TOPIC GUIDE: Party Funding

"The state should regulate the funding of political parties"

PUBLISHED: 01 Sep 2012


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The issue of political party funding and fundraising has been prevalent in any discussion of British politics since the mid-1990s. Most recently were the 2006 cash-for-honours scandal [Ref: Telegraph], the 2009 cash-for-amendments scandal [Ref: Guardian] and the 2010 lobbying scandal [Ref: Independent]. Sir Hayden Philips’s review of party funding in 2007 was the first to suggest an upper limit or cap on donations to political parties in order to increase transparency and put an end to scandal [Ref: Guardian], and since then the focus has increased on political parties about the donations they receive both from wealthy individuals and businesses, and the extent to which donors have undue influence over political parties [Ref: Guardian]. David Cameron declared in 2010 that party funding would be the “next scandal to rock parliament” [Ref: The Sunday Times], and the results of an enquiry led by Sir Christopher Kelly, chairman of the Independent Committee on Standards in Public Life, published in 2011, proposed that the state should regulate the funding of parties and limit all donations to £10,000 [Ref: Telegraph]. Any short-fall would be made up by allocating £3 for each vote a party receives in an election [Ref: Financial Times]. Whilst the state does contribute indirectly to party funding through initiatives such as ‘Short Money’ for opposition MPs expenses and Policy Development Grants, the proposal would be a substantial increase in the states involvement in the accounts of independent political parties [Ref: Parliament]. According to some critics this would place limitations on the ways that the electorate can engage and support political organisations [Ref: Electoral Commission]. If the essence of democracy is that the government should be held to account by the populace, they argue, than any intervention by the state is an infringement of our democratic right to pursue our political goals [Ref: Politics].

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This section provides a summary of the key issues in the debate, set in the context of recent discussions and the competing positions that have been adopted.

Political parties
Sir Hayden Philips noted in his review that 50 years ago one in 11 of the electorate was a member of a political party; today that ratio is just one in 88 [Ref: HMSO]. The Conservative party has seen its membership fall from a 1953 peak of 2.8 million members to around 177,000 today. The Labour party reached its peak membership around the same time but is currently now down to 194,000 members [Ref: House of Commons Library]. Lacking the dues paid by ordinary members political parties have had to find funds from new sources to pursue their election campaigns [Ref: Electoral Commission]. For the Conservatives, this has broadly meant relying on fewer, wealthier donors, whilst the Labour Party has increasingly had to rely on its historic ties to trade unions [Ref: Guardian]. Both of these funding sources have been criticised for their lack of transparency and the likelihood that they will lead to undue influence on party policy as donors to political parties ultimately want something in return, it is argued [Ref: Telegraph]. “Dubious loans and bribes from shabby billionaires expecting favours in exchange” it is argued, damages politics [Ref: Guardian]. Ex-Conservative party Prime Minister John Major, in a leaflet entitled ‘The Erosion of Parliamentary Democracy’ argued that “All the party machines are moribund, near-bankrupt, unrepresentative and ill-equipped to enthuse the electorate” [Ref: BBC News]. This has led some to question why, if parties fail to gain the financial support of the electorate as they used to, and are unrepresentative, the state should consider supporting them at all. Wouldn’t it better to allow them to go bankrupt in the hope that new parties with grassroots support will take their place [Ref: spiked]? Others claim political parties have failed the electorate because they have not represented their interests and that state funding makes these same people, through taxation, the real funders – so state funding doesn’t solve the problem, rather it entrenches it [Ref: Open Democracy].

