ConservativeHome's ToryDiary

18 Doughty Street launches a new website and a whole new approach to political campaigning

18 Doughty Street has a new website this afternoon.  It's not 100% finished - there'll be additional features rolling out over the coming fortnight - but it's a major improvement on the previous version.  The new site is overviewed here (in text form) and by me here (in video form).  The Talk TV section is much easier to navigate and there are two new sections - one dedicated to news and another to campaigning.

The Campaigns HQ section will produce a short political commercial each and every week.  The focus will be on issues neglected by the mainstream parties.  The ads will launch at 11am every Tuesday lunchtime and the first on tax will be launched virally next week.  The second campaign focuses on the possibility of still more state funding of political parties.  The innovative characteristic of these weekly campaign commercials will be the democratic, blog-led way in which they are designed.  That process is described here and you can submit your ideas for the first campaign here.

The Phillips compromise has to be good for the Party, as well as the country

10 Downing Street is reportedly hoping the Conservatives will - through Sir Hayden Phillips' review - accept capping constituency campaign expenditure in return for the unions voluntarily ceasing to give large donations to the Labour Party. This potential deal is a little one-sided.

There is of course a cap in place already but it only counts within four weeks of election day. Conservatives usually outspend the other parties in the period before this by having more active and affluent Constituency Associations, and by receiving funding from safe seats, and donors such as Lord Ashcroft who orchestrated a large private funding scheme for marginal seats at the last election.

Labour's National Executive Committee published its review into party funding in June, specifically mentioning Ashcroft's target seat support as something a local cap could curtail. The only justification being that it didn't make sense to merely cap four weeks out of a four year electoral cycle. Downing Street is also hoping that spending caps will start as soon as candidates are selected, thereby reducing the impact of the Conservatives choosing some candidates very early. Bizarrely there is also mention of only applying such caps to the 100 most marginal seats.

The Labour Party's position seems motivated purely by political expediency which in itself is hardly shocking, but at least the Conservative proposal to cap individual donations will be healthy for democracy. If there is to be a cap on such donations, then why limit how much a campaign can raise from diverse sources and popular support?

Deputy Editor

John Redwood calls for an end to 'big money politics'

There's a good article from new blogger John Redwood in today's Telegraph calling for an end to big-money politics.  Like ConservativeHome (but unlike Lord Ashcroft) the former Welsh Secretary agrees with the idea of a cap on individual donations and he opposes state funding compensating for the end of Ashcroft/ Sainsbury-size donations.  Some commentators - like my good friend Iain Dale - oppose a cap on individual donations because they do not think that small, retail funding could ever cover the lost money from big donors.  I'm not so sure about that in the long-term but I've always thought that political parties spend wastefully and do not need to raise as much money if they were more disciplined spenders.  Mr Redwood lists some of the parties' existing favourite spending projects and is sure that we could do without them.   He and ConservativeHome agree that there are big advantages in stopping all big state/ big business donations so that political parties are forced to reconnect with smaller individual donors.

There are two areas where ConservativeHome and John Redwood disagree:

1. John Redwood calls for a £7.5m cap on general election expenditure.  I disagree with this limitation although it will probably be some time before any party has a retail funding operation that could raise such a sum.  I believe that parties should be free to spend as much as they wish if they can raise it from a diverse number of UK voters.  The incumbent parties - through existing Short money funding and MPs' annual allowances - already have huge sums of money available to them to entrench their positions.  If an insurgent party could raise more than £7.5m from the electorate they should be able to spend that money on toppling the established parties.
2. John Redwood puts the retail fundraising emphasis on recruiting more members.  That's fine but is unlikely to be adequate.  The 'Bowling Alone' generation isn't going to join political parties in large numbers anymore but they will back individual candidates and single-issue campaigns on a more ad hoc basis.  These campaigns can and should be internet-based.  It is one of the disappointments of Francis Maude's time as Party Chairman that CCHQ has not delivered this fundraising operation.

David Cameron indicates that he won't compromise on donations cap

I went to David Cameron's CCHQ press conference earlier today and took my 18 Doughty Street camcorder.  The above video clip is of the Tory leader's remarks on political funding - in response to a question from The Guardian's Will Woodward.  Mr Cameron appeared to indicate that he would be willing to play hardball with Labour on the donations cap - a cap he has suggested should be set at £50,000.  Labour want an exception for trade unions and the Tories are resisting that.  Mr Cameron must know that extra state funding of political parties is incredibly unpopular with grassroots Tories and most voters.  The Tories may not be able to afford 'no deal on state funding' but Labour's financial plight is more serious.  The negotiations could get interesting...

