A diverse funding system gives American democracy a more participatory quality than our own

Put the money back into politics

Business and politics rubbed along much better before restrictions were introduced


This article is taken from the May 2024 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

It’s an election year, so political finance is back in the headlines. We have had the tawdry tale of Yorkshireman Frank Hester, the £10 million Conservative donor who said Diane Abbot makes you “want to hate all black women”.

Then there was the hullaballoo over Labour accepting cash from Dale Vince, a New Age traveller turned energy entrepreneur who bankrolled the Swampies of Just Stop Oil. Most recently, there’s been a rumpus over a “K” for Mohamed Mansour, a former Egyptian government minister and Tory treasurer.

The commentariat have responded as they always do — with calls to “get the cash out of politics”. There have been the usual knee-jerk demands for state funding of parties, caps on donation sizes and yet more regulators.

However, the problem with British politics is not that there is too much money from business folk sloshing about — rather that there is too little. It is time for all of us engaged in private enterprise to follow the lead of our American cousins and chow down on the rubber chickens, bid large at the silent auctions, and let loose the credit cards. Not only is it our civic duty, it will help our politicians become more rounded and mature representatives.

The rot set in with the passing of the well-meaning but deeply flawed Political Parties, Elections and Referendums Act (PPERA) in 2000. This was the legislation which introduced the Electoral Commission and capped the sums that could be spent in individual campaigns.

I am not saying the previous century was a golden age, but business and politics seemed to rub along rather better in those more gently regulated times. Back then, many of our largest public companies saw it as their responsibility to give modest sums to political parties.

There was never any expectation that advantage could be bought, but it sometimes earned a right to be heard. At a local level, the stalwart Rotarian classes cheerfully chipped in for posters and rosettes.

However, with the arrival of the PPERA, all this largely benign “normal money” departed.

The Rotarians became more interested in donkey sanctuaries and air ambulances

Plc board directors were worried about the “personal risk” of signing off on political donations, and the Rotarians became more interested in donkey sanctuaries and air ambulances.

The financing that remained fell into two categories — donations-with — menaces to Labour from the increasingly militant trade unions and what I call the “weird money”. Many of those who make large donations are outsiders who hope their money will enable them to wipe clean the provincial, humble or foreign origins that block their acceptance into polite society.

Somehow, they never realise that those who accept their money will privately sneer at them — and then the press will expose them to the sort of scrutiny which few reputations survive.

It doesn’t have to be like this. Whilst many people instinctively recoil at the American approach to political finances, it does have its virtues. In the US, every employee is requested — though not required — to contribute to their company’s Political Action Committee, which typically donates to candidates from both parties.

Furthermore, most Americans of means regard regular attendance at political fundraising dinners as part of their civic duty. This very diverse financing model gives American democracy a more participatory — dare I say it, more Athenian — quality than our own.

The US model also creates candidates with a more sophisticated understanding of how wealth gets created. No one can successfully run for even the most lowly local office in the US without first having had to listen carefully to the needs of businesses and their employees.

By contrast, British parliamentary candidates never have to sing for their supper in quite the same way. It leads to MPs who never graduate to grasp the big picture. Instead the Commons benches are awash with single-issue student hobbyists: army veterans whinging about the quality of barracks or former barristers demanding more legal aid. It is hard to identify a latter-day Pericles amongst any of them.

The gap in living standards between us Brits and the Americans is large and growing. (Have you tried ordering a round of Martinis in midtown Manhattan recently?) One important reason for this is our political classes’ lack of meaningful interaction with business, both in the formative foothills of their careers and as they climb the greasy pole.

It is too much to expect an incoming Labour government to take action. But if Rishi Sunak is still casting round for a meaningful long-term legacy for his meagre term in office he could do worse than repeal the PPERA.

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