How do we know whether political funding is corrupt? Mostly, we don’t. A plutocrat delivers a sack of cash to a political party. A few weeks later, it announces a policy that happens to favour the donor’s business. Are the events linked? We might suspect it; we cannot prove it. But the suspicion itself is corrosive and demoralising.
The current funding system, perhaps more than any other factor, turns us away from politics, breeding disillusionment, alienation and cynicism. A survey by the Electoral Commission last year found that only 18% of respondents believed spending and funding are transparent. A government survey in December discovered that 87% of people are “concerned about the possibility of corruption” among politicians. A further survey concluded that political donors are believed to wield the most influence of any elite faction. Disillusionment with politics drives people into the arms of the extreme right. This is paradoxical, as it tends to be highly receptive to the ultra-rich.
I’m prompted to write this column by Tom Burgis’s powerful investigation for the Guardian into Reform UK’s relationship with Christopher Harborne, who is based in Thailand. Remarkably, Harborne has provided about two-thirds of all Reform’s donations since its foundation: more than £22m altogether. The rules in Britain limit the amount a party can spend in an election year, but set no cap on the proportion a single funder can provide. In theory, one person could supply its entire budget. At what point do we decide that a political party is, in effect, owned by a donor?
I can’t prove that Harborne’s money has bought special favours from Reform, and make no suggestion of illegality. But there is also no way of proving that this funding is not connected to Nigel Farage’s enthusiasm for cryptocurrency, which appears to be Harborne’s principal source of wealth. The not-knowing is just as corrosive as the knowing. (Farage and Harborne have said the money comes with no strings attached. “Does he [Harborne] want anything in return for his money? I promise you absolutely nothing,” Farage said last year.)
While Harborne’s money dwarfs all other donations, this is by no means Reform’s only entanglement. It has also received £4m this year from the crypto billionaire Ben Delo, based in Hong Kong. In 2022 Delo pleaded guilty and was convicted in the US for wilfully failing to implement money-laundering controls at his cryptocurrency exchange. Last year, Donald Trump pardoned him.
Like the Tories, Reform has also taken lavish funding from very rich people who are hostile to climate action. Both parties now evince the same hostility. Which came first, the hostility or the funding? Does it matter? Whether a party changes its policy in response to donations or attracts big donors because of its policy, it’s equally damaging to democratic trust.
The same applies to Labour’s relationship with City donors, which might help explain its newfound enthusiasm for deregulating finance, despite the warnings of 2008. As Transparency International has documented, political parties in the UK “are increasingly becoming dependent on a small number of very wealthy donors”. “Dependent on” can easily mean “beholden to”. In very few cases has corruption been demonstrated. But that’s not the point. The problem isn’t that such relationships are illegal. The problem is that they are not.
The trust crisis was exacerbated by the Conservatives, who, without providing a coherent rationale, raised political spending caps and handcuffed the regulators. As the admirable Spotlight on Corruption has discovered, the Electoral Commission’s investigations have declined by 89% since 2019, while the police, without a dedicated unit and clear powers, do almost nothing. No one has ever gone to prison in Britain for breaching electoral finance laws. The highest criminal fine yet levied is a pathetic £6,000. The regulator’s budget in this country is about £1 per voter. In Australia it’s £24.
The higher caps set by the Tories triggered an even more intense scramble for private money: our representatives now often seem to spend more time soliciting funds than soliciting votes. Regulatory corrosion has made it even harder to spot the difference between a “permissible” donor and an “impermissible” one, and to stop foreign agents infiltrating our politics.
The representation of the people bill seeks to address this crisis. But to read the relevant sections (58-63) is to be struck by their extreme complexity and obvious loopholes. In response to the Rycroft review on foreign interference, the government has decided to cap annual funding from voters living abroad at £100,000 each, and stop donations being made in cryptocurrency. But how can anyone be sure that a billionaire based abroad isn’t channelling money through a resident, or an untraceable crypto payment isn’t turned into sterling before it lands in a party’s account? Continued regulatory chaos and public distrust are locked in.
I believe that any attempt to distinguish between “good donors” and bad, resident and foreign, is futile. Any major donor is a bad donor, as their economic power undermines democracy. Given the transnational nature of capital, distinctions based on residence become meaningless. And what’s to stop an AI program splitting a big donation into a thousand small ones that don’t need to be reported at all?
There’s a simple way of sorting all this out. It works as follows. The only money a party can receive is a standard fee (say £25) for membership. The government then matches that fee on a fixed multiple. For instance, if you have 100,000 members each paying £25, and the multiple is three, your annual budget is £10m. And that’s it: no other sources permitted. The parties would agree between themselves, with public input (perhaps a citizens’ assembly), on what the membership fee and multiple should be.
At a stroke, this sweeps away all the complexities of permissible and non-permissible donors, residence requirements, currency types, ultimate origins and spending caps. Instead of raising money, politicians would spend their time raising membership: reconnecting with the public and broadening their base. We would become equal political citizens, and our system would be transparent and intelligible. It would belong to us, not the billionaires.
The cost to the exchequer? Perhaps between £20m and £50m a year. The costs of the current system are incalculable, as the entire state is harnessed to it, creating endless dysfunction. It doesn’t solve every aspect of billionaire influence: for instance, it wouldn’t have stopped Nigel Farage taking another £5m, in this case for his own use, from Harborne before he became an MP. But this simple measure would, I believe, do more than any other to give politics back to the people.
Democracy demands that we eliminate not only the dodgiest and most obscure sources of donor money, but all of it.
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George Monbiot is a Guardian columnist
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