New campaign against state funding of politics

The latest news from the Electoral Commission has exposed the parlous state of the main parties' finances (Tory / Labour).  It's easy to understand why - with such debts - the party leaders are conspiring against the public to increase state funding of political parties.  A new website has been launched by former Tory MP Phillip Oppenheim - nopublicfunding.org.uk - to make the case for parties to reconnect with grassroots sources of funding.  The website includes an excellent list of bullet point reasons to oppose increased state funding:

• "It is wrong in principle to force people to pay through taxation for parties they may not support
• The majority of the parties' central campaign spending goes on billboards, political consultants and telephone canvassing - more state funding would increase this type of unnecessary expenditure.

Cameron and Ashcroft are both wrong on political funding

BBC News is reporting that Lord Ashcroft has suggested that moves toward state funding of political parties are "nonsense".  In a House of Lords debate the former Tory Treasurer said that political parties should be prohibited from being able to further poke their fingers into the public purse.  It is, of course, the policy of a heavily indebted Conservative Party to bid for extra funding for political parties in return for caps, for example, on the amount an  individual can give to a political party.  CCHQ told BBC that Lord Ashcroft was expressing an entirely personal opinion.  The Tory Deputy Chairman confirmed the opinion he expressed over a year ago - in an article for The Times - that political parties should be free to raise money from anyone they deemed acceptable but must disclose any donations much more rapidly than at present.

ConservativeHome fears that both the Ashcroft and Cameron prescriptions risk separating political parties from the concerns of individual voters.  If parties can get their money from big business or big government they won't be forced to return to retail politics and grassroots funding.

Maude welcomes funding review

According to BBC Online Sir Hayden Phillips - commissioned by the Government to look into the funding of political parties - has set out four scenarios for the future of public funding:

1. minimal change
2. increased transparency
3. a cap on donations and
4. greater levels of public funding.

Francis Maude's response focuses on Labour's union dependency:

“We agree with the direction of Sir Hayden Phillips has set out thinking and will consider his options with care.  It’s clear that, if public funding for political parties is to increase, political parties must tackle the perception that donations can buy influence or favours. That’s why we support a cap on donations. The ball is now in Labour’s court.  For years the public has suspected that trade union cash buys Labour policy. It’s now time Labour severs its financial links with the trade unions.  Tony Blair’s position is so weak he cannot do this. So the pressure is on Gordon Brown to decide what is more important: cleaning up politics, or keeping the trade union bosses happy and Labour’s coffers full?”

All of the political parties are facing serious financial problems and are going to take any taxpayers' money they can to ease their financial problems.  Most voters object to any more state funding of political parties - particularly if it reinforces the detachment of political elites from grassroots members and local voices.

Francis Maude attacks Labour's increasing dependence on union funding

Latest figures from the Electoral Commission show that 74% of Labour's latest declared donations of £3.4m came from the trade union movement.  Francis Maude is unimpressed:

"Labour is now almost entirely dependent on the unions for funding. In return, they’re getting pet policies and bungs with taxpayers’ money. This sort of cronyism undermines our entire democratic process. That’s why we put forward proposals earlier this year to clean up politics, including a cap on political donations, whether from an individual, a company, or any other institution, including a trade union. It should come as no surprise that Labour has already rejected them out of hand.”

In the same press release CCHQ lists three  major policy gifts from Labour to the unions:

• "Under an agreement reached with the unions in July 2004, the ‘Warwick Agreement’, Labour agreed over 60 concessions, including the watering down of anti-strike legislation and additional Government funding for the unions. In return, the unions agreed to provide funding for Labour’s 2005 General Election campaign.
• Labour introduced the Employment Relations Act 2004 which created a £10 million ‘modernisation fund’ for the unions, with few conditions attached.
• Labour bowed to union pressure and shelved plans to force existing public sector employees to retire at 65."

Meanwhile the Conservative Party faces pressure to declare the source of historical loans.  Peter Watt, Labour's General Secretary, told BBC: "It appears that the Tories have only declared loans taken out in the last quarter. In addition to this they still have not declared who their overseas lender was."

