Wednesday, March 28, 2012

The Conservative donor scandal shows why public funding of all candidates at elections would save taxpayers a fortune

I’m about to say that all candidates at elections should have their campaigns publicly funded and that we should make taking private political donations a criminal offence. This usually brings on the ‘not a penny more of my money for politicians and political parties’ response. I can understand why, but this response ignores the fact that by paying that money you would save 10 or 100 or 1000 times as much, because as long as parties can take private donations the super rich and big banks and companies will keep on being able to buy political influence with which to get themselves big government subsidies – which mean higher taxes or cut public services for taxpayers – and big tax breaks and toleration of tax havens – which mean the same.

When someone very wealthy or a big bank or company donates to a political party’s campaign funds they are usually making an investment. By funding a party for £50,000 or  £250,000 they may well end up getting subsidies or tax breaks of millions, tens of millions, hundreds of millions, sometimes even billions – or deregulation of their industry which lets them make big profits in the short term at the cost of a crisis and recession in the long term, like the financial crisis and subsequent recession, caused by banks and hedge funds being able to lobby for deregulation with the aid of big donations.

A cap on private donations to political parties or to candidates’ campaign funds will leave lots of loopholes. Where it’s been done in the US the billionaires and big firms just split a big donation up among 10 or 100 or 1000 employees to get round the cap.

The only way to avoid loopholes and end the influence of big money on politics is to have a strictly limited level of public funding of all candidates in all elections – enough to get one single colour, double sided A4 election communication leaflet printed for every household in the constituency, ward or list area, plus enough to run a website and maybe petrol costs for canvassing.

One of the reasons the government hasn’t re-regulated the financial sector properly is that donations from banks and financial firms to the Conservatives have doubled since 2005 (according to research by the Bureau of Investigative Journalism).

In addition we’d need a ban on elected officials and civil servants who are regulating an industry being employed by any company in that industry for say 5 to 10 years after leaving office – and similarly banning anyone employed in an industry regulated by a government body from being in any elected or government body involved in regulating that industry for the same period. This would eliminate the “revolving door syndrome” in which big companies buy influence with government by offering paid employment or cushy jobs to people in government who do them favours.

Then make it a criminal offence for any elected official or political party to accept any donations to their party or election campaign – and similarly a criminal offence to break the rules on ‘revolving doors’ between government and business.

That might all cost millions at each election, but would save between hundreds of millions and tens of billions between elections.

The big parties will be opposed to this, because it would eliminate their funding advantage over small parties and independent (non party) candidates.

We can expect that the Conservative donations for access scandal will lead them to suggest a ‘reform’ which would benefit them – one putting a maximum cap on donations from organisations, but not from individuals, aiming to reduce trade union funding to the Labour party while maintaining their own donations from big banks, hedge funds and some of the very wealthy.

Labour and the Conservatives and Lib Dems will all keep suggesting greater transparency – making large donations known to the public through the register of members’ interests. That would be an improvement, but wouldn’t eliminate big money’s influence on politics, it would just make it better known.


Garylanta said...

Great article, I agree with your point. To take private donations out of politics would surely make for a fairer democracy.

calgacus said...

Thanks Gary. Have had a read at your blog post on the same subject and left a comment too.