Reforming party funding by stealth and compromise may have longer-term consequences

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Since the 2015 general election the government has introduced two measures –proposals relating to trade union political funds and cuts to Short money – that have the potential to affect the funding of at least some political parties. Justin Fisher argues that reforms such as these that have an asymmetric impact on parties could have longer-term consequences by causing a future government to exact ‘revenge’. That would do little for the prospects of reaching consensus on the vexed question of party finance reform.

The phrase ‘stop-go’ has become a useful means by which one can characterise Britain’s approach to party finance reform since 2000, when the wide ranging Political Parties, Elections and Referendums Act  (PPERA) was passed. Despite PPERA, the ‘problem’ of British party finance has refused to go away and, in the relatively short period since its introduction in 2001, there have been two subsequent government sponsored inquiries, both of which have recommended significant further reform but have failed to see their proposals implemented. The result is that Britain has developed a stop-go approach to reform, whereby reviews are entered into with reforming zeal, only for the ensuing proposals to be shelved by a failure of the main political parties to reach agreement. However, since the 2015 election two measures have been introduced which have the potential to affect the funding of at least some parties. In both cases the final proposals are likely to be somewhat less radical than was originally envisaged but could nonetheless have significant short- and longer-term consequences.

The Trade Union Bill

The election of the Conservative majority government in May 2015 very quickly signalled that reforms related to party funding would be attempted, not as a comprehensive attempt at reform, but with possibly far reaching consequences for some parties. In July 2015, a Trade Union Bill was presented, which included a clause requiring trade unions with a political fund to operate a ‘contracting-in’ system rather than a ‘contracting-out’ system. This had been a Conservative Party manifesto commitment, but went to the heart of the Labour Party’s relationship with the trade unions, following the Trade Union Act 1913. This established that for trade unions to engage in political activity, they must create a separate political fund. This covered all political activity – not just that with the Labour Party – and trade union members were required to actively ‘contract-out’ if they wanted to avoid paying this modest additional fee. The 1913 Act laid the ground rules for an important aspect of Labour funding for much of the next 100 years. Political activity through the Labour Party would be expressed collectively through a union’s decision to affiliate to the party.

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