Labour isn't fit for its purpose

Sir Jeremy Beecham, Chair of Labour's NEC, admitted quietly on Friday that donations to Labour had "disappeared" since the cash for peerages scandal was uncovered. He said he was considering requesting the Phillips inquiry to ask for more government money to cover Tony Blair's security at all Party events.

The Telegraph's front page features a starker story today:

• Labour may not pay September's wage bill for its 230 employees
• Labour MPs will be asked to cough up £1000 out of their salary
• Unions such as Unison were being leaned onto provide more money
• The Party's accounts are described as "woefully insolvent" by a senior accountant
• Lord Levy's fund-raising department is being disbanded, making several of its key employees redundant
• Voluntary redundancies are being sought amongst staff at its northern office in Newcastle

Labour deny the first three points, but it would be politically significant if Labour really is courting the Trade Unions for more money. Like government grants, their funding would not come without strings so we would expect more of a "true Labour" manifesto at the next election rather than a New Labour one.

Considering that the number of Labour Party members has more than halved whilst they have been in power, and the number of its Councillors dramatically reduced at local elections, its ability to put up a decent fight at the next election has got to be seriously questioned.

Conservative Associations were recently urged to raise annual membership subscriptions to at least £25 by January, although this would just bring them closer to the current membership rates of the other parties. Pointing out that the Conservative and LibDem accounts were hardly ship-shape, the Telegraph's leader warned of renewed calls for full state-funding of political parties:

"This is an idea that must be shouted down at once: rather than imposing an ethic of good housekeeping on the parties, it would merely encourage them to waste more of our money instead of their own. A better and far more popular approach would be for the leaders to agree that the whole edifice of British party politics must be scaled down for the general good."

Political parties do of course have a vested interest in funding themselves the easy way, but Conservatives should resist this. It would not only be staying true to our principles, but - assuming we can keep the faith of our own activists - it would stop a dying Labour Party being bailed out by the taxpayers.

Deputy Editor

Loan woes are not an excuse

The police investigations into party funding are getting increasingly serious:

"The Tories are facing the threat of prosecution over allegations that they secretly banked a “soft” loan provided below bank rates in breach of electoral laws. The party also received loans from other supporters who did not expect them to be repaid as they would be converted into donations — another potential breach of the law." - The Sunday Times

The Conservatives have received up to 150 loans, and most of the people the police have interviewed so far have been Conservatives. A CCHQ spokesman blamed conflicting advice about what constitutes a commercial loan.

The pressure is increasing on Labour too, as it is revealed that they haven't paid back £436,000 worth of interest to Levy's secret donors:

"The police are expected to open a new front in the "cash-for-peerages" affair and to ask why the party has failed to repay the interest it owes to lenders, who include several millionaires personally nominated by Tony Blair for seats in the Lords." - Independent on Sunday

The prospect of political parties being funded much more by taxpayers will seem increasingly tempting as a way to move on from this quagmire. David Cameron has reiterated his interest in more state funding again in an interview with Jasper Gerard of the Sunday Times.

If you have any ideas on how to counter the emerging self-serving consensus on state funding comment here.

Deputy Editor

Anyone mind paying for Cherie's haircuts?

We know that political parties are in the red and we know that they waste money.  These are some of the other things we know...

• Only 25% of voters support greater state funding of political parties but all three of the main political leaders are open to greater state funding...
• 81% of Tory members oppose state funding but David Cameron and Tony Blair have had private talks to potentially release millions of taxpayers' pounds into the coffers of their parties...
• State funding has corrupted European politics but we are considering it for Britain...

What can we do to oppose state funding?  Please use the thread below to suggest ideas (and objections) and, in particular, suggestions for a Chameleon Army-style campaign we might be able to run against the emerging consensus at Westminster...

The TaxPayers' Alliance has an excellent post offering five reasons for opposing taxpayer-funded political parties.  Also see this on Guido Fawkes.

Voters reject greater state funding as solution to sleazy Labour

A YouGov poll for The Daily Telegraph produces the rather unsurprising finding that Tony Blair's government is now thought to be sleazier than John Major's was once thought.  In 1997 only 19% of voters recognised Labour as sleazy and disreputable.  62% thought it of the Conservatives.  Today just one-third of voters think it of the Conservatives but 63% think it of Tony Blair's New Labour.

