Political parties should not be financed with taxpayers’ money

BRITAIN is sleep-walking towards the state financing of political parties. Some will welcome this: they believe that reducing parties’ reliance on trade union money (in Labour’s case) or City donors (in the Tories’) would be a good thing, as it would also diminish their influence. Yet state funding would be disastrous, even worse than the status quo, and not only because it will end up costing taxpayers.

Switching to public money would make parties even more detached from the public, and even less constrained by anything other than their leaders’ self-interest. State financing would nationalise politics, guaranteeing income sources based on past election results, reinforce the existing cartel in Westminster, reduce competition for voters and make it almost impossible for new parties – such as the SNP, Ukip or the Greens – from ever breaking through. State support will come with strings attached. Parties will become even more consensual and less appealing to an alienated electorate. MPs increasingly belong to a new class whose views are distinct from that of large swathes of the public; this worrying trend will intensify.

Instead of nationalising politics, we need to privatise it. Political parties need to reinvent themselves for the digital era, and mutate into loose networks of activists. They need to tap into far larger numbers of donors for smaller sums of money, and ape some of Barack Obama’s pioneering fundraising techniques. The transition will be very tough – but the state financing of our politicians would be a disaster for our democracy, and must be avoided at all costs.

LABOUR STILL AHEADThe received wisdom among many Tory MPs is that they are on a roll, that David Cameron’s position is safe until 2015 and that Ed Miliband is faltering. A different but related view is to be found in the upper echelons of the City: many there despair of the coalition’s dithering but the thought of a Prime Minister Miliband is met with incomprehension, bafflement and disbelief. “There is no way that he can be PM”, they keep telling me. That, I’m afraid, is wishful thinking.

The Labour leader did well at this week’s Prime Minister’s question time, an event which matters to the political elites, but he remains engulfed in a high risk battle with his trade union backers to reduce some of their control over his party.

His strategy is hard to decipher. The most likely outcome is that nothing will really change: union members may end up giving less to the Labour party itself, but the money will be allocated to unions’ political funds instead, and be spent on left-wing, anti-austerity causes, directly or indirectly. The fact that a surprisingly large number of union members vote Tory, and many back the Lib Dems, and hence may disagree with these causes, won’t make any difference.

But the real flaw in the mainstream view is that it is contradicted by the data. I’m not aware of a single national opinion poll which isn’t predicting an overall Labour majority at the next election. True, Labour’s lead has shrunk, but the facts don’t justify the Tory party’s irrationally exuberant mood. Take the most recent YouGov poll: the Tories are on 32 per cent, Labour on 37, the Liberal Democrats on 11 and Ukip on 12. These are terrible results for the traditional parties, but Labour would still easily get the most seats, and almost certainly over half. A continuing, modest recovery may conceivably further narrow the gap, despite never-ending austerity. But the electoral system is viciously biased against the Tories: they need a 10.5 point lead to win a majority, but Labour just needs a 3 point lead, because Tory votes are concentrated in larger seats. Ukip remains a major threat. Miliband isn’t doing well in the circumstances – but sometimes a mediocre performance can be good enough.

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