If Cash for Cameron is a problem, is state funding the solution?

by Dr Alison Smith

Revelations that David Cameron courted donors over dinner at Chequers have given British journalists an alliterative field day, with this week’s headlines including ‘Supper for Supporters’, ‘Dinner for Donors’ and, least plausibly, ‘Dave’s Dodgy Diner’.

Of course, this is not the first time that governing parties in Britain have been accused of trading influence for money; one of the most notorious examples was the Cash for Peerages scandal of 2006/2007.  And every time a case like this arises, somebody (usually the Liberal Democrats) always suggests that it is time to consider introducing state funding of political parties.

Most other European democracies have some level of state funding of political parties.  Decisions to provide such subsidies are usually the ‘carrot’ accompanying the legislative ‘stick’ of lower donation limits and increased reporting requirements.  Unfortunately experience on the continent suggests that state funding is no panacea for cleaning up politics.  Just ask the French.

Parties (and sometimes individual politicians) will always seek to maximise their income in order to out-compete their rivals.  Therefore, alternative fundraising doesn’t cease and funding scandals are still a problem.  Indeed, when funding scandals break, they are met with even more public frustration because taxpayers have made significant contributions without seeing the promised improvements in democratic quality.

Moreover, state funding does not necessarily level the playing field in quite the way that smaller parties like the Liberal Democrats might hope.  Funds are usually allocated in one of three ways: per vote received, according to the percentage of votes won, or according to the number of seats won.  Whichever method is chosen, the most electorally successful parties receive the most money, locking in their advantage.

In the current financial climate, it is unlikely that the idea of introducing state subsidies for political parties will catch on in the UK.  If it does, however, the Liberal Democrats must insist that funding is allocated on a ‘per vote’ basis in order to avoid receiving a double blow at the hands of Britain’s majoritarian electoral system.