The Funding of Political Parties

Where Now?

Keith Ewing, Jacob Rowbottom, Joo-Cheong Tham

• Publisher: Taylor & Francis
• Year: 2012
• Print ISBN: 9780415580014
• eBook ISBN: 9781136630248
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Political Campaigns & Elections
• Index: Politics & International Relations

This book explores the problems associated with regulating the funding of political parties and election campaigns in a timely assessment of a topic of great political controversy.

From interest in Obama's capacity to raise vast sums of money, to scandals that have rocked UK and Australian governments, party funding is a global issue, reflected in this text with case studies from Australia, Canada, New Zealand, United Kingdom, and the United States. Taking an interdisciplinary approach with leading scholars from politics, geography and law, this text addresses key themes: contributions, spending controls, the role of broadcasters and special interests, and the role of the state in funding political parties. With regulatory measures apparently unable to change the behaviour of parties, why have existing laws failed to satisfy the demands for reform, and what kind of laws are necessary to change the way political parties behave? The Funding of Political Parties: Where Now? brings fresh comparative material to inform this topical and intractable debate, and assesses the wider implications of continuing problems in political funding.

This book will be of interest to students and scholars of political science, political theory, policy and law.

1 Introduction

Keith D. Ewing, Jacob Rowbottom and Joo-Cheong Tham

Following the UK General Election in 2010, the Coalition Agreement between the Liberal Democrat and the Conservative Parties pledged to ‘pursue a detailed agreement on limiting donations and reforming party funding in order to remove big money from politics’. Shortly after coming into office, the new government referred the issue of party funding to the Committee on Standards in Public Life (CSPL), the recommendations of which are likely to form the basis of legislative proposals.

This is not the first time that the CSPL has been asked to look at political finance, as its 1998 report formed the basis of the Political Parties, Elections and Referendums Act 2000. The latter was a landmark piece of legislation which gave the UK system for funding politics its biggest overhaul since 1883. While the Act has had a number of successes, most notably introducing a regime of transparency in political donations, that latter success inevitably also exposed additional problems that needed to be addressed.

The problem of party funding

The legislation of 2000 was itself the child of a decade of controversy surrounding political funding which had dogged the Major government since 1992. These controversies related to secret funding, foreign donations and escalating campaign costs. Controversy also followed the New Labour government, with the Ecclestone donation of £1 million in 1997 embroiling the government in difficulty of its own making from its earliest days. The Ecclestone donation was controversial because it became associated with a change of policy on the part of the government.

Having been enacted in the shadow of the latter donation, the 2000 Act did not deal with it directly, concentrating on the transparency and source of donations rather than their amount (though it did require shareholder approval for corporate donations). Nor did the 2000 Act otherwise resolve the problem of party funding which continued to generate controversy, with claims being made that donors were buying privileges, a claim given fresh impetus during the cash for honours affair in 2005–2006.

It has to be said, however, that it is easier to make claims of impropriety than to substantiate them. None of the major so-called scandals led to a prosecution or conviction, even though the cash for honours affair was by no means the end of it, with the Labour Party and Labour politicians in particular haunted by the Act during the period that Brown was prime minister, as discussed by Navraj Ghaleigh in Chapter 9. The continuing concerns did, however, lead to a number of high-profile police inquiries, while the continuing discomfort led to a number of inconclusive reports addressing the question of further funding reform.

The problem of party funding is by no means unique to the United Kingdom, as revealed by developments in the United States, where the cost of ‘democratic’ politics is very high. Attempts in the US to secure legislation to address the problems have met with extreme difficulty as there is no consensus about the nature of the problem or the means needed to address it, and the Supreme Court has consistently used its powers to strike down legislation which it perceives as restricting free speech.

It is true that some commentators take great inspiration from the efforts of President Obama to raise vast sums of money through smaller donations, given mainly as a result of internet targeting of voters. But as Rick Hasen points out below, these same commentators overlook the fact that George W. Bush did much the same, and that Obama also generated large sums of money from traditional sources, that is to say, special interests. The idea that Obama offers a solution to the British problem is implausible, and it remains to be seen how much he is able to garner in small donations when he runs for a second term.

In the meantime, the 2010 US congressional campaigns have been a sobering experience for those intoxicated by the belief that the solution to party funding is for political parties and candidates to raise money in ‘small sums’ from ‘small people’. There we see familiar concerns about ‘special interests’ pouring money into the process, especially following the Supreme Court’s protection of corporate election spending in Citizens United, discussed by Stephanie Palmer in Chapter 10. There is no sign that business as usual will not continue to be the order of the day.

