Liam Fox has just confirmed on BBC1's Politics Show that the Conservative Party will propose a cap on individual donations. The former Tory Chairman told Jon Sopel that the cap would be lower than the £100,000pa proposed by ConservativeHome.com (before the current scandals broke on 22nd February). David Cameron is expected to announce comprehensive proposals tomorrow. He will write to Ming Campbell and Tony Blair and urge a cross-party consensus.
Such a move would be confirmation that David Cameron is determined to 'stand up to big business'. It could also force the Labour Party to cut its ties with 'big union' donors. The lower the cap the greater will be the incentives for the political parties to create a diverse funding base made up of mass connections.
The emphasis must be on 'mass connections' rather than 'mass membership'. The days of mass membership political parties are over. The Conservative Party should lead the way in raising money for single-issue campaigns and individual candidates. David Cameron could, for example, turn his campaign on climate change into a fundraising effort. Other campaigns could be run on matters of concern to small businesses, churchgoers and sports enthusiasts.
Liam Fox hinted that some compensation from the taxpayer might be necessary if a cap is introduced. If such "compensation" is introduced it must be proportionate to a party's success in raising funds from small donors. State funding should not be decided by insiders in the interests of incumbent politicians.
1.25 UPDATE: Iain Dale is unimpressed with the idea of a cap on donations:
"Tomorrow the Conservatives will outline plans to 'clean up' the system. One proposal will be to limit donations to a figure probably under £100,000. I look forward to hearing where they think they money will come from to make up the shortfall... I suppose symbolically it would be quite appealing for David Cameron to stand up and say "I am announcing today that the Conservative Party will no longer accept any donation of more than £100,000." He would be cheered by the electorate and it would reinforce his 'change' agenda... But on the other hand, think of the message this sends to those donors who have kept the Party afloat in the past through their generosity. If Michael Ashcroft had not been around during the Hague years the Party would have gone under. It's as simple as that."
Guido's take on this news notes the possible gains to the conservative movement of a cap:
"The effect of this will be that non-party organisations will get funding (as with political action committees in the U.S.). Effectively political funding will be diversified and less controlled centrally by the parties, this can only be a good thing. The situation where the Labour party is funded and controlled from within No. 10 is just unhealthy."
Nice to see Liam Fox on TV - he backs up what George Osborne was saying this morning, the Conservative response is going to be radical (thank goodness) and hard for Labour to swallow, as it will mean the end of the free handouts from the unions. Unfortunately it probably means the Labour party will be bailed out by the taxpayer and won't go bust.
Diverse funding streams and individual issues are a good way to go and will encourage more people to give more money as they can see where it's going. It will also help to build the conservative movement that is talked about on this blog from time to time.
When I recently joined the party I was asked where I wanted my extra donation to go and I selected 'Social Justice' so the beginnings of this thinking were in place before Blair's slush fund became an issue.
Posted by: kingbongo | March 19, 2006 at 13:20
It's obvious where this is going and equally highly illustrative of the practical import of a Cameron-style government: MORE STATE INVOLVEMENT.
In other words: the State is going to restrict people's ability to express themselves and give as much money as they would like. It thereby restricts free speech. The obvious solution and where it will end up thanks to the anti-liberal insticts of Cameron is state funding.
Yet another illustration to show how Compassionate Conservatism=Socialism.
Anyway, on current trends in the polls it's quickly becoming clear that Brown is going to coast to Labour's fourth consecutive victory, so it's all pretty irrelevant...
Posted by: Rebel | March 19, 2006 at 13:32
Absolute nonsense Rebel.
Why - it could be said - should government stop a big business cutting its prices in a predatory fashion to force a small firm out of business? That, on your argument, could be said to be a restriction on a company's ability to operate freely. In fact it is a justified restriction (that adam Smith would have recognised) that enlarges freedom for others.
A cap on individual donations limits a big donor's freedom in order to ensure other voices are also heard.
Posted by: Editor | March 19, 2006 at 13:36
Are we proposing something that we will do ourselves whether or not it's legally enforced? If we really want to come across as ethical, we will impose ethical standards on ourselves, and not just make proposals that one day may or may not be agreed by the others.
For an interesting debate on the Tory party's own issues, may I recommend the other thread, on the £276,000 part-timer Steve Hilton.
Posted by: buxtehude | March 19, 2006 at 13:53
"some compensation from the taxpayer might be necessary if a cap is introduced. If such "compensation" is introduced it must be proportionate to a party's success in raising funds from small donors."
