Let Labour fund itself and leave us out of it

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It seems to have been going on for months, the debate about whether the taxpayer should subsidise or, indeed, wholly finance the political parties.

It seems to have been going on for months, the debate about whether the taxpayer should subsidise or, indeed, wholly finance the political parties. It is what the Victorians called a "hum". Ten days ago the Prime Minister told Mr Jeremy Paxman on Newsnight that he would like nothing better than to cease having to raise money for Labour. He went on to add that to make a change would, however, require what he called "consensus" – the agreement of the Conservative Party, which unfortunately he did not have.

The idea that consensus is the same as an identity of view by the two front benches is curious, to say the least. But there is nothing about it that should surprise us. It is the way politicians commonly go about things. If it is sufficiently impressed on Mr Iain Duncan Smith that state funding is a progressive cause, he may yet take it up as a further demonstration of the enlightened character of modern Conservatism.

For though there may be no consensus between the two front benches or, for that matter, among the voters at large, there is certainly agreement in the Prig Press that Something – no one is sure precisely what, but Something – Needs to be Done. This is even more strange than Mr Tony Blair's definition of consensus. Can anyone imagine C R Attlee, say, confessing to an interviewer that unhappily he spent much of his time soliciting contributions to his party? Would Harold Wilson have admitted to the same activity?

True, Wilson had a certain taste for low company which Mr Blair shares. He had a whole string of familiars of more or less doubtful reputation, one of whom, Lord Kagan, ended up in jail. But their function was either to entertain him or to provide funds for his private office. There was no question of their being party benefactors of the same order as the trade unions.

In olden times the system was reasonably straightforward. Labour got its money from the trade unions; the Conservatives theirs from public companies large and small. Both methods of finance had one characteristic in common: the contributors of the cash were not asked their permission before it was disbursed. Usually, indeed, they knew nothing at all of their generosity.

Company donations were buried in the accounts and could only be extracted with great diligence. Union contributions were a matter of how many members the leaders chose to affiliate to the party. This figure bore an arbitrary relationship to the number of members choosing – or being compelled – to pay the political levy. In law, the levy was to set up a political fund merely, from which the Labour Party might or might not benefit. The transport workers would under-affiliate, partly out of parsimony, partly to avoid the impression that they were throwing their weight around. The mineworkers, principled in those days, would affiliate the precise number paying the levy. But Clive Jenkins's ASTMS would affiliate more members than had any real existence, to buy more influence for the union or, rather, for him. In addition, most of the unions would chip in at election time.

Rich individuals had always given money to the parties as well, usually to the Conservatives or the Liberals. The most famous practitioner of cash extraction was Maundy Gregory, who was Lloyd George's intermediary and whose activities led to the setting up of the Political Honours Scrutiny Committee. This has turned out to be one of the most ineffectual parts of our polity: it may be because we can only be certain of the rascals it undoubtedly lets through rather than those it may have turned down.

We do know, however, that it rejected Lord Archer at least once and possibly more often before admitting him to their lordships' House. There is presumably no reason why he should not return there after he has completed his spell of imprisonment. Lord Kagan used to scandalise Lord Wilberforce by regularly taking tea in the House after his own release from prison.

Perhaps politics have become more expensive – though the expense is competitive, like that of the great powers over nuclear weapons in the Cold War. The unions may be less a part of Labour than they once were. Large companies may not be so generous as they used to be. More rich donors may accordingly have to be sought out. But the present call for the taxpayer to come to the aid of the parties is wholly factitious. It is a consequence of the attacks of Mr Alastair Campbell, ably assisted by Mr Blair, on the government and the Conservative Party in the 1990s.

The Tories were not specially corrupt as these things go. Mr Campbell and Mr Blair, however, persuaded the voters that they were and that something had to be done about it. One consequence was the report in 1998 of the Committee on Standards in Public Life under Lord Neill. This proposed a shiny new quango, the Electoral Commission; publicity for individual donations of over £5,000; and a limitation on expenditure in general elections. After much debate, it came down against state aid to the parties additional to the existing "Short money".

The last is money given to the opposition parties after 1975 for parliamentary purposes. It is named after the then Leader of the House, Edward Short, who now reposes in the Lords under the title Lord Glenamara of Glenridding, sounding like a fine old malt whisky. A few of the papers have been saying that the Short money somehow justifies the distribution of additional millions to party headquarters. One might as well argue that it is equally justified by the long-established salary paid to the Leader of the Opposition – or by Mr Jack Straw's Act on the registration of political parties. After all, the law regulates the activities of limited companies, members' clubs and civil marriages. It does not follow that the state should give them money.

As Home Secretary Mr Straw had another measure passed: the Political Parties, Elections and Referendums Act 2000. This incorporated most of Lord Neill's recommendations. What, then, has changed so much in a mere two years to require an approach previously rejected by committee and Government alike?

The answer is that Mr Blair has become embarrassed by the donors whose names he insisted on publicising, most recently Mr Richard Desmond. To alleviate the shame, he has set up a committee of workers, peasants and intellectuals under Mr Charles Clarke, the "party chairman" and Minister without Portfolio – in reality the Minister for Newsnight and Today – whose function it will be to determine whether a potential donor is worthy of the People's Party. The spear which Mr Campbell and Mr Blair thought they had discharged at Mr John Major has turned into a boomerang. There is not the slightest reason why the taxpayer should get them out of trouble of their own making.