It’s time to ‘take back control’ of money in politics

Guest Author, the views expressed are those of the author and do not necessarily represent those of the Electoral Reform Society.

Posted on the 24th October 2016

The following is a guest post from Steve Goodrich, Senior Research Officer at Transparency International UK. 

The views, opinions and positions expressed are those of the author and do not necessarily represent those of the Electoral Reform Society.

Although Brexit has divided opinion across the country there’s one thing that everyone’s united on: it’s a massive deal. Some see it as a great opportunity for the UK to find its own way in the world, whilst others fear it’s the beginning of a retreat into parochial isolationism. No matter who you’re talking to they’ll probably have some sort of opinion on it.

However, this intense focus on the future has distracted us from something equally as important: the conduct of the referendum campaign itself.

Based on our analysis at Transparency International UKonly 10 donors accounted for over half of the reported donations to either side of the referendum debate. That is an astonishingly small number of people for such a significant event.

Furthermore, 95% of all reported contributions to campaigners came from just 100 donors. 95%! It’s no wonder why over three quarters of UK respondents to our latest Global Corruption Barometer thought that wealthy individuals exerted undue influence over our government.

You might rightly ask yourself ‘fair enough, big money in politics isn’t ideal but what does this have to do with corruption?’ Well, everything.

Corruption takes many forms, from taking bribes to stealing from state budgets to providing privileged access to lobbyists in return for favours. Summarised succinctly it’sthe abuse of entrusted power for private gain. And, as we know, it affects UK politics, too.

We’ve had scandals about cash for peeragescash for influencecash for accessand cash for honours. In all of these examples perceived or actual misconduct was linked with large amounts of money that are way beyond the means of the average voter.

For any social scientist that would constitute a trend, and for academics at Oxford University this trend is more than just coincidence. They found that it is statistically improbable that large amounts of money aren’t being recognised with honours – the chances of this relationship being a coincidence is the same as winning the lottery five times.

This is not to say that those 100 donors at the referendum were currying favours or buying influence. However, over half of the reported donors at the referendum had also made significant donations to political parties; they were not a group of random individuals who spontaneously gave money in a fit of philanthropy. To rely on such a small number of people for such a large amount of money is evidently another scandal waiting to happen.

This is why we’re calling for an annual donation cap of £10,000, more transparency about smaller donations to help monitor compliance with these new rules and tighter controls on spending to reduce the demand for big money.

Alongside this are some interesting questions thrown-up by donations from, among others, Better for the Country Ltd. It’s a private limited company set up in May 2015, just under a year before it gave £1.9million to the Grassroots Out campaign. There is no evidence to say that the company was involved in breaking the law. They only have to be registered and ‘carrying on business’ in the UK – a relatively low threshold – to be able to make a contribution. However, it has yet to even submit its annual accounts, meaning we have no idea where the money came from. This cannot be good for either confidence in the democratic process or preventing potential undue influence over our politics.

Of UK respondents to our Global Barometer survey, 59% thought company donations to political parties and their candidates should be banned completely. This is a fairly blunt tool, but may be something worth considering. In the meantime, we propose that the law is strengthened so companies can only make donations if they can demonstrate that they are trading in the UK and earning sufficient income here to fund any contribution they make.

The obvious question when anyone proposes packages like this is ‘that’s all well and good, but who’s going to pay for parties’ shortfall?’ As an anti-corruption organisation this is slightly outside of our territory. The glaringly obvious problem we’re trying to solve is how to stop the corrupting influence of big money in politics.

How parties transition to this new reality – through a wider membership base, more small contributions and possibly some extra public funding – is for the parties to decide. You might also question it isn’t in their self-interest to do such a thing. On face value you’re right, but as we’ve seen from the crises across Europe, established parties can be wiped-out overnight if they do not heed the need for change.

Making these essential reforms might seem like a large cost in the short term for parties, but considering how low trust is getting in politics, it might be a worthwhile investment for their future.

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