News 07th Oct 2021

Why big money can create big headaches for political parties

Steve Goodrich

Head of Research and Investigations

Steve is Transparency International UK’s Head of Research and Investigations. He is responsible for managing TI-UK’s research unit and is our specialist on lobbying accountability, party funding and open governance. Before joining TI-UK in May 2015, Steve worked as a Senior Policy Adviser at the Electoral Commission. He has over five years’ experience working on political finance regulation, legislation and data.

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As part of the Pandora Papers exposé, this week's BBC Panorama raised serious questions about the probity of large political contributions. The revelations highlighted major concerns about how the Conservative Party conducts due diligence on its financial backers. In particular, it focused on three major donors – controversial businessmen, Mohammed Amersi, Aquind, an energy company seeking planning permission from the UK Government, and Lubov Chernukhin, the wife of a former Russian minister and banking official.

The Conservative Party stated it was within the law to accept all of their contributions. All of the donors profiled deny any wrongdoing.

While the programme focussed on the people bankrolling the party it’s worth taking a step back to see the wider dynamics at play, which make controversy like this almost inevitable.

UK politics can be an expensive business. Without meaningful controls on campaign costs, political parties can spend upwards of £50 million in a major election year to get their candidates elected. That money has to come from somewhere, and unlike most other democracies it has very low levels of public funding. This puts major pressure on their fundraisers to fill the party coffers.

There are varying strategies on how to do this. In the US, we’ve seen recent presidential campaigns solicit hundreds of millions of pounds in amounts under $100, a model not too dissimilar from many parties here, too. The alternative is to go big and secure as much money as you can from a relatively small number of extremely wealthy donors. This can produce quick and substantial returns in the short run, but it can also create massive headaches over the longer term.

As any fundraiser worth their salt knows, the allure of big donors is a double-edged sword. Yes, they may be able to balance your books with the waft of a pen, but this can come at a price. The Conservative Party are finding this out the hard way.

Donors often want to get something in return for their contribution, even if it’s the fuzzy warm feeling associated with knowing that their money has gone to a good cause. Other more hard-headed contributors might prefer something more transactional. With such a dynamic and sizeable sums at play, it is easy to generate the perception, or open the door to the reality, of some form of quid pro quo.

Previously, questions over cash for peerages dogged both Labour and the Conservatives in government. Now, it’s cash for access and potential political influence that’s catching headlines. While proving profitable – we estimate this could have brought in tens of millions of pounds since 2019 – it can be politically dangerous.

The Westferry scandal, in which Robert Jenrick pushed through a planning decision against the advice of his officials and after being lobbied by the developer at a fundraising event, mired his tenure as Secretary of State. The reputation of Conservative Co-Chair, Ben Elliot, has taken a bruising, not only over that incident but also his role in developing the party’s ‘Advisory Board’ club – where members pay £250,000 annually for exclusive access to the PM and other senior ministers. These latest revelations will do nothing to help a party mired in allegations of sleaze.

To avoid such political pitfalls, we’ve long advocated for reforms that would take big money out of UK politics.

To reduce the need for large contributions in the first place, we call for tighter controls on how much parties can spend at elections. Currently, the limits are far too generous and do not include major costs, like staff salaries, which drive the demand for donations. In turn, this will reduce the pressure on fundraisers to behave recklessly.

To reduce the risks of cash being exchanged in return for favours, we call for an annual cap on donations, so individuals or companies can give no more than £10,000 to a party, their candidates or other election campaigns annually. Risking reputational damage, or even criminal investigations for bribery, is far less appealing if the benefits of a donation are modest. It would also have the benign effect of encouraging parties to diversify their support base and engage larger sections of the public outside of election time.

These should form part of the government’s Election Bill, which is claimed to increase the integrity of polls but does more to stifle democracy than protect it.

Pending our proposed reforms, which require legislation, we ask parties to undertake more thorough checks on their benefactors. Asserting the contributions you accept are within the law does not say much when the demands of the law are minimal – a donor only has to have some sort of connection to the UK, like being on an electoral register or incorporated and carrying out business here (a very low threshold). Parties should have confidence that those who provide them with substantial financial support are of good standing. Thinking before thanking donors for their cash might take a little bit more effort in the short-term, but prove a sound investment of time and political capital eventually.