It may be all well and good for taxpayers' money to be used in this way if it limits corruption. But why should public funding be used to finance the BNP, or any other odious party that might arise in the future? If this State 'compensation' were implemented, and the BNP became increasingly successful in raising money from 'small donors', it would raise clear ethical issues. Not least would be the State sanctioniong of what is politically acceptable or not.
Posted by: TT | March 19, 2006 at 14:12
This is both wrong in principle and politically stupid.
For some reason, probably due to the cyclical nature of politics, the media has decided that they want to get Labour on this. They are almost completely ignoring the fact that the Conservatives have had one recommendation for a peerage refused, and that we took out more in loans. We should sit back and watch the Labour Party implode, not make opportunist announcements which only invite srutiny on our own practices.
It is also politically stupid becuase the Labour Party are going to have serious problems fundraising at the next election. With membership at around 180,000 and falling, it is no wonder they had to rely on rich businessmen. But who's going to donate now? Those who donate in return for honours know that this is much less likely to happen now, and others will be put off by the whole controversy and the feeling that Labour has let them down. We may not be rolling in money but we'll sure have a lot more than Labour. So why on earth let them off the hook by proposing state funding! There is a reason that Reid, Hewitt, Prescott etc. are advocating this - because they realise Labour now need ithe money. They didn't try and introduce it when we were in deep financial trouble in the late 1990s.
And ideologically it goes against what Conservatives believe. People are going to be prevented from spending money as they see fit and instead be made to fund parties by an interfering state. Higher taxes, less freedom, more state control - how on earth can we suppot this? And what about the inevitable new loopholes e.g. donating to thrid party groups instead, and all the problems this will bring. State intervention doesn't work.
It's bad enought that we have to sell out on existing socialism in this country (eg no more selection) but it is inexplicable that we want to introduce more.
Posted by: Tim B | March 19, 2006 at 14:57
Not least would be the State sanctioniong of what is politically acceptable or not.
Democracy is about promoting the will of the people, not shoe-horning people into three no-size-fits-all parties.
I am sure many people would be opposed to the current state funding of the Tories and the LibDems if they knew how much the taxpayer is being forced to bankroll them.
Zero state funding is the preference for me, but if it must exist, as Tim notes above, it must be done proportionally based on the number of small donors (I would suggest <1k pa to define a small-donor).
I would also suggest this "compensation" coming from a fixed sized pot to encourage more small donors, as it creates competition, where your success means less for your opponents.
As I noted on another thread, distribution in this way will enable small parties to have a fair share, and fair voice, it will force efficiency on the big parties and reduce the influence of millionaire donors.
For all the good words, we need to end the current siutation of the taxpayer being forced to prop up the big three parties.
If this State 'compensation' were implemented, and the BNP became increasingly successful in raising money from 'small donors',
"I may disagree with you but would die for your right to say it"
Yes, we may dislike BNP, Communists or any party (remember many will choke on the millions of tax payers money that ends up in tory party coffers) on the political fringes, but if these parties grow it must surely be because they are addressing concerns that other parties are dismissing?
Any system that using the scare-mongering BNP-argument to prop up the big 3 parties and make it even more difficult for the other small parties to grow has no place in a healthy democracy.
Posted by: Chad | March 19, 2006 at 15:04
I am glad that the Tories are going to put forward these proposals. It gives the impression that we are seizing the political agenda. If Labour take these proposals on board, it will look like it is the Tories, once again, that are delivering reform (which will be another major victory for Cameron's strategy).
If Labour dismiss the proposals, they will look like the corrupt "Party of the Past." It is only if they put forward their own proposals that we would be in danger, and then only if the public preferred the Labour proposals to the ones we are suggesting.
Posted by: Elena | March 19, 2006 at 15:14
"I may disagree with you but would die for your right to say it"
That doesn't mean that I should be compelled to pay for you to be rent broadcast airtime and print space to say it...
Posted by: James Hellyer | March 19, 2006 at 15:14
It gives the impression that we are seizing the political agenda.
I'd say the opposite, because it's in response to a scandal it shows that our agenda is driven by the media rather than by principle.
Posted by: James Hellyer | March 19, 2006 at 15:16
That doesn't mean that I should be compelled to pay for you to be rent broadcast airtime and print space to say it...
100% agreed James, but we are currently forced to do exactly that for the Tories and LibDems.
Zero state funding should be the aim, but if the state will provide "compensation" then it is only faitly to distribute it in a full proportional way, not just give it all to the biggest opposition parties.
