The Kelly proposals: eminently sensible and workable

by Peter Watt

The reaction to the report “political party funding – ending the big donor culture“, by the committee on standards in public life, chaired by Sir Christopher Kelly, has been depressing if not surprising.

I feel strongly about this issue. I was caught up in “cash for honours”. I had to instigate swingeing budget cuts and redundancies to avoid bankruptcy at the Labour party. I was part of Labour’s negotiating team in the failed Haydn Philips inter-party talks on party funding in 2006 and I was embroiled in a pretty major funding scandal that lead to my resignation as general secretary and another police investigation. I also gave evidence to the Kelly enquiry.

So let’s start with some cold hard facts.

  1. Politics is expensive. Staff that run campaigns, develop policy and arrange conferences, plan strategy, engage the public and design materials, websites and videos cost money. And there’s everything a reasonable sized organisations needs:  advertising, membership systems, property, cars, travel, hotels, publications, professional services like accountants and lawyers, furniture, computers, software licenses, insurance and stationery. This does not come cheap and it all needs to be paid for.
  2. Politicians are generally shallow and fear failure. This means that they don’t care all that much about where the money comes from to pay for those things that they think that they need to maximise their chances of winning. They will dress it up as wanting to win to do good things, and there is obviously some truth in that. But fundamentally they want the glory; and they need funds to achieve it.
  3. Politicians do not get involved in fundraising. They, rightly, fear being tainted by the “dirty” business of fundraising. So while they demand that the funds are there when they need them, they generally don’t lift a finger to raise it unless absolutely forced. The result is that those charged with raising funds are put under enormous pressure and are given very little support to raise the necessary cash.
  4. Small donations and membership alone will not pay for this. Just do the maths.  Let’s say a party costs £10 million per year (the Labour party currently costs twice that) to run, then that is a lot of small donations or membership fees. I know that it is popular and easy to claim that this solution will work. Throw in the old favourite “internet fundraising” and blimey, I don’t know why no one has tried it before. But it is nonsense, a fantasy and will not work. Yes more could be done, and yes there has been an over reliance on big donations, but over reliance is not the same thing as not needing to rely on it at all.
  5. Political parties are inefficient. They waste money on things that ease political egos, rather than just on what works. Why take a train in an election when a plane will do? Why one plane? Why not a fleet of helicopters? Or an extra ad van or pre-speech video. The problem is that the minute a politician says that the campaign “needs” something people find it difficult to say no. Because if they do, then they risk being blamed for the loss or for failure. It is a defensive attitude that has cost millions. All parties suffer from it. It is to the Labour party’s credit that at the last election they were able to organisationally fight a pretty good campaign despite limited funds. Living within their means and accepting that they will need to exist on smaller budgets is something that all parties will need to do.
  6. People and organisations who give money to political parties want something in return. But that something is generally for that party to be successful, as they broadly support them or their overall approach. Of course they also want to be seen with famous politicians or want to feel important or respected. They might even want to get close enough to bend a politician’s ear about their pet hate or favourite project. But they generally don’t expect to get something in policy terms.
  7. The public think that all politicians are corrupt and everyone who gives money is on the take. To be fair, successive scandals have reinforced this. They also do not draw any distinction between rich individuals or trade unions, in terms of their expectation that favours are being bought for the money donated. And before anyone shouts “yes, but trade unions are morally superior etc”, the public do think this. Just look at the research the committee on standards in public life carried out. And to say that trade unions do not have influence and do not use their financial muscle within the Labour party to increase this influence, is disingenuous at best. The result is that the public hold politics and politicians in very low esteem and quite frankly our political system has never looked so weak, self-serving and out of touch.

Over the years there have been several attempts to try and sort this mess out. The political parties elections and referendums act introduced transparency. The sensible Haydn Philips proposals tried to introduce caps on donations and expenditure. The problem was that no party consensus was reached.

Everyone blamed everyone else. The truth was that both Labour and the Tories chose self-interest over the national interest. The Tories feared a spending cap, but wanted a cap on trade union funding. Labour wanted both caps, as long as the trade unions were exempt. And unless agreement was reached between the parties then each feared the public backlash if any further tax payers’ money was used to fund the parties. And so the public was let down. On Labour’s side, behind the scenes, the trade unions effectively killed the proposals off before they started.

And so to this week’s Kelly proposals. They are sensible in that they cap donations at £10,000 per year, cap expenditure and offer limited extensions of state funding. They accept that trade union money is different if, and only if, each individual trade union member payment to the party is made more transparent. They expect greater openness on what is being spent and that parties will need to be more efficient and spend less overall. They expect the electoral commission to regulate the new regime. No doubt the proposals will need tweaking, but in essence they are workable.

