Raising the standard for funding elections

Date: 10/05/01

By Dick Leonard

With an election imminent in Italy and less than a month away in the UK, Dick Leonard examines whether the rules on political funding go far enough

As Senator John McCain continues his efforts in the US Congress for campaign finance reform, two parliamentary elections within the EU highlight the fact that spending on elections is a European problem too.

In Italy, which polls on Sunday (13 May), concern has focused on the almost unlimited expenditure by the centre-right candidate, Silvio Berlusconi, and his privileged access to television exposure due to his quasi-monopolistic control of the main commercial channels.

In the UK, which votes on 7 June, this will be the first election in which new controls on election expenditure and on the transparency of political funding will be in force.

The whole question of political funding was illuminated by the Stockholm-based International Institute for Democracy and Electoral Assistance (IDEA) at its conference at The Hague last month held in conjunction with the Netherlands Institute for Multiparty Democracy.

IDEA has sponsored a major research programme, studying political finance laws and subsidies in 60 countries (including all the member states of the EU), the results of which will be published in its forthcoming Handbook on Funding of Parties and Elections.

In Italy there is a complex set of laws controlling political funding but - as a leading political scientist told the IDEA conference - there "is an enormous gap between legal requirements and actual political practice".

He referred to an estimate made during the mani pulite (clean hands) inquiry of 1992 that the amount illegally obtained, mostly from tangenti (kickbacks) was "some 3,400 billion lire a year, at least ten times the total official income of all Italian parties".

There has undoubtedly been an improvement since 1992, and Berlusconi's expenditure of his own money is not illegal, but the situation remains far from satisfactory.

Fewer laws, more strictly administered, should be the central thrust in the continuing efforts to clean up the country's political system.

In the UK, political funding scandals have been on a far smaller scale, though concern was rightly raised by dubious foreign donations to the Tories at the last election, and the Labour Party's acceptance of £1 million from the Formula One boss, Bernie Ecclestone.

This was subsequently returned after suggestions (strongly denied) that this had influenced the decision to exempt Formula One from the ban on tobacco sponsorship.

These events led to the passage of the Political Parties, Elections and Referendum Bill of 2000, which enforces an outright ban on foreign donations, requires the publication of all contributions over £5,000, imposes an overall limit on election expenditure and provides for the appointment of an independent Election Commission.

These reforms are welcome, as far as they go, but they do not touch on the central problem of how to prevent parties from being - or appearing to be - influenced in their policy decisions by their financial dependence on interest groups, traditionally big business for the Conservative Party and the trade unions for Labour. Neither do they ensure a level playing field between the two major parties, let alone the Liberal Democrats.

I should, perhaps, declare an interest, as I believe I was the first person - back in 1973 - to publicly advocate that Britain adopt a system of public subsidies to political parties, such as is now in force in most other EU countries.

This led to the appointment of the Houghton Committee on Financial Aid to Political Parties, which, in its majority report, in 1976, broadly backed my proposals.

They were never implemented, largely because the then Labour government feared a public backlash if money was allocated for this purpose rather than for more obviously worthy causes.

The situation has changed since then. The financial disparity between the Tories and Labour (then about 8:1) has disappeared, at least for the time being, and Labour's overwhelming dependence on trade union funding has lessened, as it has - with increasing success - tapped into corporate funding, previously a Tory monopoly.

This has, however, if anything, led to more distrust of the purity of its motives.

I remain convinced that only public funding can resolve this dilemma. It is not, of course a panacea, and it did not prevent the illicit and secretive fundraising by Helmut Kohl on behalf of the German Christian Democrats.

Yet, notably in the Scandinavian countries, which were pioneers, it has undoubtedly helped to produce an almost totally scandal-free political culture which has endured over several decades.

The UK public may be hesitant. Yet if it wants a clean democracy, free of the taint, or the threat, of corruption it should be prepared to pay for it.

And politicians should not shrink from asking them to do so.

Dick Leonard has been writing on European issues for over 20 years for The Economist, The Observer, Europe magazine and leading newspapers across the world. A former assistant editor of The Economist, is a former British Labour MP and the author of numerous books.

With an election imminent in Italy and less than a month away in the UK, columnist examines whether the rules on political funding go far enough.