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Sam, the following two posts on my own blog might be of interest to readers:

http://andrew-kennedy.blogspot.com/2006/07/get-your-sticky-fingers-out-of-my.html

http://andrew-kennedy.blogspot.com/2006/07/further-thoughts-on-state-funding.html

A CCHQ spokesman blamed conflicting advice about what constitutes a commercial loan.

I don't see how this is hard to work out. At the least, interest should be charged at a commercial rate, for which the Treasury's official rate of 5% could be used as a guide, and repayments covering at least the interest element should be made.

What's so tricky about that?

Nothing terribly difficult: they were never legitimate in the first place. Whether zero-interest loans, or straightforward gifts merely disguised as loans, the intent was always to bypass party funding rules.

If they were on commercial terms, then the parties would have gone to banks. Why go through all the hassle to hide loans if they would cost the same from more conventional sources of finance? Of course, you can't get preferential treatment from banks by giving them peerages.....

It's going to be a very interesting GE! The entire leadership of the three main parties, banged up in the 'Johnathan Aitken Suite' of Ford open prison. The PPB's will make fascinating viewing, for once.

"The prospect of political parties being funded much more by taxpayers' will seem increasingly tempting as a way to move on from this quagmire"

Increasingly tempting to whom, Deputy Editor? Not to this taxpayer, and not to the great majority of taxpayers, I'd wager.

This quagmire is entirely of the parties' own making. Their feckless and irresponsible management of their party finances is shaming. Getting the taxpayer to pay off the overdrafts would be deeply immoral and unconservative.

First of all wouldnt it be Michael Howard 'banged' up , as he was the leader at the time. On the question of why didnt they go to the bank, I did read somewhere that the banks had refused them any more money, so i suppose it was the only other source of money on offer.

I quite agree with Alasdair Ogilvy @ 11.04.


But I did get a laugh from David @ 10.57.

"I did read somewhere that the banks had refused them any more money, so i suppose it was the only other source of money on offer."

If that is true, then the true rate of interest to make this a "commercial" loan would have been much higher to reflect the credit risk.

Anything less than a substandard rate would clearly be a masked donation by subsidising the true market rate.

We all know they weren't real loans.

It is just that the Labour incompetence allowed the lid to be blown off the whole scam.

Now is is all out in the open both parties are panicking and knowing they can't get away with such behaviour again they are colluding to get the taxpayer to bail them out.

Should we see the day when the current debts of the Tory and Labour parties are cleared with taxpayer funds it will mark a clear acceleration in corruption within British politics.

james 10:31

Parties cant go to the banks because banks tend to want their money back, and of course there is the little problem of collateral.

Im against state funding firstly because youd end up with all the undesirables geting it ie BNP, Senn fein, NuLab and the liberals.

There is also the problem of NuLab, they have already said that they will not give up union funding in exchange for state funding.

Secondly because the politicians will always find a way of making rules work for them and try to damage funding to the other parties.

Thirdly once it has started it cant be stopped and the bill will keep going up.

Personally im suprised any conservative leader would even concider this as a realistic prospect.

No true Conservative leader would.

For Labour and the Tories, it has moved beyond any value base into pure, naked self-survival.

They overspent by millions, they can't get away with any dodgy deals to help balance the books.

Converting more 'loans' to donations just strengthens the case that they weren't real loans in the first place, but leaving them as loans leaves them with interest payments they never expected to keep.

So their dodgy financing being exposed has left them stuck between a rock and a hard place.

So how can they get themselves out of their own mess?

The only real solution (as they see it) is for them to steal it off taxpayers. You can see the temptation when they manage billions of pounds of our money, why shouldn't they 'use' a few million to balance their own books, in the interests of "transparency"?

However this is the temptation of corruption. The same temptation anyone faces who has a role that gives them trust of other people's money.

It is not the job of taxpayers to bail out political parties who can't balance their own books, but want us to trust them to balance the country's books.

Remember this is our money not theirs. This seems to have been forgotten, or at least conveniently ignored.

It will be simple theft if taxpayers funds are used to bail out the current debts of Labour and the Tories. No new rules should involve wiping out their current debts.

I know this party funding is a hot topic, and people do seem to have taken entrenched views on it, and I know this has been mentioned before. In the best of all possible worlds, party funding would not be a problem. Citizens would join their party of choice in droves, they would be active, they would contribute financially.So we wouldn't even be having this discussion, but they don't, they won't. we are.

If it comes to the crunch, and all three major parties are reaching a consensus on this issue, then we must ensure, we have a say.

