Valentino Larcinese argues that, as is the case in Europe, the UK should adopt public financing for political parties to help avoid elite capture by wealthy private individuals or corporations, and allow politicians to devote their time to activities other than just fundraising

Larcinese, Valentino

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LSE Research Online

blogs.lse.ac.uk http://blogs.lse.ac.uk/europpblog/2012/04/19/europe-political-party-funding/The UK should embrace the European model of publicfinancing for political partiesApr 19 2012Valentino Larcinese argues that, as is the case in Europe, the UK should adoptpublic financing for political parties to help avoid elite capture by wealthy privateindividuals or corporations, and allow politicians to devote their time to activities otherthan just fundraising. The United Kingdom is quite unique among European democracies for its absence ofpublic  funding of political parties. So–called “short-money”, which covers basicadministrative costs of opposition parties, varies between 5 and 8 million pounds peryear, depending on the size and composition of the opposition. In France, political parties receiveabout 70 million euros per year plus 50 per cent reimbursement of electoral campaign spending (about80 million per year). In Germany, public funding amounts to about 130 million euros per year, and thestiftungen (think-tanks directly linked to parties) receive more than 300 million. In Italy the amount isaround 200 million per year, and in Spain, 130.There is not much difference, though, for what concerns violations of the rules. In the last two weeks,scandal on possibly illicit financing of the 2007 campaign is getting closer to French president Sarkozy.And in Italy, a scandal erupted on the personal use of party (and mostly public) money made by majorfigures of the Northern League, a party that, incidentally, owed its success, among other things, to itsanti-corruption and anti-state platform. There is virtually no democratic country where you will not findimportant scandals surrounding the way politics is financed.Not too long ago, 2008 US presidential candidate John McCain warned:“I promise you, there will be huge scandals, because there’s too much moneywashing around, too much of it we don’t know who’s behind it and too much corruptionassociated with that kind of money.”The problem can only get more acute as electoral campaigns get more sophisticated and the size ofwar-chests need to increase as a consequence. Politics costs money and, if it is necessary for a wellfunctioning democracy, it is probably money well spent.Public funding of political parties will therefore not eliminate funding scandals. But it is nevertheless agood idea. A system almost exclusively based on private contributions is inevitably more prone to be“captured” by wealthy individuals and corporations. This creates a gap in representation between thosewho can afford sponsoring a candidate and those who cannot. Moreover, as the costs of politics goesup, politicians will find themselves devoting increasing portions of their time to fundraising rather thanother, socially more valuable, activities. This problem is now well known to US legislators.It is also useful to distinguish between small contributions made by generally disinterested citizens andthe donations of large sums. The risk of capture is mostly linked to the second. Also, as shown in arecent study on the US, the quality of legislative activity has no correlation with the amount of moneyraised by legislators, but is strongly positively associated with the number of small donations (andactually negatively associated with the amount raised in large contributions). Better candidates (fromthe perspective of the public at large rather than a few grand-donors) are probably able to attract largernumbers of small donations.Hence, it would be useful:1) to place a ceiling on the amounts that can be donated. In France, for example, the limit is 4,600euros;2) to create incentives for small donations, making them tax deductable. In Germany, for example, it ispossible to claim an annual tax credit of 50 per cent the contributed amount up to a maximum of 825euros. In France the tax credit is 66 per cent.3) To make private contributions fully transparent. In the US, for example, all donations in excess of 200dollars are reported online on the website of the Federal Election Commission, including name andaddress of the donor.On the plus side, the current system, based on in-kind subsidization of electoral campaigns and a banon paid TV advertising, is probably cost effective. As a result, campaign expenses are much lower inthe UK than in other comparable countries. Finally, a feature which is peculiar to the UK system and isworth retaining is the idea that opposition parties should receive more public money than parties ingovernment (indeed, at the moment there is no money for parties in government). Public financing ofpolitical parties in other countries is typically proportional to votes. This means the strongest party (andparties in government) receive more money. But this can be an obstacle to political change and to aphysiological replacement of political elites. A new system of public funding for political parties shouldtherefore try to retain this feature of the British system and give more money to opposition partiesrepresented in Westminster than to parties in government.Please read our comments policy before posting.Note: This article gives the views of the author, and not the position of EUROPP – European Politicsand Policy, nor of the London School of Economics.Shortened URL for this post: http://bit.ly/I4EvC6This article first appeared on the LSE’s British Politics and Policy blog.________________________________________About the authorValentino Larcinese – LSE GovernmentValentino Larcinese joined the LSE Government Department in 2001. Previously heworked as an economist in the research department of the Bank of Italy. He receiveddegrees from Bocconi University (Laurea in Economic and Social Disciplines), from  theUniversity of York (MSc in Economics), from the University of Milan (Doctorate inEconomics) and from the LSE (PhD in Economics).Related posts:1. With Mario Monti’s technocratic government, it is not just the idea of party government which isbeing damaged in Italy, but the very idea of the political party’s role as an indispensable agent ofdemocracy. (5.5)2. Blogs on European affairs are written by insiders. There is a need for these EU specialists andacademics to bring their debates to the digital public. (5.4)3. Book Review: Social Movements, Public Spheres and the European Politics of the Environment(5.5)

The UK should embrace the European model of public financing for political parties

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