Other key findings of the poll:

• 65% do think that Labour raised money by offering peerages for loans;
• Exactly the same proportion think Blair knew that this was happening;
• 82% think that Tony Blair has failed to clean up politics;
• Only 25% support greater state funding of political parties in order to try and clean up politics - 59% think it wouldn't clean up politics or they don't favour the move.

The poll coincides with a report in The Times which suggests that "The Labour Party has run up the biggest debts in its history at £27.2 million."  "Almost half," Andrew Pierce reports, "is owed to a dozen rich businessmen who are demanding repayment."

The figure is not quoted in the main poll but Simon Heffer - discussing 'Dodgy Dave's' EPP shift - reports that "51 per cent of the public say they find the Conservative Party untrustworthy."

Donal Blaney, author of the Laws of the Public Policy Process series on YourPlatform, uses this week's law to attack David Cameron's failure to deliver the "months, not years" exit from the EPP:

"These are now dangerous times because trust, once lost, is very hard (if not impossible) to regain. David Cameron cannot get away from the fact that a vast swathe of the Party's membership in the Commons, Brussels and in constituencies will feel badly let down by what has happened this week. It may even be the case that many on the Right who had kept their counsel until now on Project Cameron may no longer feel compelled to do so anymore."

Labour's NEC to review political funding

The Labour Party's National Executive Committee has today launched its review of the Party's position on party funding. They will be consulting Labour members and affiliates for two months and then putting together some proposals for their Autumn Conference.

This comes after a government review into party funding was launched two weeks ago headed by Sir Hayden Phillips (who also submitted a report on cleaning up the honours system for the Cabinet Office in 2004).

The main issues the review will look at are:

1. How to invest in democracy - Increasing funding of policy development, managing state funding of political parties and helping them engage with the electorate, possibly reforming "short money" (it mostly benefits the Conservatives).
2. Caps on party expenditure - Goes further than the Conservative Party's proposals by looking at caps at a local level, and capping annual spending rather than election-period spending. Mentions Lord Ashcroft's personal funding of some election campaigns as something this would curtail.
3. Individual donations - Whether to limit them, and how to close the "loop-hole" of non-party organisations such as America's 527 groups "bypassing" the system. Unclear as to how they would manage such control-freakery.
4. Affiliated organisations - The review seeks to make a distinction between "affiliated organisations" donating because of shared values, i.e. Trade Unions to Labour, and non-integral organisations donating because of finances, i.e. businesses to the Conservatives. Francis Maude has already attacked this position for "justifying the unjustifiable".
5. Compulsory financial system - How to enforce a mandatory transparent system onto political party's funding practices without excessive bureaucracy and restrictions on volunteers at a local level.
6. Foundation for Democracy - Advocates establishing a domestic equivalent of the Westminster Foundation for Democracy to independently adminster support for domestic, democratic institutions.
7. Tax relief on donations - Like ConservativeHome's initial proposals, the review recognises the public-spiritedness of donating to a political party, but hasn't ruled out giving it Gift Aid or charitable status rather than simple tax relief.
8. Devolved institutions - Leaves a question-mark on how the above proposals would affect European and local government, as well as independent candidates and single-issue campaigns.

There are some thoughtful suggestions here but too much of it has the potential to enshrine a big Labour party in the UK political process. It is positive about the role active citizens and political parties have to play, but at the same time could clip the wings of localised and grassroots political movements.

Deputy Editor

CCHQ launches fundraising campaign

With David Cameron at 37% to 38% in the opinion polls, CCHQ has chosen a good time to launch a funding drive across the whole party membership.

My invitation to give arrived in this morning's post.  The fundraising letter is posted on the right (click the graphic to enlarge it).

The heart of the appeal begins at paragraph three and all of the 'core vote' buttons are quickly pushed.  There is talk of...

"Labour have given new powers to the European Union"

"They have created Regional Assemblies which noone wants."

"Highest tax burden in British history."

"Huge damage on our pensions system."

"Foreign criminals... released onto Britain's streets rather than being considered for deportation."

Later on there are references to "a sustainable environment" and candidates "representative of modern Britain" but the letter is primarily negative and designed to get Tory activists to open their chequebooks.

