Party Finance

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    • 00:10

      JUSTIN FISHER: Hello, I'm Justin Fisher.I'm a professor of political science at Brunel UniversityLondon.When thinking about the evolution of party finance,it's worth breaking it up into eras, and we can identify four.The first of these is known as the aristocratic era.Now this has its origins in the early stirrings of modern partyactivity, in the first half of the 19th century.

    • 00:34

      JUSTIN FISHER [continued]: Now at that time, elections were markedby a high degree of corruption, largelythrough the bribing of voters.Now this came under pressure from the growthof the franchise-- there were more people to bribe--and the secret ballot, which madethe transaction less secure.What also happened was that political partiesstarted to become more disciplined in Parliament.

    • 00:57

      JUSTIN FISHER [continued]: In other words, parties started to whip their MPs,to ensure that they voted to get business through the House.And what this meant was that the independent power of MPs,and the possibilities of personal enrichment, declined.But the final nail in the coffin of this erawas in 1883, with the passing of the Corrupt

    • 01:18

      JUSTIN FISHER [continued]: and Illegal Practices (Prevention) Act.What this did, amongst other things,was outlaw the bribery of voters, but also placedlimits on how much candidates could spendduring election campaigns.So after the aristocratic era, wecan identify a second, plutocratic era.

    • 01:39

      JUSTIN FISHER [continued]: During this period, from the late 19th century onwards,parties found that the landed aristocracywas no longer a good source of raising party funds.And the alternative was from Victorian businessmen,who whilst being wealthy, craved social acceptance.And this could be achieved through the award of honours

    • 02:02

      JUSTIN FISHER [continued]: What the Liberal and the Conservative Party both didwas exploit this situation enthusiastically.In effect, party donations were solicited and acceptedin return for titles, especially in the periodafter the First World War, which wouldproduce many new millionaires.Now in the early part of the 20th century,

    • 02:24

      JUSTIN FISHER [continued]: we see the first stirrings of what we call the modern era.And this owes its development to two things.Firstly, there was the development of trade unionfunding of parties, first of individual candidates standingfor the Liberals, and then, from the early 20th century onwards,the funding of the Labour Party.But it was also a response too, by the Conservative Party,

    • 02:48

      JUSTIN FISHER [continued]: to the growing Labour movement, and specifically the LabourParty.The Conservative Party was concerned about the growthof Labour as an organized movement,and wished to develop a new source of funding.But the Conservative Party also wantedto move away from the scandal that was associatedwith the sale of titles.

    • 03:08

      JUSTIN FISHER [continued]: And so what we see in the modern erais a move towards parties being funded by institutions,rather than individuals.And a consensus surrounding party finance emerged.In effect, both sides, Labour and Conservative,broadly accepted trade union funding for Labour,

    • 03:28

      JUSTIN FISHER [continued]: and corporate or business funding for the Conservatives.And this consensus between the partiesreally continued until the 1980s.So from the 1980s onward, we can identifya fourth and final era, the so-called post-modern era.Now here we see company donations comingunder threat for two reasons.

    • 03:51

      JUSTIN FISHER [continued]: Firstly, corporate political independence.In other words, companies deciding that they didn't wantto be seen as supporting one side or another.But secondly, a number of companiesbecame multinational companies, or ownedby multinational organizations.And many companies didn't want to beseen to be supporting one side or another

    • 04:12

      JUSTIN FISHER [continued]: across a range of territories.The second pattern that emerged was the so-called reemergenceof large, individual donations.In the 1990s for example, we startedto see donations from individualsas being much larger than those of companies.Many companies for example, would only

    • 04:32

      JUSTIN FISHER [continued]: make a donation of around 200,000 pounds, which of coursesounds a lot of money.But in the '90s, we started to see individualsgiving donations around a million pounds.The third pattern was that trade union income started to varyin importance for the Labour Party.Labour had traditionally, relied principally on trade union

    • 04:55

      JUSTIN FISHER [continued]: money.But this changed really in the 1980s,as all parties started to develop entrepreneurial formsof income.They started to realize for example,that their conferences were more than just political events,and ones where they could raise substantial sums of moneyfrom organizations and companies who wanted to take out stalls.

