TThe date for the next UK general election has not yet been set, but one thing seems certain: the contest will be the most expensive in British history. They are already adding huge amounts of money to the party coffers. But what does this mean for our politics?
When it comes to political funding, Britain is something of an anomaly. Unlike many European states, there is little public funding for parties. Like the US, British politics is run on private money, but unlike the US, our politics is cheap: the 2020 US election cost $14 billion. The Conservatives spent just north of £16m to secure victory in the 2019 general election.
As a result, political giving is a minority pursuit. A striking feature of recent political donation data is how dependent British parties, particularly the Conservatives, are on a very small number of donors. In the first quarter of this year, Rishi Sunak’s conservatives intervened more than 14 million eurosmainly in cash donations from a handful of super rich individuals. The last time the Conservatives recorded donations of this scale outside of an election year was in the winter of 2009, when David Cameron was tipped to be the next prime minister. But that hefty headline donation figure is inflated by just one gift: a joint-record £5m from Mohamed Mansour, a former minister in the regime of Egyptian dictator Hosni Mubarak, who is the Tories’ chief treasurer.
Labor is also building a war chest and has raised more than £5 million in the first quarter of this year. While unions remain the mainstay of the party’s finances, Keir Starmer has been aggressively attacking private donors. There are signs that LabourRoses Network‘, which appears to mirror the Tory ‘Leadership Group’, where for £50,000 donors are given regular unofficial meetings with senior ministers, is starting to flourish: investor Stuart Roden gave £180,000 to Labor in February. Gary Lubner, former head of Autoglass, has pledged up to £5m to help Labor increase its “capacity and capability” ahead of the next general election. Some notable New Labor names have also returned to the fold. Francesca Perrin, daughter of David Sainsbury, has given more than £1 million since Starmer became leader. Michael Levy, who donated £25,000 last year, was previously involved in a ‘cash for honours’ scandal under Tony Blair.
The growing dependence of work on “high net worth individuals” is partly a product of necessity. As members have left the party in large numbers, fee income has fallen – falling by more than £3m in 2021, according to its latest annual accounts. Donations increased, but the party still posted a deficit of £4.8m.
The motives for the generosity are not always clear, but donors often benefit from preferential access to political elites. Conservative donors were bumper-to-bumper in the notorious “VIP lane” created by the government for suppliers of personal protective equipment during the Covid pandemic. In total, almost £5 billion in contracts were awarded to companies with political connections.
In 2021, it was revealed that donors, some of whom had given the Conservatives more than £250,000, sat on a secret.”Advisory Council” who had meetings with ministers. Its members have lobbied the government to lower taxes.
Peter Cruddas, left, speaking to Jacob Rees-Mogg, has said he will not fund the Tories under Rishi Sunak. Photograph: Andrew Matthews/PA
Donors can, of course, withdraw their support when they are unhappy with how the party is being run: Peter Cruddas, for example, has said he will not fund the Conservatives under Sunak. Cruddas, a City trader elevated to the House of Lords by Boris Johnson against official advice, has been supporting the avowedly pro-Johnson Tory Democrat organisation. Other donors have stopped giving altogether, or even switched allegiance to Labour, such as Gareth Quarry, who cited the Conservatives. arrogance and complacency. Another Tory from the Cameron era, Kasim KutayCEO of life sciences investor Novo Holdings, has done the same.
However, the Conservatives are still attracting new funders. Nigerian-born oil tycoon Orikolade Karim donated £50,000 earlier this year. Amit Lohia, who has not previously given, gave the Tories £2m in March. Dubbed the “prince of polyester”, Lohia is a director of an Indonesian conglomerate whose only UK outpost is a plastic bottle factory in Northern Ireland. And another veteran donor is sticking with them: party treasurer Graham Edwards gave £2 million earlier this year, and former vice-president Michael Ashcroft gave £50,000 in February, as did Lubov Chernukhin. (In total, Chernukhin has given almost 2.5 million euros to the Tories since 2014.)
The Tories’ muscle memory for raising money is well developed. The party revolutionized political funding in the 1980s when the late Alistair McAlpine turned up at the City of London with a big sack, asking for wads of cash to fill it, which would have been perfectly legal at the time . When the Conservatives returned to power under Cameron, half of the party’s funding came from city donors. But after the 2016 Brexit vote, the pro-European business elite fled the Tories as factions such as the European Research Group became increasingly powerful. Around two-thirds of existing Conservative donors reduced their contributions after the EU referendum or stopped giving.
Today, the Conservatives rely on a mix of largely pro-leave donors, often with ties to the world of hedge funds and speculative finance, and international businessmen (almost all of whom are men).
Accepting sums from private donors leaves the parties open to accusations of hypocrisy, cronyism or worse. This is especially the case when, as Labor has done, you have pledged to clean up politics. The Tories calling for Starmer to return the money from Just Stop Oil financier Dale Vince is clearly partisan, but the risk of taking cash from other, less salty characters is all too obvious.
Political donations can be a way for sectoral interests to secure a seat at the table: Conservatives have received millions of real estate developers in recent years. Money can also shape broader policies. Boris Johnson’s hard-line Brexit was championed by the speculators who bankrolled his election victory. As Labor becomes more reliant on private money, it will no doubt come under pressure to temper radical gains and adopt more “business-friendly” policies.
There is a reason why most countries do not follow the British political funding model. The system is ripe for abuse. Our electoral law is outdated, with loopholes so big they can be seen from space. The Tories introduced compulsory voter ID, a move resisted by the Electoral Commission, but have done nothing to tackle the threat of foreign funding in British politics. The maximum fine for breaching electoral law is £20,000.
The easiest way to curb the influence of money in politics would be to limit donations. But there seems little prospect of that. In their absence, the race for political contributions is only likely to intensify in the run-up to the next general election.