Addressing the problem

When designing a regulatory framework, there is a need to protect political freedoms that are also a central feature of a democracy. The emphasis placed on these goals varies from country to country, with each different jurisdiction designing regulatory frameworks in different ways to fit with its own political culture and constitutional values. These clearly include the right to free speech, which is essential to the conduct of elections. Without free speech there can be no free elections.

The concern with the US position, however, is the treatment by the Supreme Court of money as speech, and the failure on the part of the Court to accept the need to reconcile freedom of speech with other essential pre-conditions of free and fair elections. These include ensuring that everyone has an equal opportunity to participate in the process, as well as fair competition among the different parties representing major stands of opinion.

The difficulty with party funding reform is not only that the objectives are thus contested, but that the politics are uncertain as a result. As in the United States, political funding reform in the UK has also been difficult to secure on the basis of all-party consensus, which some would contend is an essential constitutional pre-condition for reform. That difficulty was seen in 2005–2006, when attempts by a retired civil servant to broker reforms collapsed in a spirit of mutual distrust and recrimination.

The current political climate will prove to be as a great a challenge for any agreement on reform. The 2010 General Election may have been one of the most closely fought in recent years, but the spending in the campaign was notably uneven among the parties. The Electoral Commission reported that the Conservative Party spent £16.7 million on its campaign, while the Labour Party spent £8 million and the Liberal Democrats spent £4.8 million.

The asymmetries continue to be found in the organisation of the parties and the sources of income, with the Conservatives relying on individuals and companies for donations, and Labour gaining a substantial amount of funds from trade unions. In this context, any attempt to adjust the rules on donations and election spending could result in an advantage for one party. With the stakes so high in the current political environment, consensus will be hard to come by.

For some, the asymmetries go deeper still, As discussed by Rowbottom, Ewing and Tham in Chapters 2, 3, and 4, there is a danger that party funding reform has implications not only for party funding, but also for party organisation and structure. This is a particular problem in the United Kingdom (though it is by no means unique to the United Kingdom) because of the nature of the party organisations.

Methods of regulation

It is not only uncertain objectives and intractable politics that make this such a difficult area for regulation. There is also the problem of different regulatory methods and techniques. One starting point is to look at the source of the funds, at where the candidates and parties get their money from, and how much is given by each source. Along these lines, scandals following large political donations have been a regular feature in UK politics, with much recent attention focusing on the role of wealthy individuals, companies or interest groups in bankrolling the leading political parties.

But although it is tempting to impose the ‘blunt instrument’ approach of legally imposed contribution caps, there may be problems with such a strategy. At what level should a cap be set without giving one party an advantage over another? How could it be done consistently with the need to respect the diverse party structures and forms of organisation? Although desirable in principle, can it be made to work in practice, or is the temptation for evasion too great and effective enforcement impossible?

This leads some to suggest that the focus should be on spending, with tight limits to reduce the demand for money, so-called demand side solutions. This may take the form of general limits (say on all forms of election activity by parties and candidates), or segmental limits (say on parts of election action). The latter might take the form a ban on the use of billboards for example, and thereby significantly reduce costs at a stroke of the parliamentary pen.

Although spending in British elections is dwarfed by spending levels elsewhere, there are still frequent concerns that elections are becoming too costly. But while further spending regulation is also tempting, there are problems here as well. At what point does the spending level need to be set to be effective? Are there not also problems of evasion and enforcement here too? If these can be avoided only by a cap on all party spending (general as well as election spending), have we not reached the stage where the state is too intrusive, and freedom of association too heavily compromised?

The other concern relating to both contributions to and expenditures by political parties is that if we regulate too tightly, there is a danger that we simply drive the money elsewhere. It will not go away but will end up in even murkier places that are even harder to regulate, partly because it is being spent by bodies and people not subject to the same legal and public scrutiny as political parties, and partly because the claims based on free speech will be harder to ignore. Nevertheless, tight regulation of political parties suggests that we at least need to be prepared to contemplate the tight regulation of others.

The list of others includes (but is not confined to) the media, whose influence over political debate, for example, can sometimes be subject to controversy. The connection between the mass media is most obviously symbolised in Italy by Silvio Berlusconi, the country’s biggest media mogul and longest serving postwar prime minister. Such an overlap in personnel is unusual, but more common is the close connection between those in office and those owning the media. Rupert Murdoch’s frequent contact with governments in the UK and the consequent opportunities for lobbying the government is an obvious reminder that media ownership brings the potential to influence.