    • 05:16

      JUSTIN FISHER [continued]: Coupled with that, parties started to offer financialservices, a Labour Party credit card for example,as well as selling goods.And then the final thing which really changed the way we thinkabout party funding, was that Labour,particularly in the 1990s, started to attract income,both from companies, but also from wealthy people,

    • 05:38

      JUSTIN FISHER [continued]: really signaling a sea change in the way that parties arefunded.So I'd like to look at now is some trends in party income,and also how parties benefit from state support.Now the Conservatives have traditionally been the wealthy

    • 05:60

      JUSTIN FISHER [continued]: party, much wealthier than the Labour Party, or indeed,the Liberal Democrats and their predecessors.But this really changed between the mid-90s and the mid-2,000s.During that period, we saw party finance turned on its head,with Labour being the wealthy party.But after 2006, we return to the norm.

    • 06:22

      JUSTIN FISHER [continued]: The Conservatives had a huge financial advantagefor example, in the run-up to the 2010 and 2015 elections,where they were able to raise all of the money in effectto fund those campaigns, in the last six monthsprior to election day.So parties also benefit from some support from the state.

    • 06:43

      JUSTIN FISHER [continued]: The earliest example of this was the introductionof the payment of MPs in 1911.Prior to that, parties had to paythe salaries of their own MPs.But today, all candidates receivea free mailing, courtesy of the Royal Mail, at election time.All candidates have the free use of a public hallif they want to have an election meeting.

    • 07:04

      JUSTIN FISHER [continued]: And perhaps most significantly, the larger partiesreceive free broadcasting airtime for a controlled numberof party broadcasts.Most recently, parties have also received state securityat party conferences.And this has really been increasedsince the 1984 Brighton bomb.But what characterizes all of these aspects of public funding

    • 07:28

      JUSTIN FISHER [continued]: is that they are in-kind.In other words, no money changes hands.But there are also some examples where parties receive cash.Opposition parties for example, since the 1970s,have received resources for their work in Parliament.The idea here was that the governing party receivedthe support of the civil service,

    • 07:49

      JUSTIN FISHER [continued]: so opposition parties needed to have resourcesso that they could provide alternative policies.And since 2001, there's also been a cash-limited PolicyDevelopment Fund for all parties with two or more MPs,to help them really develop a range of policies.Now although British parties do receive some support

    • 08:10

      JUSTIN FISHER [continued]: from the state, the subsidies they do receiveare actually very modest, comparedwith many other Western countries,who receive regular contributions in cashand also in-kind.Now the one area where it really works very well in the UnitedKingdom is in respect of television and radiobroadcasting.Parties are not able to purchase advertising

    • 08:32

      JUSTIN FISHER [continued]: on either of these two media.So instead, what the state providesis free broadcasting airtime.Parties have to pay for the production of these things,but the airtime at prime time televisionis something that the state provides for free,and shouldn't be understated.

    • 08:55

      JUSTIN FISHER [continued]: So British political parties are principally fundedby private sources, rather than public ones.And we call that model voluntary funding.And the consequence of the dominance of voluntary fundingis that we have a funding cycle whichis based around the cycle of British general elections.In other words, parties are well-funded around the times

    • 09:17

      JUSTIN FISHER [continued]: of elections, and less well-funded between them.Now this leads to two principal problems for political parties.First and foremost, most expenditurefor British political parties is routine,rather than being focused only upon campaigning.In other words, parties spend most of their money

    • 09:37

      JUSTIN FISHER [continued]: on being political parties-- paying salaries, propertycosts, and so on and so forth-- rather than spending allof their money on elections.Secondly, elections in Britain are held in almost every year.We don't just fight elections in the general election,we fight them in the European elections, devolved elections,and of course, the staggered local elections.

    • 09:60

      JUSTIN FISHER [continued]: Now as a result, political parties often find themselvesin deficit, not necessarily by excessive spendingat general election campaigns, but simply tryingto operate on a routine basis.And that provides us with a problem for the healthof political parties.

    • 10:24

      JUSTIN FISHER [continued]: So what I'd like to talk about noware issues in party finance, issuesthat apply not just to Britain, but across the world.First of these, is whether or notparties rely too much on wealthy contributors.Now those wealthy contributors might be individuals,they might be companies, and they might be trade unions.