Party funding must be placed into the hands of an independent body. If for instance, it was to be decided to make a £2.0 per voter award to a political party, it must be placed on the ballot paper whether you wish £2.0, to be contributed to the party of your choice.

I know all the arguments against, I agree with most of them, but we live in the world we've got, not in the world we want.

I'm against the state funding of political parties because they're just voluntary associations of private citizens pursuing their (supposedly) common political objectives, and should never be elevated to the status of public institutions.

If a political party goes bankrupt - tough, it should have sorted itself out and got more members and donors. I'm appalled that Cameron is even considering the legalised theft of taxpayers' money to keep the Tory party going.

" ... we live in the world we've got, not in the world we want". The "world we've got" has been created by the three main parties, and now we're supposed to pay them to carry on degrading our democracy?

Where does all this money go to though? How on earth could you make a case for state funding when there is such a massive waste of money by political parties. I certainly wouldn't like to think my taxes are going towards tit for tat billboard adverts.

The major parties will just have to draw in their horns and live within their means, because the public will never accept state funding.

"I did read somewhere that the banks had refused them any more money, so i suppose it was the only other source of money on offer."

Yes just how much did George Younger in his days at RBS loan the Conservatives ?

I'm against the state funding of political parties because they're just voluntary associations of private citizens pursuing their (supposedly) common political objectives, and should never be elevated to the status of public institutions.

No they are organised conspiracies against the public.

Just look how much Kohl salted away in Swiss accounts in addition to State funding, and how much Mitterand paid Kohl through the Leuna Privatisation...............and guess what happened to lots of files when Kohl left office ?

Then read up on Kohl and Friedrich-Karl Flick and the suitcases of cash Kohl would collect from this billionaire back in 1982............State funding will not stop corruption..............it just gets much much worse...........

Read these links and see how democracies can be bought

http://multinationalmonitor.org/hyper/issues/1984/12/strawn.html

http://www.aicgs.org/analysis/at-issue/CDUAffair.aspx

http://ww1.transparency.org/working_papers/country/german_paper.html

I'm opposed to state funding - it would remove the incentive from Parties to actually raise their own funds!

However the present situation is a mess. The PPERA (Political Parties, Elections & Referendums act)was brought in by Labour to supposedly "clean up" the situation - trouble is it is untried (and inevitably vague)legislation so everybody (incl Labour who brought it in) has been pushing it to see what they can get away with! Until the courts give some definitions as to what the law actually means (or the Act is improved) the situation will continue in chaos - which is bad for us as well as everybody else. This is the trouble with ill thought through legislation that is trying to make a political point rather than sensibly deal with a problem.

I'm not sure the current arrangements are a mess at all, it is just the electoral commission had allowed some trust to come into the situation which has been abused by Labour and the Tories.

The rules are there for transparency, and the big 2 parties found what they thought was a sneaky way to hide their donor's identities.

And remember it would seem that the Tories were doing this first and Labour copied, but copied in their usual incompetent way which led to its discovery.

It would follow that all that is needed going forward is a clear legal requirement to announcement the source of all income no matter how it is structured.

Let's not lose sight of what has happened; Labour and the Tories have deliberately abused the spirit of the law to hide the source of income from us.

Any extension of state funding of political parties is simple corruption.

There is no case force us taxpayers to bail Labour and the Tories out of both their current financial mess and their falling income.

Personally I think anyone ought to be able to donate anything they please to parties. Keep it all in the open so that it would be difficult to be corrupt without making it plainly obvious and getting voted out.

I think that far too much money is spent on elections in any event and would suggest that there be a cap to such expenditure. That might reduce the amount of personal invective which is seldom amusing but is generally off-putting to the average voter.

I don't think a cap on spending would work. It would simply present a new set of rules for parties to find their way around (most likely through the advent of US style Political Action Committees).

You ask what we should do to prevent a consensus developing on state funding.A carrot and stick idea might work.What about a Conhome campaign to significantly increase the cost of membership to say £25-30p.a. if no increase in state funding is accepted by Cameron conversely if it is Conhome to launch a campaign against it with a petition to be signed by most of the activists who post on here publicly refusing to raise a further penny piece if we are paying through our taxes.Certainly I would refuse to raise any funds at all in future and would probably consider whether I could be a member anymore.

It would be interesting to see how the lenders/donors have treated the loan interest/gifts for tax------do they declare either and AT WHAT TIME?

This is an important thread. Corruption will seep into any system if people are involved.

Best to go for a transparent, broad-based funding model

OK you file them in the SG&A line under "Consulting Fees"; "Marketing Expense"; or capitalise them into "Project Costs" for a new building..............

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