I'll send off a small cheque but it won't be big enough to get me into one of the donor clubs that the mailing also advertises (image on right):

• A £2,000 annual fee will get you membership of 'team 2 thousand' - "a lively programme of drinks receptions, dinner and discussion groups" with the Leader and Shadow Cabinet.
• Also for £2,000 you can join The Entrepreneurs Forum.  The Forum meets in London's West End and in the City with leading industrialists and prominent City figures "to expose Labour's red tape, bureaucracy and excessive taxation".
• "Key players within the property industry" can become part of Lord Young's Property Forum for £5,000 and can then discuss property issues over breakfast.
• The Front Bench Club passports you into 'team 2 thousand' events but the £5,000 membership fee also provides "the opportunity to meet and debate with Shadow Cabinet Ministers at a series of private political lunches and receptions".

State funding rejected by 81% of Conservative members

Yesterday evening ConservativeHome published Tory members' ranking of international challenges.  Today we'll be publishing more results from the April survey.

We begin with a finding that Tory members reject the idea that a "major proportion of funding for political parties should come directly from the state" by 81% to 13%.

David Cameron and Andrew Tyrie have recommended that there should be increased state funding of political parties in return for a reduced number of MPs.  See here.

77% oppose public money for political parties

In the Guardian/ ICM poll, published today, only 20% agreed that public money should be used to finance political parties.  A whopping 77% thought it should not.

Yesterday, from the Electoral Commission, we learnt what the political parties spent their donors' money on.  Here is my colour-coded top ten of 'General Election expenses' which explain why voters don't trust politicians with their money...

1. Cherie's £7,700 hair bill;
2. Alastair Campbell's £47,000 consultancy bill (remember how AC had to leave Downing Street in 2003 after disgracing his office?);
3. £100,000 to convert a bus into the Prescott Express;
   
4. £299 on Star Trek suits (to ridicule Vulcan Man John Redwood);
5. £441,000 from the Tories for the Crosby-Textor firm of Lynton Crosby;
6. £3,500 for groundhog costumes for Tory workers to dress up in outside Labour's 'stuck-in-the-past' HQ;
7. £6,000 to run a 'Value for Money' press conference (my favourite!);
   
8. £3,638.35 on make-up for Michael Howard... and a little under £1,900 on make-up for Charles Kennedy;
   
9. £350 on hand-made shirts for Charles Kennedy and another £4,800 on five suits.
10. A £20+ bar bill at an Exeter hotel.
    

Five of seven new Tory peers were donors

10 Downing Street has announced the names of 23 new members of the House of Lords.  Top names include David Trimble as an Ulster Unionist peer and Bill Morris, former T&GWU leader, for Labour.

None of the Labour peers gave money to the party, Radio 4 is reporting.  Labour's big donors who were nominated either had their applications blocked or withdrew from the approval process (see the FT).

The new Tory life peers are:

1. Sandip Verma, former Tory parliamentary candidate.
2. David James, who oversaw Michael Howard's cost-cutting review of government spending.
3. Sir Sandy Bruce-Lockhart, Chairman of the Local Government Association and the author of the poverty-fighting Supporting Independence project when he was leader of Kent County Council.
4. Jonathan Marland, Tory Treasurer.
5. Mohamed Sheikh, chairman, Conservative Muslim Forum.
6. John Taylor, former President of the Party's National Union.
7. Rodney Leach, a leading supporter of the No Campaign.

A full list of peers for each party has been published by ePolitix.com.

Related ConservativeHome link: Options for Lords reform.

Labour gain and state funding loses in Populus survey

A Populus survey for this morning's Times confirms the pattern of recent polls that point to a modest slippage in support for the Tories.  The main two parties were level-pegging at 35% each in Populus' March survey.  Labour has now opened up a 2% lead.  The ConservativeHome Poll of Polls  now puts Labour up by 1.4%.  This finding comes a few days before Mr Cameron makes his first big speech to Tory activists since becoming leader - to the Party Spring Forum on Saturday in Manchester (from where ConservativeHome will be liveblogging).

Populus also offer some interesting findings on political funding:

• 79% support a limit on the amount of money an individual, company or union can give to a political party;
• State funding of political parties is opposed by 53% to 43% of voters;
• 54% to 42% support tax relief on "relatively small individual donations".

Messrs Blair and Cameron should reflect on these findings as they meet today to discuss a way forward on political funding.

CCHQ announces names of individuals who lent £16m

CCHQ has just released the names of individuals who have lent the Tories £16m.  A pdf of the full Francis Maude statement can be read here.

