Political Party Funding

Political Party Funding

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Political Party Funding

Political parties require funds so that they can pay for election
campaigns and wages and so forth. Donations can range from a mere £5 a
year to millions of pounds, or funding for offices and equipment.
Frequently, a party spends a lot more money in a year than they will
receive in donations or membership fees. To see how the parties are
funded, it is best to look at them individually.

The Liberal Democrats, in comparison to the big two, have a relatively
small income of about £3m. For the Lib Dems, their 85,000 members are
vital for their existence, as they lack support from institutions and
wealthy individuals, which gives them a handicap when it comes to
elections. Also, their members are vitally important for election
campaigns, as the Lib Dems lack support from a newspaper and cannot
afford to spend huge amounts of money. This means that they have to
spread their resources very thinly across constituencies, and as a
result will not gain many votes as they struggle to get their
manifesto across.

The Conservatives have increasingly worrying money woes, as their
income is continuing to drop. Even though they have more money on
paper than they did a while ago, it is not in line with inflation, so
they are losing money. A big reason for this is their drop in
membership. In the 1950s, the Conservatives could boast a membership
of over 2m, but that has fallen to 330,000. The Conservatives have
enjoyed huge donations from wealthy people and businesses (in the
early 90s especially), though there is a sleaze factor in this.
Wealthy families of Brunei, Saudi Arabia and Kuwait have donated huge
amounts to the Tory party, and got military help in return for their
generosity. They also received funding by Li Ka-Shing and Rong Yiren;
in return they received passports to come to this country. The
Conservatives have been criticised for being funded by a handful of
wealthy individuals.

The bulk of Labours income comes from the Trade Unions, though they

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still have wealthy individuals, such as Bernie Ecclestone and Lord
Sainsbury, donating large quantities of money to the Labour Party.
Like the other parties, a fall in the number of members has led to a
decline in revenue, of which most of their money comes from, which has
effected their earnings. It is well known that the Labour party would
collapse without its vital Trade Union beneficiaries, though Labours
reliance on them has declined over recent years.

Critics argue that parties funded by private means, like the
previously mentioned, act on their behalf, which does not help
everyone. When Labour declared it would be banning cigarette
advertising, Bernie Ecclestone promptly donated one million pounds to
the party. In return, his Formula 1 Empire was exempt from this law,
albeit for ten years until other means of finance could be found. Sir
Alex Ferguson (it is argued) may have received his knighthood from the
£20,000 a year, which he donates to the Labour Party. The
Conservatives also carried out 'favours' for people who donated money
to them, most notably in Margaret Thatcher and John Major's terms as
Prime Minister (1979 and1997). It is known that during this time, in
which 18 life peerages and 82 knighthoods went to industrialists in 76
companies. These industrialists and companies had donated upwards of
£17,000,000 to the Conservatives' cause. This is why people feel that
parties are 'puppets' to these individuals, and policies can be aimed
more at these individuals than at the electorate.

One thing that the Lib. Dems support is the idea of parties being
funded by the taxpayer. Advantages of this is that there is a fairer
system, so the electorate have more choice, as smaller parties can
spread out more funds across constituencies, which will increase the
democratic system in Britain, as more smaller parties can be better
represented. There are problems with this, as some people will want
their tax money to go to a certain party, which could result in a more
complex system. Another main problem is that millions of pounds will
be spent on parties, rather than health and education. Perhaps the
most complex is what would each party receive to spend on campaigns.
Due to this reason, this system would not actually be fair, as the big
two would still receive more than the other parties.

What the parties have been more active at in increasing income is
trying to attract more members. In the past, people would join a
Conservative club (or any other such club) to socialize, or as one
popular political commentator said, 'I joined because they had
table-tennis.' Nowadays, people can go to a wine bar, a club or to a
restaurant more to socialize, so these political clubs are not so
popular. A good example of a leader trying to get back support was
William Hague. In hi 'Fresh Future Reforms', he pledged to obtain more
than a million members by the millennium. To do this, he tried to make
the membership more influential, rather than a 'leader leads, party
follows' structure, it did seem to work, but membership was up on 2000
by 12,000 members in 2002. His idea did not work and he was replaced.
Parties have been less successful than, say, the RSPB in attracting
members is probably because people have certain beliefs, so will want
to join something they feel reflects them. For example, you may want
to join Conservatives because of their tougher stance on asylum
seekers, yet disagree with their 'anti' Europe stance.

To limit the amount of donations, a limit of £1,000,000 was enforced
to maximise a single donation. There are ways around this. For
example, you can offer to pay for the use of property for a party,
which can free up other money in the party. A newspaper can also give
priceless support for your party, which could gain more votes. In
general elections, the parties are now allowed to spend a maximum of
£30,000 per constituency, and £40,000 for the national assembly of
Wales. Though, this act has only just been introduced, so parties have
been spending freely. The idea of these limits is to allow each party
to spend a maximum of £19,230,000; perhaps so that the parties do not
try to receive funding from sleazy characters (i.e. Richard
Desmond-Porn entrepreneur) and therefore the parties have to do less
'favours' for their donors.

It has to be said, that spending from all three main parties in 2001
is more than 50% less than the spending in 1997, which could be down
to Labour's majority, and if that trend continues, there would be no
political parties, except ones that are bankrolled by an ambitious
businessman. This is perhaps why state funding for parties has come
into question more, as parties rely more on wealthy individuals than
on their members (except the Liberal Democrats). Labour have already
suffered a blow as the Rail, Maritime and Transport Union has
withdrawn its funding, due to disagreements with some Labour policies,
and other Unions (i.e. the FBU) could follow suit.
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