devolved, with local/regional branches having their own political funds that they can allocate independently.