Political parties could get more state funding to make up for donation caps
Tories argue that they would lose a third of their income under the proposals, but the Lib Dems are strong supporters
A huge increase in state funding of political parties, worth up to 100m over a five-year parliament, is being proposed by a government-commissioned inquiry.
The funding, which would be shared out according to the number of votes each party receives in a general election, would be presented as a way of compensating them for a huge loss of income as a result of introducing new caps on individual donations to parties. It would also be seen as a way of repackaging state funding that already goes to opposition parties.
The Tories have argued that a 50,000 cap on individual donations would see their party lose as much as a third of its donor income.
The state funding idea has been pushed hardest by the Liberal Democrats, who currently have the least independent income and are likely to benefit the most from the proposals. The party has had to lay off staff and sell its HQ to cut costs.
The draft report is proposing that parties receive funding worth 3 per vote they receive. On the basis of the last election, the Tories would get 32m, Labour 25.8m and the Lib Dems 20.4m. The figures could be higher if tax relief were added.
One idea proposed by the recent Power Inquiry and supported by LibDem leader Nick Clegg was for voter vouchers allowing voters to tick a box saying they wanted 3 state funding to be given to the party for which they are voting. Those familiar with the report suggest the proposal is not in the draft.Critics are likely to argue that such a degree of state funding would provoke public uproar and make it harder for small parties to break the stranglehold of the big three. But it would also act as an incentive for parties to get their vote out in seats that they are not likely to win. State funding is seen by most sides as the only way to reduce dependence on big backers.
In the wake of the expenses scandal, the Cabinet Offic! e minist er Francis Maude said the public appetite for state funding of political parties had largely evaporated, but he conceded it might be acceptable if it was seen as part of a package.
Attempts by the Brown government to secure a cross-party consensus on party funding collapsed amid a welter of recrimination and accusations of bad faith.
Nick Clegg, who is responsible for party political reform, said he was determined to try again and asked the Committee on Standards in Public Life, chaired by Sir Christopher Kelly, to come up with a new formula acceptable to parties and public. All sides accept there is a need to take the perception of big money out of politics.
After a 17-month inquiry, a chairman's draft was presented to the committee on 15 September, but amendments from the parties are being drafted this weekend as they scramble to maintain their positions. The committee includes a representative from each of the three main parties and six independent members.
The Tories made a last-minute intervention, saying they could not accept a donation cap set as low as 10,000 the figure proposed by the Liberal Democrats in their election manifesto.
Lord Feldman of Elstree, the Tories' co-chairman, said in a letter to the committee that the cap had to be 50,000 and even this would mean the loss of 37% of the party's donor income. He claimed: "A cap of 10,000 would hugely inhibit the ability of political parties to engage with the electorate."
The Conservatives are also continuing to press for a requirement that union members opt into affiliating to the Labour party, rather than the current system where they are required to opt out.
In Northern Ireland, where the opt-in system exists, only 35% of people do so suggesting two thirds of union affiliation income to Labour would evaporate.
Labour has previously accepted that the system needed improvement. The Tories claim Labour receives a large proportion of donations from people who are not making a positive decision ! to contr ibute to the party.
The report is expected to recommend a small decrease in the current 20m cap on party election expenditure. The Tories outspent Labour by more than two to one at the last election. There may, however, be new caps on local election expenditure, caps that would be easier to police in the context of a fixed term parliament.
Democratic Audit told the inquiry on the basis of the Electoral Commission's register of donations, from 1 January
2001-30 June 2010, donations of 50,001 or more accounted for 41% of Liberal Democrat income, 54% of Conservative and 76% of Labour party declared donation income. The committee is likely to defend its proposals on the basis that state funding already exists but it is a patchwork including policy development grants, Short money paid to opposition parties, and indirect subsidies.
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