Posted by: Chad | March 19, 2006 at 15:18
faitly =fair :-)
Posted by: Chad | March 19, 2006 at 15:19
100% agreed James, but we are currently forced to do exactly that for the Tories and LibDems
And we should propose to do away with that rather than say "let's do it more!"
I think it would be also be fair to force trade unions to divide their political contributions by their members' affiliations. At the moment, union members can opt out of contributing to Labour, but they can't opt in to contributing to any other party.
Posted by: James Hellyer | March 19, 2006 at 15:22
It appears to be a shrewd move by the Conservatives. However it will be best to wait until Cameron's announcement tomorrow, when all the details to come out before we can fully comment. Will there be increased state funding? Many including myself would most certainly not welcome that. Will the capping be enforced by legislation, or is Cameron suggesting a cross party voluntary agreement, which I think would be a very good idea.
The good thing is, that the Conservatives are no longer silent on this issue.
Posted by: Rob Largan | March 19, 2006 at 15:24
"Any system that using the scare-mongering BNP-argument to prop up the big 3 parties and make it even more difficult for the other small parties to grow has no place in a healthy democracy."
Chad, as much as sympathise with your utopian ideal, I incline towards James' view. Why should state funding be used to buy airtime or print columns for (say) the BNP, UKIP, a Muslim Party, a Christian Party, a Gay Party, or any party fused to a paradigm of singularity?
I agree it should not 'prop up' the 'big three', but therein lies the argument for no state funding; not its increase.
Posted by: TT | March 19, 2006 at 15:25
Again, I can only agree James, but the chances of the Tories giving up 4-5 million quid a year of Taxpayers funds, plus declaring loans, plus capping donations, is not likely to happen is it?
All I am saying is, if the tories are not prepared to give up all state funding, then they should at least agree that it should be distributed fairly amongst all small parties, based on their small-donor base.
Posted by: Chad | March 19, 2006 at 15:26
TT,
I hope it is clear that I agree with you 100%
But the chances of the Tories giving up their state funding is zero.
I don't have a utopian view, just a realistic one. It could be summarised as:
"If the greedy b******ds refuse to give up the hand-outs then they should at least be shared out in a fairer way."
Posted by: Chad | March 19, 2006 at 15:28
I need to know more - is there are difference between constituency party and central party funding? will we look to loans each election? is Party looking for tax relief on donations rather than matching funding? how is individual described?(ie will we see separate donations from Lord & Lady Kalms, Lord & Lady Ashcroft?), what are the boundaries between a political party and a supportive organisation( would Committe to Elect a Conservative Government be a separate organisation if it had no officers of the Conservative Party on board though composed of members of the party?) etc.
In 2004 Central Office party expenditure was around £26m - Short money & grants was £4.2m, membership only £0.8m, other abour £1m, £14m from donations so £6m was loans I presume. So assuming expenditure over next 5 years averaged at £30m we would look at an average funding (subscription levy plus donations) per member of £120 p.a - even if we took out Short money/grants it would be about £100 average.
If proposal is matching funding then we would be looking to raise £12.5m per year - hope our Treasurer has identified 500 or so individuals/companies to give us £25k average per year otherwise its £50 per member for CCHQ alone (and we'd expect to have clearly explained where the money is spent!)
Posted by: Ted | March 19, 2006 at 15:39
Well detailed Ted.
..or in short, the Tories will be forced to accept the tought economic political realities that the small opposition parties have to address every day.
It would seem from Tim's summary that Liam Fox is looking for more state funding on top of the existing 4.2 million a year to maintain their bloated costs.
No wonder there hasn't been much noise about supporting the Tax Payers' Alliance efficiency drive! Liam just wants a bigger hand-out to keep the good times rolling. that doesn't sound very conservative to me.
Of course, there is nothing to stop the Tories unilaterally giving up all their state funding, declaring their loan sources and capping donations. No chance of it happening though.
Posted by: Chad | March 19, 2006 at 15:45
off-topic, but taxes have hit anall-time high
http://www.timesonline.co.uk/article/0,,2087-2092829,00.html
and cameron is still too timid to present us with tax cuts.
long live the "stability" of polling around 33%!
Posted by: Rebel | March 19, 2006 at 15:51
Editor:
Yes, we fundamentally disagree, you've bought into the collectivist mindset, I'm actually a Hayekian defender of traditional liberties
cangovernment stop a big business cutting its prices in a predatory fashion to force a small firm out of business? That, on your argument, could be said to be a restriction on a company's ability to operate freely.