Here are four highlights:

• "Like all the main political parties, the Conservative Party has entered into loan arrangements to fund the considerable cost of campaigning. In the run up to and during the last General Election, the Party’s Finance Committee, Board and Party Leader were kept informed of the Party’s financial position.  The existence and extent of the loans has always been declared in our annual report and accounts."
• "We have been contacting lenders to seek their permission for us to make their names public. Today we are publishing a complete list of the individuals and organisations with whom we have loan arrangements, together with the amounts.  We are also writing to the Electoral Commission to confirm that we will share with them any relevant information or material.  In the last few weeks a number of lenders have turned their loans into donations, and their names will appear in the relevant returns to the Electoral Commission. We have also repaid around £5 million to lenders who did not wish their names to be disclosed."
• "Since David Cameron became Leader of the Party, we have seen a large increase in donations and more than 20,000 people have joined the Party.  When we report our first quarter’s donations to the Electoral Commission by the end of April we shall be reporting a total of nearly £8 million."
• The top four lenders: Lord Ashcroft, Deputy Chairman & former Treasurer (£3.6m); Johan Eliasch, Deputy Treasurer (£2.6m); Michael Hintze (£2.5m); and Lord Laidlaw (£3.5m).

BBC News 24 is reporting that (within the repaid loans) there were a small number of foreign lenders.  Although perfectly legal - as the loans were made on commercial terms - this will be politically sensitive and will frustrate Tory attempts to draw a line under the affair.

16.42 update: In an interview on '24' Francis Maude has just been repeatedly pressed on these foreign loans and whether they were on truly commercial terms.  Mr Maude effectively conceded that the party had received some foreign loans but that the lawyers Clifford Chance had inspected the contracts and were satisfied that they met Electoral Commission rules.  FM paid tribute to the people who had financially supported the Conservative Party - in an environment where, he said, Labour were "vindictive" to those who supported Tory causes.  He insisted that the Tories had been more transparent than Labour and were the only party to have proposed comprehensive reforms of political funding.  He noted that the Labour party had received £12m from the unions and that the Labour government had just spent £3m of taxpayers' money on a union modernisation project.

Media, Electoral Commission and Scotland Yard finally force disclosure of Tory loans

The Times: "The Tories will today name the rich benefactors who secretly lent the party £20 million as Scotland Yard widened its inquiry into the alleged sale of political honours.  David Cameron, the Tory leader, bowed to mounting political pressure and agreed to a demand by the Electoral Commission for complete transparency."

The Independent: "Mr Cameron has been desperately trying to persuade the anonymous millionaires who lent the party large sums for the last election campaign led by Michael Howard to allow their names to be released."

BBCi: "One lender, who had been told the list would be out on Friday, said the names were all familiar existing and former donors.  "None of the names will cause the party the slightest embarrassment," he told BBC News."

The Guardian: "According to Tory sources, Mr Cameron is asking many of those who lent cash to convert the money into donations to prevent the party's balance sheet going deep into the red, making it difficult to attract new cash. The last Tory accounts show the party already had significant loans in 2004 and was not paying commercial rates on an average of £6.8m of loans."

"Anyone who has been involved in the selling of peerages should be shaking in their shoes."

Today's Guardian reports that "Scotland Yard will broaden its "loans for peerages" investigation to cover the Conservative party as well as Labour".

Mr Cameron has proposed sweeping reforms of political funding arrangements.  He has inherited nearly all of the hidden loan obligations from before he was leader although his tenure has been tarnished by a £100,000 connection with the wife of a Saudi arms dealer.

After a meeting at Scotland Yard the SNP MP, Angus MacNeil - who initiated the police's proceedings - was uncompromising:

"The police are interested in crime. They are not interested in which party committed it ... After meeting people at Scotland Yard I would say anyone who has been involved in the selling of peerages should be shaking in their shoes."

The Guardian continued:

"Scotland Yard has refused to say which figures the detectives intend to interview as the inquiry unfolds, but it will not rule out speaking to Tony Blair. Westminster sources believe they will almost certainly speak to Lord Levy, the prime minister's chief fundraiser, and key players, such as the party chairman, Ian McCartney."

Some forms of state funding are better than others

There has been almost universal opposition to state funding of political parties from visitors to this blog.  Some object to any state funding in principle and must, therefore, object to the current funding of the policy work of political parties through Short Money (worth c£4m pa to the Conservatives). 

