How should we pay for our politicians?

At the Hurlingham Club last week, a select number of Conservative party members paid £1,500 each to have dinner with outgoing prime minister, Theresa May, and the two contenders, Borish Johnson and Jeremy Hunt.

One mysterious donor went a little further – he or she bid £300,000 to have dinner with the next Prime Minister.

Other wealthy supporters doled out thousands of pounds in the auction to buy a signed photograph of Boris Johnson and David Cameron, a day trip for nine on a private jet to anywhere they wish in Europe and tickets to the Abu Dhabi Grand Prix.

Another donor paid £40,000 for a private champagne party for a 100 people at the London Cabaret Club in Bloomsbury, another paid £15,000 for a hunting trip to Scotland. One brave soul paid to go walking with Rory Stewart.

We do not yet know the identity of the wealthy donors who shelled out hard-earned cash for such privileges. But you can bet your cotton socks they will include a hedge-funder, a property developer with offshore companies and maybe a rich Russian too.

These days, it is the hedgies and self-made tycoons who have the spare cash or desire to fund political parties.

Thirty years ago most of the big money for the Conservative Party came from big corporate donations – companies like United Biscuits – but rigorous and more politically-correct shareholders have put paid to that largesse.

However, what the Hurlingham auction does illustrate once again, is how a small group of supremely wealthy people are paying for our political process, and indeed, our politicians. It also begs the eternal question about political funding: to what extent does such a tiny group of people have access to ministers and influence over policy-making and its direction?

Indeed, it’s this perceived insidious relationship between politician and donor which brings the entire political funding system into question. For example, when Johnson says he wants to review “sin” taxes, such as the sugar tax, he is immediately labelled a stooge of the food and drink manufacturers. However honest Johnson is about questioning the orthodoxy that sugar taxes will reduce obesity, it’s a hard charge for him – or any other politician – to rebut when food tycoons probably have contributed to the party.

You can see again how tiny that circle is by looking at the identity of the dozen or so donors who have been backing the leadership campaigns of Boris Johnson and Jeremy Hunt.

Candidates are allowed to spend only £135,000 each on their campaigns. Another £150,000 can go to helping the Conservative Party pay for their hustings but any money left over must go to the general party funds.

And boy does the party need the money. Many of its traditional donors such as asset manager, Jeremy Hosking, have switched to the Brexit party, and some say they are unlikely to be drawn back.

The party has struggled with some big donors “on strike” in protest at Theresa May’s handling of Brexit. The Tories raised £3.68m in the first three months of 2019. That is down from £7.4m in the final quarter of 2018. The Conservatives will need to raise a minimum of £20m or so as a war chest to fight a general election. CCHQ hopes a new leader will inspire donors to start paying again.

Indeed, the leadership campaign – and the hope that Johnson will win – appears to have got the juices going again. The register of member’s interests shows that Johnson has raised around £500,000, nearly double that of Hunt.

His backers include Robin Birley, who runs the Mayfair club 5 Hertford Street, and is said to have switched back to the Tories from the Brexit party. Sir Anthony Bamford of the JCB digger company and Sir Michael Hintze, the hedge fund manager, have also contributed. Michael Spencer, the City financier who used to be party treasurer, is said to have given money to all the candidates.

Hunt has received more than £185,000 in total, a chunk of which came from Remainers. His register of interests show he received ten donations in May 2019 from nine backers: they include Andrew Law, a hedge fund manager, who also gave £200,000 to the In campaign, Ken Costa, the City banker and former envoy to the Saudi Arabian government and the Pathak couple who run McDonald’s franchises.

So the next Prime Minister to be announced on July 23 will have been chosen by the votes of 165,000 of the party’s 180,000 members and the wallets of a couple of dozen or so affluent individuals. Does that matter? And is there a better way of funding not just the leaders’ campaigns, but the parties themselves?

If pimping out the future British prime minister for dinner has an unsavoury taste, then the block support given to the Labour party by a handful of unions could be seen as every bit as distasteful.

For the Labour party is just as reliant on the power and influence of the unions as the Tories are on their wealthy backers.

Labour, which has more money than the Conservatives right now, also has its fair share of hedge fund managers and property developers as donors – not as many as in Tony Blair’s days but businessmen and women remain faithful backers. One of the UK’s most successful private entrepreneurs, John Mills, of the JML TV shopping channel, is still one of the party’s biggest donors.

No wonder every public poll of political funding reveals that most people are deeply sceptical about the influence that donors have on our political system. There have been several attempts to fix funding over the last decade or so – the Electoral Commission review in 2003, the Hayden Phillips review in 2007 and the Electoral Commission in 2013. Yet there have been no radical reforms in how we fund politics for a 100 years or so. Indeed, the only significant change introduced was the transparency rule that the identity of donors giving £7,500 or more should be revealed.

The truth is the status quo has suited our traditional two-party system: the Tories had the rich, Labour had the unions and the LibDems had the left-overs. Until now.

Our political landscape is going through its own changes with the growth of new parties such as the Brexit party, Change UK/Independent group and the popularity of the Greens.

Whether these tremors will turn seismic is yet to be seen. But this could be the time for a meaningful review of funding. At present, the UK’s political parties receive in total about 70% of all funding from non-government and private sources – the rest is from the state via short money and other grants.

By comparison, Europe’s political parties receive far more on average from central government. Germany’s politicians get 70% from state funding – the mirror image of the UK.

Ironically, just as public polls show a revulsion for the influence of private donors, only a tiny minority say they would be prepared to pay for politicians out of their own purse through tax.

Much has been said and written about how our politics are “broken” – and that trust in the political process has never been so fragile. Could looking at alternative ways of funding our politics help restore that trust?

Imagine if every working adult paid £2 each a year into a political fund – that’s cheaper than a cuppa. And would raise  £64m straight off – enough to pay for all our party finances and do away with most private contributions.

Maybe they should be asked in citizen’s style assemblies?

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