Structure of the book

Above are some of the underlying concerns and issues dealt with in this book, which brings together a range of different scholars to examine the workings of a number of systems of political finance from a range of different perspectives. While the majority of contributions to this volume look at the United Kingdom, there are contributions from United States, Canada, Australia, and New Zealand, which draw on the experience of related problems in the various countries.

The volume not only brings together scholars from a range of jurisdictions, but also includes contributions from political scientists as well as lawyers. These contributions look at the developments in campaigning in practice, to investigate how well the regulations fulfil their goals, and look also at the impact of money on electoral success. These perspectives provide a valuable resource both in terms of the rationales for regulating political finance and the design of those laws.

Contributions

The first theme of this volume looks at the questions concerning political contributions. In Chapter 2, Jacob Rowbottom examines the role of institutional donations in British politics. While British political parties have long depended on companies and trade unions as a stable source of funds, their continuing role has proved to be a stumbling block for further reform. Rowbottom looks at the existing regulation of institutional donations, and considers the options for a regulatory framework which applies similar requirements to all institutions.

In Chapter 3, Keith Ewing looks at the role of trade unions in financing political parties. In this, he examines the extensive legal framework that regulates trade union donations and independent campaigns. Ewing argues that trade union activity provides a channel for grassroots participation and calls for the protection of the autonomy of such activity instead of an increase in the levels of regulation. These themes are developed in Chapter 4 by Joo-Cheong Tham, who emphasises the need for an approach to contributions which avoids a onedimensional approach to the question.

Expenditures

The second theme to be addressed in the volume is political spending. In Chapter 5, Keith Ewing and Jacob Rowbottom examine the operation of the national spending limits in British elections. In this chapter, the authors note that, within the existing system, a significant disparity in election spending exists between the major parties. While the regulations also cap spending by independent actors, relatively few organisations appear to be regulated by these provisions according to the records with the Electoral Commission. The growth of independent electoral expression on the internet is also identified as a potential challenge for the regulatory authorities. In the following two chapters, the focus turns to election spending at the local level.

In Chapter 6, Professors Johnston and Pattie review the controls imposed on local level campaigning in Britain. While much attention is paid to national political expenditures, they note spending at the local level is increasingly important – a finding that has not been lost on British political parties that have invested in marginal constituencies in recent campaigns. This study on local spending is therefore a welcome contribution and highlights an often overlooked area. Johnston and Pattie outline the various patterns in local spending, and show the shortcomings of the existing legislation. They explain how the British laws have been drafted in a way that provides much scope for higher local spending to take place outside the controls imposed on candidates.

Based on empirical work, in Chapter 7 Professor Justin Fisher explains how local campaigning in Britain has experienced a shift away from volunteer-based activities and towards capital intensive methods. This is explained on account of the decline in available volunteers and also the decrease in the cost of some of the expense-incurring activities. Fisher also finds that the impact of money on electoral success should not be simply assumed, that much depends on the way the money is spent, and any advantages secured can be challenged by opponents through free campaigning. For these reasons, he argues for caution before extending controls on local spending.

The role of other actors

The third theme to be addressed is the problem of ‘other actors’. The term ‘other actors’ is used broadly to refer to those other than parties and candidates. In Chapter 8, Andrew Geddis looks at the role of the media. While not participants in the election directly nor formally part of the campaign machinery, the mass media nevertheless play a crucial role in shaping the campaign, by helping to decide which issues will be most salient, through their own commentary and critique, and by providing a platform to certain parties and candidates.

A second key actor in the regulation of party funding is the regulator established to ensure that the law is complied with. This is the subject of Chapter 9, by Navraj Ghaleigh, which looks at the enforcement activities of the Electoral Commission. The Commission had a rocky start and has been heavily criticised in the past, though it appears now to be much more sure footed in the discharge of its responsibilities. This seems unlikely to be as a result of the ill-conceived changes to its composition in 2009.

As already mentioned, a third key actor is the judiciary, who have the capacity to make or break any regulatory system. In Chapter 10, Stephanie Palmer looks at the legal challe...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• List of contributors
• 1. Introduction
• Part I: The role of contribution caps
• Part II: The role of spending limits
• Part III: The role of other actors
• Part IV: Lessons from abroad
• Part V: State funding and party autonomy
• Index