I have no 'in principle' objection to state funding if it can be leveraged to overcome the present gap between the rulers and the ruled.  The current Tory proposal - devised by Andrew Tyrie MP - to allocate state funding on the basis of the votes received at a previous General Election will do nothing to encourage a reconnection with voters.  It will be a powerful reinforcement of incumbency and, as argued by William Rees-Mogg in today's Times, it will increase the power of the centralised bureaucracy of political parties and reduce the influence of members.  State subsidy of this sort, as Fraser Nelson suggested in yesterday's The Business, could only "reward parties' failure to connect with the public".

But state funding could be used to reward reconnection with the public.  A political party could receive state funding in proportion to its success in raising money from small donors.    Dependence on big money or Tyrie-style state funding both serve to isolate political leaders from the general voting population.  If political parties have to fund themselves from diverse sources this will encourage them to listen more attentively to what the public wants and come up with policies that appeal beyond the Westminster village.

David Cameron's appropach to climate change could, for example, become more of a campaign than a policy.  It would have a lively, interactive website where visitors would develop the policy and would suggest and fund ways of making more people buy into it.  This form of fundraising would also produce better value for money campaigning.  It is unlikely that grassroots campaigns will tolerate their money being spent on expensive billboard ads.  If Britain went down this road the political parties would evolve into broad coalitions made up of campaigning groups.

It is, of course, possible to go down this road towards grassroots and netroots funding without that funding being topped up by taxpayer pounds.  But we must be practical and it may take some time for a more democratic funding base to develop.  State funding could, for a transitory phase at minimum, be used until this funding base is broad enough to meet all of a political party's financial needs.

Cameron 'guru' is paid £23,000 every month

The Sunday newspapers have caught up with Iain Dale's blog and told the world that an Australian  hedge fund millionaire is one of the Tory party's previously secret lenders.  The Observer also unmasks Johan Eliasch, a Swedish sports equipment tycoon and Finnish property billionaire Poju Zabludowicz.

A bigger and much less savoury story can be found in The Sunday Times:

"The Tories under David Cameron have accepted £100,000 from the wife of a foreign arms dealer barred from making political donations in Britain.  Wafic Said, a Syrian-born Saudi, and his British wife Rosemary are accused of exploiting a loophole in the rules to fund the Tories, who are under increasing pressure to reveal their financial backers.  According to a senior Conservative source, Said used to give donations to the Tories until he became a tax exile and foreign gifts were banned. His wife now bids at fundraising auctions, which friends say is his way of supporting the party."

The Sunday Times continues: "Over the past two years the Saids are understood to have given at least £550,000 to the Tories at auctions but none of it has been declared publicly."

The sale of arms to Saudi Arabia began in the 1980s under Margaret Thatcher with Wafic Said a key middleman: "Said has a colourful public profile. He was the middleman who profited from Britain’s biggest arms deal — “Al-Yamamah” — which involved the multi-billion-pound sale of fighters and warships to Saudi Arabia. The deal was signed by Margaret Thatcher, whose son Mark was said to have received payments for his involvement in the deal in the 1980s."

Mr Cameron was evasive when ConservativeHome asked him about arms sales to repressive regimes during the leadership process and a frontbench defence spokesman welcomed a new arms deal with the Saudis last December.  The record of the Saudi kingdom on human rights, democracy and religious freedom leaves much to be desired.  Arms sales to untrustworthy regimes have always been questionable but must be doubly so in the post 9/11 world.

For many Conservative members the party's sources of revenue arouse less excitement than how the Tories spend their earnings.  Last week's news that Cameron aide Steve Hilton is receiving £23,000pcm caused much anger amongst ConservativeHome visitors.

Today's Sunday Herald has used the Freedom of Information Act to produce a fascinating article on how the Tories spent £18m at the last General Election.   Here are some of the highlights of the article:

• "Ex-Tory leader Howard handed over day-to-day control of last year’s election campaign to controversial Australian Lynton Crosby, whose six-month fee was reported to be £250,000.  But invoices submitted by the pollster’s firm, Crosby Textor, show that the total amount was closer to £450,000, with a fee of up to £60,000 per month."
• "Documents also showed that the Tory campaign focused on policies designed to shore up their core vote. In particular, a large part of the £4.5m spent on “unsolicited material to electors” focused on protecting the UK’s borders."
• "Costs for the campaign slogan “Are you thinking what we are thinking?” came in at £120,000."
• "Documents showed the party footing the bill for up to £20,000 in libel damages for Labour MP Martin Salter, falsely accused of bullying at a Tory press conference in 2004."