    • 10:44

      JUSTIN FISHER [continued]: The reality is the parties can't fund themselveswith lots and lots of small donations,so frequently, large organizations got involved.The second question we need to askis whether parties have too much money, as many people oftenargue, or actually, if they don't have enough.If we find parties being routinely

    • 11:05

      JUSTIN FISHER [continued]: in deficit for example, is that because they're notgood at spending money, or is it because theydon't have enough money to survive and serve usin our democracy?And then the third question to consideris whether or not party funding disproportionatelyfavors the largest parties.If for example, the main source of voluntary funding

    • 11:27

      JUSTIN FISHER [continued]: is companies and trade unions, does thatmean that only certain kinds of partiesare going to be able to have the kind of money theyneed to fight a large number of election campaigns?So what I'd like to talk about finallyare some possible reforms.

    • 11:49

      JUSTIN FISHER [continued]: And these ideas for reforms are onesthat are live both in Britain, but also around the world.Now the first of these is whether or notdonations should be capped in terms of their size.And there are two reasons that people argue for this.The first is that there is a possible danger,if an institution, a company, a trade union, or an individual,

    • 12:11

      JUSTIN FISHER [continued]: makes a donation that's so large that a political party would bein some way beholden to them.Rather, it's argued, it would be better to cap a donation,to try and ensure that that doesn't happen.The second reason that people sightis that rather than parties raising moneyfrom a small number of donors, they

    • 12:31

      JUSTIN FISHER [continued]: should be encouraged to raise money from a larger number.So by capping the size of donations,we move away from gaining say, a million pounds from oneindividual, and instead, getting lots of smaller donationsfrom a whole range of individuals.This, it's argued, encourages more participationamongst the electorate.

    • 12:52

      JUSTIN FISHER [continued]: But there are counterarguments here,and the most prominent one is the idea of individual freedom.If I as an individual want to give my moneyto my favorite party, why should the statestop me spending as much as I like, on the political causethat I like?It seems to many people that this wouldbe an infringement on liberty.

    • 13:14

      JUSTIN FISHER [continued]: The second argument against it is that of course,if you cap donations in terms of their size,you have to find money from elsewhere.And that might lead to more state funding, which we'regoing to look at in a minute.The second area where we often think about reforms,is whether or not donations shouldbe permitted from institutions like companies or trade unions

    • 13:37

      JUSTIN FISHER [continued]: at all.Now the argument here is that whereas we only give citizens,individuals, the vote, by allowing companies and tradeunions to make donations, we are in effect,giving citizenship of some kind to institutions.We're allowing companies and trade unionsto try and influence the electoral process

    • 13:58

      JUSTIN FISHER [continued]: by giving monies to the party of their choice.The third area of reform is whether or notparties should receive more or less public funding.Now as we've seen earlier on, British parties alreadyreceive some public funding.But there is an argument that suggests, well,OK, if we're going to cap donations,

    • 14:18

      JUSTIN FISHER [continued]: some other form of income needs to come along.And most realistically, that is public funding.Now many people argue that public funding is a good thing,because it ensures that parties are properly funded,and also ensures that many parties cancompete in elections on a more even playing field.But at the same time, many people

    • 14:40

      JUSTIN FISHER [continued]: object to public funding.In the first case, they argue that theydon't want their taxes being spent on partiesof which they don't approve.But secondly, some people argue that if partiescan't raise money themselves, they shouldn't exist.After all, we wouldn't give state supportto a company that was going bust.

    • 15:02

      JUSTIN FISHER [continued]: In other words, some people arguethat parties should be no differentfrom any other organization, and should live within their means.Now there are no right answers to any of these questions.And inevitably, it is about making choicesabout the kind of democracy we want.And so when thinking about party finance, both in Britain,but also around the world, we need

    • 15:22

      JUSTIN FISHER [continued]: to think about these very important questions,and see how they link in with each other.So I hope you've enjoyed this presentation.And I hope it's given you food for thought about oneof the key issues in understandingpolitical parties, and democracies more broadly.

Party Finance

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Professor Justin Fisher discusses the ways political parties find their funding. Different political parties face many challenges, and throughout history there have been different ways of finding money. Now, most money comes from individual and industry donations.

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Party Finance

Professor Justin Fisher discusses the ways political parties find their funding. Different political parties face many challenges, and throughout history there have been different ways of finding money. Now, most money comes from individual and industry donations.

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