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A golden moment for political funding reform could be about to slip by

Lost in the outcry over the Lord Sewel affair was an announcement from the Committee on Standards in Public Life calling for the renewal of talks among political parties on party funding reform.

The story is not new. In the two most recent general elections, seeking a consensus package on party funding reform was listed in the manifestos of the (then) three largest parties.

Alongside this, enacting a version of the Hayden Phillips Review on party funding was one of the so-called “red lines” in the coalition negotiations between the Liberal Democrats and the Conservatives. Considering inter-party talks have repeatedly broken down, would negotiations in this parliament be any different?

Why reform, why now?

Polling has consistently shown that the British public believe that large donations buy political favours. However, as leading experts have argued, the public are an unreliable barometer on this subject.

One of the main reasons for the lack of movement on party funding reform is that although the public has the view that influence can be bought, people in no meaningful way support the introduction of significant state funding to offset the loss of revenue from a cap in donations. Indeed, the recent outcry over a 10% pay rise for MPs is perhaps instructive of the public reaction if this were to happen.

Will reform be benched? UK Parliament, CC BY-NC-ND

Public opinion is only ever likely to be on the side of reform in the midst of a scandal, which is pretty much the worst time to be making a major policy reform. It’s like trying to build a house in a hurricane. You’ll either have to rebuild the whole thing or start again from scratch.

Union ties

Another important aspect of these discussions is how to reform party funding without irrevocably damaging the historic and fundamental link between the Labour party and the trade unions. Indeed, it was disagreement on this that proved instrumental in scuppering previous negotiations.

However, a by-election in Falkirk – following a disagreement in The Strangers’ Bar – was beset with allegations of vote-rigging. This led then Labour leader Ed Miliband to call for a major review of the union relationship – accepted by the party in early 2014. The “go button” on party finance reform had been pressed. By effectively endorsing “contracting in” to the political levy and union members consenting to a portion of this going to Labour, a key institutional stumbling block had been removed.

Indeed, in the heady pre-election days these reforms could have been considered Ed Miliband’s very own Clause IV moment. If only the outcome on May 7th was different …

The rocky road to reform

But it wasn’t, and in the first Queen’s speech the Conservatives announced that they would be introducing trade union legislation that would include, amongst other things, the “opting in by union members to contribute to political funds”. Labour’s interim leader Harriet Harman accused Cameron of “rigging the rules” by enacting these reforms. It certainly seems to break with the unwritten understanding at Westminster that no party would introduce partisan party funding legislation.

But in many ways the source of this legislation can be traced to the reforms made in the wake of Falkirk by the Labour Party. It seems to have been a rather large strategic error on the part of Labour to essentially throw away their biggest bargaining chip.

Nevertheless, if the Conservatives are serious about their manifesto commitment of continuing “to seek agreement on a comprehensive package of party funding reform”, there is further evidence that it needs to happen sooner rather than later.

Banner issue. DncnH, CC BY

When discussing his review Sir Hayden Phillips noted:

It was made worse as, during September and October, the polls began to move against the government and a much heralded early General Election was not called. I felt this left our work rather stranded, not in the ‘too difficult’ box, but in the box marked ‘no longer a pressing priority as we have other things on our minds’.


The real stumbling block is one of timing in what promises to be a packed political schedule, even with the security of a five-year parliament. The Labour leadership campaign has already been bruising for the party, and at some unspecified time (“by the end of 2017”) there will be a (no doubt bruising for both parties) referendum on membership of the EU.

This will be followed at some point by a Conservative leadership election, followed shortly after by a general election. It becomes quickly clear that it is unlikely that political parties will be keen enough to make the time to push through decisions that are likely to prove unpopular with the electorate.

This all suggests that if the door to meaningful party funding reform remains open in this parliament then it is closing and closing fast. The current institutional climate seemingly represents a golden opportunity for reform. We would do well to consider Charles Dickens – perhaps it is both the best and worst of times.

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