But the public won’t be keen. It may only cost 50p per voter per year to implement, but that is still millions per year at a time of general austerity. Politically it will be all too easy to cry “it will cost too much”. The implementation of the recommendations will need political courage, political consensus and the putting aside of tribal self-interest.

Politicians will need to remember the damage done by the MPs’ expenses scandal. And that is was their silent acceptance that the bending of their own rules was an acceptable way to quietly give themselves a pay increase that lead to the crisis. Perhaps with hindsight it might have been better to be more up-front about the issue of MPs’ pay.

But political courage, political consensus and the putting aside of tribal self-interest are all in short supply in political circles. So I suspect that it will take another scandal before anyone takes this seriously again.

I hope that I am wrong.

Peter Watt was general secretary of the Labour party.


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9 Responses to “The Kelly proposals: eminently sensible and workable”

  1. The Future says:

    This is a good article and I also broadly support the proposals.

    But I do disagree with your assertions that the Labour party couldn’t raise a good deal more from the membership. In fact I think that we need to accept that we have to many people in the party that think the £3 a month they give entitles them to the world. I would never want to price out people from the party but those that can pay more should.

    If 25% gave an extra £5 a month we would have an extra 5 million a year. I’m sure if everyone was honest then most could afford that. So while I would look to more state funding, if it’s based on money per vote we would have an incentive to work our heartlands a bit harder, I still think we should recognise as a party that far more money should be coming in from members.

  2. Point 1 of your ‘cold hard facts’ pretty much says it all. The things you mention are expensive, not just for political parties but for businesses too. Businesses however have to do what is required however or go under. They can’t increase sales given the state of the economy so they have to cut expenditure instead. That means all overheads have to be trimmed and investments deferred with no exceptions.

    Going to the public for the cash instead, who for years have had to contribute more in ever increasing taxes than it now turns out they could ultimately afford is not an option for them nor can it be an option for political parties of whatever stamp.

  3. Worrying developments on the NHS privatisation story, following on from the Hinchingbrooke Hospital take over by Circle Health. It seems there is a connection between Circle Health and one of Andrew Lansley’s adviser/s…as mentioned in the KONP film below,

    KONP (Keep our NHS Public): a short film about lobbying and the sad story NHS privatisation story called “The Health Industry Lobbying Tour” (scroll down the bottom of the web page) and you will be amazed (or not) at the connections between private companies and the Tory party.
    http://www.keepournhspublic.com/index.php

    Here is another short film highlighting how the NHS is being secretly privatised,
    You Tube: NHS Privatisation
    http://www.youtube.com/watch?v=sNiruX2gZDc

    The Labour Party has a useful web link http://www.labour.org.uk/dropthebill to sign. It gives the impression if the bill can be dropped – privatisation of the NHS will stop. All the information available indicates this is an ongoing campaign by the Tory party to (secretly) privatise the NHS, whatever the outcome of the Health and Social Care Bill.

  4. MBoy says:

    What a sensible article!

  5. TheBin says:

    How much does it cost to knock on doors?

    How much does it cost to stop people in the street and actually hold conversations with the electorate?

    Politicians no longer represent the people of their constituency in Parliament; they represent their Party in their constituency and their priorities are all too clear. Party first, people second. So, asking those poor people to stump up an extra few quid to pay to distant people money to produce spin on their taxpayer funded laptops is another way to annoy the electorate even more.

    Here’s an idea; have MP’s or contenders that are actually local, they can knock on doors all year round, they can then go home rather than stay in hotels. Things like Laptops etc are easily available and don’t need to be bought every campaign. Get local volunteers and supporters to help produce leaflets.

    Instead we get; no MP’s listening to us, fliers for parties telling us how great they are for us, and now they want us to pay for their failed parties while failing the country too?

    No thanks, I’ll pass.

  6. Livy_Nye says:

    Cracking stuff.

    I would only add a point No. 8, detailing how clean and how cheap our system really is compared to others, particularly the American one.

    The British electorate should feel grateful their representatives don’t have to start filling a campaign war chest from day 1. We should feel grateful not to have PACs or soft money contributions. We really do keep the money out of politics.

  7. Jonathan da Silva says:

    In terms of the cost maybe Gordon Brown could show compared to the Billion he added to the debt and the recurring costs through PFI it’s trivial money. Not even rounding error stuff.

    Will Labour lead on any matter a focus group might react negatively to?

  8. william says:

    ‘Cash for honours’.You should have done 5 years.Stop moralising,you brought the Labour party into disrepute,it was on your watch, the world knows it.

  9. Peter Watt says:

    William says – thanks for your considered response. Where do I send the Christmas card to? And if you are interested in what happened on ‘my watch’ perhaps you’d like to read my bbook which you can purchase here:

    http://www.amazon.co.uk/Inside-Out-betrayal-cowardice-Labour/dp/1849540381/ref=sr_1_1?s=books&ie=UTF8&qid=1322743960&sr=1-1

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