Engaging the voter
It is hoped that, by capping donations and incentivising parties to seek funds from more diverse sources, public interest in policy and how it is shaped will be stimulated [Ref: Stumbling and Mumbling]. However, others argue that big donors have become prominent because they fill a vacuum: if Britain’s established parties were not moribund – if they were capable of generating a level of political support – they would be far more capable of financing themselves without recourse to the super rich, trade unions or other interested bodies. The problem then is not money but the inability of politicians to engage the public politically [Ref: Open Democracy]. Whilst politicians have expressed concern with spending more public funds during a time of recession [Ref: Politics Home], it has generally been accepted that, at about £3 per person, per year, the cost to the individual would not be excessive [Ref: Guardian]. A more pressing concern for some, however, is that it may actually reduce the incentive for parties to engage with the electorate; given that established parties will now be funded for every vote they receive, leading perhaps to politicians being ’lazy and out of touch’ as they no longer need to convince the electorate for support [Ref: Telegraph].

Political interests
Some have suggested donations to political parties should be seen analogous to giving money to a charity [Ref: BBC News]. Conservative chairman Lord Feldman said that giving money to the RSPCA or a political party are good for society and so both should be rewarded with tax breaks [Ref: Telegraph]. Others agree that political parties form an essential part of the governance landscape, developing policy, recruiting future representatives and leaders, and preparing them for government, but they argue it’s only state funding that will solve the current crisis [Ref: Institute for Government]. Others go further, pointing out that joining, or donating to a political party, isn’t an act of consumerism, and that policies aren’t products being sold in a marketplace [Ref: Third Estate].  Political parties ignore the issues that really matter to voters, they say, caring only about the funders who share their views. With guaranteed state funding they can afford to ignore everyone. So, do we need a funding method that forces parties to take heed of voter’s political interests, rather than a system that potentially expels voters for good?


It is crucial for debaters to have read the articles in this section, which provide essential information and arguments for and against the debate motion. Students will be expected to have additional evidence and examples derived from independent research, but they can expect to be criticised if they lack a basic familiarity with the issues raised in the essential reading.

UK Party Funding

Financial Times 26 March 2012


Why public finance of political parties is justified

Martin Wolf Financial Times 29 March 2012

Labour and the Tories must accept state funding

Dennis McShane New Statesman 27 March 2012

Political funding: paying for the party

Guardian 28 October 2011

Time for state to fund political parties, says James Purnell

Nicholas Watt & Allegra Stratton Guardian 29 May 2009


Vouchers: a third way for financing political parties

Alex Hern New Statesman 23 July 2012

A Corrupt System Badly in Need of Reform

Sunday Times 1 April 2012

Don’t dally, I want big money out of politics fast

Nick Clegg Sunday Times 1 April 2012

UK Party Funding: No Cash, No Democracy

Open Democracy 24 November 2011

Review of party funding

The Committee on Standards in Public Life 16 November 2010


Definitions of key concepts that are crucial for understanding the topic. Students should be familiar with these terms and the different ways in which they are used and interpreted and should be prepared to explain their significance.


Useful websites and materials that provide a good starting point for research.

In brief: party funding - Commons Library Standard Note

Richard Kelly Parliament 3 April 2012

Cash for access and the problems of party funding

Jacob Rowbottom UK Constitutional Law 28 March 2012

Party Funding: All in this Together

Guardian 26 March 2012

History of Party Funding Scandals

BBC News 26 March 2012

How Cameron’s Lobbying Prediction Came True

Emily Payne& Rebecca Seales The Sunday Times 25 March 2012

A transparent attempt to rejuvenate politics

Tim Black spiked 10 November 2010

Funding Political Parties in Britain: A pathway to reform

Stuart Wilks-Heeg & Stephen Crone Democratic Audit 2010

Cash for peerages analysis

Graeme Wilson Telegraph 12 April 2008

Political funding in Britain: what can we learn from history?

Michael Pinto-Duschinsky

Party Finance, Overview

Electoral Commission

Donations to Political Parties

UK Political Info

Funding of Political Parties and Election Campaigns

Reginald Austin & Maja Tjernstrom Idea


Links to organisations, campaign groups and official bodies who are referenced within the Topic Guide or which will be of use in providing additional research information.


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