Slicing the donations knot

The Paul Richards column

The news that the Tory Party will be hosting a cash-for-access dinner at their conference next month provides the excuse to recycle some old jokes. If it costs a grand to sit next to Eric Pickles, how much would it cost to not sit next to him? It also gives us an excuse for the likes of the pugnacious Michael Dugher MP for some old-fashioned Tory-bashing. The coincidence of Asil Nadir, Tory donor and fugitive from justice, arriving in London reminds us of the good old days when the Tories took money from just about anyone. The late great Tony Banks told the Labour Party conference the Tories were ‘funded by foreign fascists and run by dickheads’.

Before we get too carried away, though, we should remind ourselves that the Labour Party organises identical events where people pay for dinner on the promise of a senior politician on their table. Lest you think swanky fundraising dinners are a product of that evil Tony Blair, remember that the saintly Labour leader John Smith hosted one the night before he died.

Such events play on the idea that sitting next to a minister at dinner will somehow give business leaders great insights and information of use to their business. In reality, any business leader with a legitimate cause or concern can pick up the phone, speak to a civil servant, and arrange a meeting with a minister or MP. Any citizen can walk into Central Lobby and make a case to their MP. That’s why it’s called lobbying. You don’t need a thousand pounds.

Unfortunately, the political parties do need the thousand pounds. They need many thousands of pounds, and the swanky dinners will continue for as long as they do.

The answer lies in reform of the system of party funding, with greater state funding of parties. Like the Schleswig-Holstein Question, which Palmerston suggested had been understood by only three people, one dead, one mad, and himself, and he’d forgotten, party funding is a hard debate to understand. Sir Haydon Phillips, former permanent secretary, chairman of the National Theatre, the Salisbury Cathedral Fabric Advisory Committee and the Marlborough College council was asked by Labour to investigate party funding, and came away unable to slice the Gordian knot. The sticking point was trade union donations to Labour, which few outside the Labour family understand.

We already have state funding of parties. Oppositions receive the ‘Short money’ which Labour was generous enough to treble over its time in office. The Liberal Democrats were reliant on state funding, and fought to retain it after unexpectantly joining the government. Your taxes also pay for the special advisers working for secretaries of state. The argument is whether it is healthy to ‘nationalise’ political parties by making them dependent on the state for their finances, or whether they should remain voluntary associations.

If the Tories get their way, all of this will become academic. They propose to cap donations at around £50,000. That will have little impact on the Tories, who know hundreds of people with £50k in their back pockets. It will destroy the Labour Party’s funding base, which relies on big donations from a handful of trade unions. The party is close to bankruptcy already. A tough anti-union law would reduce the party to the level of a small charity. The Tories have shown that they are prepared to act in a ruthless partisan way with their proposals to scrap dozens of Labour parliamentary seats. They’ll do the same to outlaw union donations. Crossing our fingers and hoping for the best won’t get us through. Neither will waving placards saying ‘defend the union link’. The new leader, along with the newly elected treasurer and NEC, will need to win back those high-level donors who have deserted us in recent years, and massively increase the amount of small donations to Labour. The surge in membership has been a welcome bonus. But the hard truth is that the new Labour leader will need to get his dinner suit out of the wardrobe and start hosting some thousand-pound-a-plate dinners of our own.

Paul Richards’ new book Labour’s Revival is out this September.

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3. The end of the popular movement?