These revelations will only encourage those party members who want to see CCHQ behave much more transparently.  The elections to the party board - which has operational responsibility for fundraising and spending - are not even advertised on the party's own website.   ConservativeHome profiled the five candidates on Friday.

Cameron faces the heat on Tory loans

There is speculation that a Sunday newspaper will reveal the names of the businessmen who loaned money to the Tories during 2005.  Up until now the Conservatives have said that they will not break confidentiality undertakings that were made to their lenders.  Lenders to the Tory party apparently fear that, if their identities are revealed, they will be penalised by the Government in any bidding for contracts.

Today's Times reports suggestions that the Jersey-based Morain Investments is being used to hide a £2m loan that was made to the Conservative Party in the last week of Michael Howard's unsuccessful General Election campaign.  The £2m of extra borrowing was used to finance a last minute advertising offensive.

Editor's note: "I'm not sure if the most offensive thing was the wastefulness and nature of the dog-whistle advertising campaign itself or how it was financed."

Labour are desperate to turn the media's fire on to the Tories after enduring a terrible ten days of negative publicity.  Cabinet minister Margaret Beckett wrote to David Cameron yesterday asking him to disclose all of the Tory lenders.

Pundits have not been impressed with David Cameron's handling of the political funding scandal.  "This has been David Cameron’s first major test as leader of the opposition, and his performance has at best been useless," was Peter Oborne's verdict.  Andrew Tyrie's proposal to cut the number of MPs in return for greater state funding of political parties was damned as "more taxation with less representation" by the Daily Mail.   

3pm update: IAIN DALE reveals one of the 'loan Tories'.

Tory proposals to 'clean up politics' are launched

David Cameron has now announced Conservative proposals to 'clean up politics'.  The proposals are the product of a three month study by Andrew Tyrie MP.  Full details can be found in a pdf on conservatives.com but the main recommendations are listed below (with Editor's comments):

• An upper limit "on donations from individuals, trade unions, corporations and institutions" of £50,000.  "This," the party says, "will end parties' reliance on a small number of large donations and address concerns about donations buying honours or influencing policy".  It is a tighter restriction than the £100,000 suggested by ConservativeHome but a speedy vindication of our campaign.  It also offers great opportunities for the 'conservative movement'.  The big donors who have sunk all their treasure into CCHQ can soon invest it in The Taxpayers' Alliance, think tanks and, er, um, ConservativeHome!
• Tax relief on donations of up to £3,000.  This is to be welcomed.  Giving to a political party is a public-spirited thing to do and should be honoured in the same way that charitable giving is encouraged.
• "A ban on all forms of loans to parties, except from financial institutions on fully commercial terms, should be imposed."  Labour - rightly - seems poised to legislate for this immediately.
• There would be additional state funding in the Tory proposals but this would be paid for by reductions in other costs of politics: "a reduction in the number of special advisers, the abolition of Regional Assemblies, and consideration to a reduction in the number of MPs."  This seems a reasonable deal for the taxpayer.
• Additional state funding based on the number of votes a party received at the previous General Election.  The Tories propose a one-off £1.20 for each vote received at a General Election plus 60p per vote every year.  This is the least attractive recommendation.  The parliamentary allowance given to MPs already provides a significant advantage to incumbent politicians.  The advantage to incumbency will only be increased by a financial awards scheme that reflect the choices of yesteryear's voters.  "Additional state funding" should be proportionate to a political party's current ability to fundraise.
• A reduction in permitted General Election expenditure from £20m to £15m.  This seems a reasonable proposal.  Much of current expenditure is wasted on billboard advertising (and not very good billboard advertising at that).  I know plenty of Tory candidates fighting LibDems who hated anti-Labour billboards appearing on their turf.  Coalition-building and narrowcast campaigning is the way of the future (but none of this is cheap).
• A final proposal: "A statutory Honours Commission, accountable to both Houses of Parliament, to replace the House of Lords Appointments Commission and to assume from ministers the task of making recommendations to The Queen for all honours.”  Fair enough.

The Tory Party is clear that these recommendations intend to break the union-Labour link:

"[The proposals] offer Tony Blair and Gordon Brown the opportunity once and for all to end the Labour Party’s reliance on trade union funding – and with it the suspicion that the unions act as a brake on vital public service improvement plans."

For that reason it is difficult to see Labour accepting them.