There has been much discussion here on the Labour party’s funding scandal. There has been the suggestion that donations should be strictly limited in their level and should only come from individuals.

That sounds like a good idea on the face of it, but I think there are a number of problems with it. Firstly, it would require an extraordinarily large number of small donors to fund a modern political party. Well, tough, some people might say. Politics should be run more cheaply!

But there is a problem with that point of view.

British politics is already remarkably cheap compared to that of other countries – not least because broadcasting law compels the TV companies to broadcast Party Political Broadcasts (something that might be considered a violation of their right to freedom of the press in a country like the US). The two major parties spent something like £50m in the year of the last general election. Given that the GDP of the UK is around £1trn, that is about 0.005% of GDP. By comparison, the last US election cycle is estimated to have cost more than $1bn.
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