Unlike you I don't think there is such a thing as "predatory pricing". As long as government isn't erecting artificial barriers to entry, let the big businesses cut their prices all they want. What you advocate is socialism. Period.
I am starting to understand however why like you Cameron so much!
Posted by: Rebel | March 19, 2006 at 15:55
I dislike this now seemingly frequent use of Guido as a source of opinion.
Posted by: Chris Palmer | March 19, 2006 at 16:03
Cameron has made a good move, This is not opportunistic, but working as a party with the solutions. Labour are still in the scandal, while the tories already have the solutions coming.
State funding may be the only way to ensure that corruption doesn't become too prominent. However, I don't see how capping donars can help either.
Posted by: Jaz | March 19, 2006 at 16:13
Liam just wants a bigger hand-out to keep the good times rolling. that doesn't sound very conservative to me.
Do you perhaps think he was repeating the collective line rather than laying out his own policies?
Posted by: James Hellyer | March 19, 2006 at 16:56
No, but then neither of us knows what he is thinking just what he has stated which I based my response on.
Of course it would be the height of hypocrisy if he was going on TV to promote a new tory initiative that he does not support.
Posted by: Chad | March 19, 2006 at 17:27
Of course it would be the height of hypocrisy if he was going on TV to promote a new tory initiative that he does not support.
That's what you have to do if you are in the Cabinet or Shadow Cabinet. Once a decision has been made, you abide by it in public.
Posted by: James Hellyer | March 19, 2006 at 17:31
That's what you have to do if you are in the Cabinet or Shadow Cabinet. Once a decision has been made, you abide by it in public.
No James, there is always a choice.
If you disagree on principle you can resign, but if you are more comfortable with your snout in the trough, you keep quiet.
Posted by: Chad | March 19, 2006 at 17:35
No James, there is always a choice.
Every issue isn't a resigning issue. If it was there's be no Shadow Cabinet (or Cabinet) by tea time!
Posted by: James Hellyer | March 19, 2006 at 17:38
Of course James, I agree, and perhaps we are going off topic a little.
Whatever Liam *believes* he is promoting a policy of increasing state funding of the Tory Party, something that many Tories here are strongly opposed to on principle.
If the proposal includes increased funding for the Tories and LibDems without any proportionality for the other opposition parties, then it would show that the official CamCon position is one as stark odds with conservative beliefs.
Posted by: Chad | March 19, 2006 at 17:43
During his leadership campaign, didn't Cameron say something to the effect of "I don't think anybody wakes up everyday wishing the state was smaller"?
How wrong he was. It also shows his fantastic sense of self-importance, as he must surely by aware that most party members (and people in the country) do not want a state that controls their daily lives.
If we do badly in the local elections, how long has he got?
Posted by: CDM | March 19, 2006 at 17:55
A recent article from the Indy...
"He said: "I think I am doing some very important things in terms of reforming my own party.
I have suspended every selection in every constituency. I have asked everyone on the candidates' list to reapply."
"My own party". Since when did it become his private property?
Posted by: CDM | March 19, 2006 at 18:05
Like Ted I need to know more.Unlike Jaz 'though I think it is entirely opportunistic as Osborne & Co probably realise that we have some difficult questions to answer too and are trying to create some kind of smokescreen before those questions are asked.
Very very disappointed that Fox would even consider the idea of State funding.I'd thought that would go against everything he believes in.Perhaps the old adage is true every man has his price!
Also sorry to see that the general consensus is that mass membership of our party is a thing of the past.Perhaps if the party actually considered the novel idea of giving something back to members like involving them in policy discussion rather than relying on them as no more than a source of revenue things might change. I'm sure the well paid genious Steve Hilton can be better used in thinking up ways of increasing party membership rather than wasting his time devising absurd Ad campaigns.
Posted by: malcolm | March 19, 2006 at 19:42
Look, the simple truth is this: no matter what legislation one drafts, money gets into politics one way or another. What one would (perhaps optimtically) hope should be evident from each new generation of campaign finance "reform" here in the US is the the only thing that attempts to regulate the finances of politics really do is generate ever-more-complex creative accounting. That means that it achieves practically the opposite of its intended result: less transparency, and therefore less accountability.
While it might be politically unpalatable to say so, the best system would eliminate all caps, on giving and on spending, and focus regulation instead solely on ensuring full disclosure as to sources.
Posted by: Dave J | March 21, 2006 at 04:59