Peter Facey on Paying for the Party: Myths and Realities in British Political Finance by Dr Michael Pinto-Duschinsky, Policy Exchange.

(Policy Exchange, April 2008, 64pp)

This Policy Exchage pamphlet offers few solutions to party funding deadlock.

Despite effervescent claims to be myth busting (perhaps dragon slaying would have been a more appropriate term given the publication date), there is very little in Michael Pinto-Duchinsky's new Policy Exchange pamphlet on party funding that is particularly consensus breaking.

One of Dr Pinto-Duchinsky's main conclusions is that the problem with UK party funding is not the so-called arms race, but the centralisation of spending. Unlock Democracy's predecessor organisation, the New Politics Network, made broadly the same point in its first discussion paper on the subject back in 2003. We agree with him that existing state support is extensive. We agree that the existing system of parliamentary expenses needs to be considered alongside formal party funding and that existing incumbency protection is considerable. We agree that further blanket state handouts to central parties would be counter-productive and that any additional state support should be focused at a local level and designed specifically to encourage engagement.

The only substantial conclusion of his on which Unlock Democracy begs to differ is where he suggests that rather than insisting on reform now, we should allow existing legislation on party funding to bed down first. It isn't clear how Dr Pinto-Duchinsky came to this conclusion as the actual implementation of the PPERA 2000 and the recent funding scandals are barely mentioned in the report. Yet it has become clear that a number of loopholes exist in the current legislation, such as the fact that individuals wishing to preserve their anonymity may simply donate via an unincorporated association. Donations to political parties via unincorporated associations have increased exponentially since the 2000 legislation was introduced (£634,000 in 2000, £2,340,000 in 2005, £2,041,000 in 2007). Similarly, it has become apparent that without statutory investigatory powers and a range of less draconian sanctions to impose on parties that break the law, the Electoral Commission's ability to enforce existing legislation will remain extremely limited.

Realistically, we are likely to always have loopholes in the legislation somewhere. However, a cap on donations would reduce the ability of political parties to exploit them. It would also have an additional benefit in that it would further encourage parties to raise small amounts of money from large numbers of individuals rather than big donations from a few rich people. This would help to reverse the centralisation that Dr Pinto-Duchinsky's identifies as a problem. It also happens to be the one measure related to party funding reform that enjoys broad public support.

Opposition to such a cap now comes from Labour and the trade unions rather than it's traditional opponents, the Conservatives. Yet not only is it possible to introduce such a cap without breaking the Labour-union link, but the Canadian experience suggests that it could actually strengthen the ties between the party and individual members. It is unfortunate that so many within the Labour movement fail to see this relationship in any terms other than nostalgic images of national secretaries enjoying beer and sandwiches at Number 10.

In our past encounters, Dr Pinto-Duchinsky has sought to present the two of us as diametrically opposed in this debate. His new report suggests that we are rather closer in agreement than he might care to admit. I sense that he shares my frustration that, without criticising Sir Hayden Phillips himself, the negotiations surrounding party funding reform have been rooted in an attempt to establish a consensus between the three main party HQs rather than consider what is in the interests of party politics more widely.

Dr Pinto-Duchinsky concludes that the fundamental problem underlying everything else is the decline in popular support of political parties. Not reforming the current system will only cause this gulf to widen as MPs will have every disincentive to stick with the status quo. We need to begin to reverse this decline now. We must remain forthright in opposing measures which are counter-productive, but doing nothing is simply not an option.

Peter Facey is Director of Unlock Democracy.