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.

Given that it would take something like 5m small donors giving £10 to fund parties to the level they are now, it is clear that small donors can’t fund parties. The fact is, as mentioned in the thread, the average person isn’t minded to give money to parties – partly because they are apathetic. But, at the same time, parties are – in my view – necessary to modern representative democracy.

Without strong parties, there is the danger of pressure groups and lobbyists gaining too much power. This I think is a dangerous situation. Parties can act as aggregations of interests and present clear choices to the electorate, in a way that behind-the-scenes pressure groups or single-issue groups don’t. For example, a pressure group campaigning for more public spending doesn’t have to say where the money would come from. A party would (or would at least be questioned by its opponents and the media about it).

Additionally, weak parties would encourage wealthy individuals to run under their own steam as independents. Some would think that this would be a good thing, as they would say we need more independents in our political system. But I would argue that, if there are too many of them, a parliament with independents could actually hamper accountability. Firstly, people end up voting on personality not policy in that situation. Secondly, it is difficult to hold independents accountable for their votes and for the tough decisions that every government has to make in the way that party representatives can be held accountable. Independents will always disclaim responsibility for unpopular measures in the way that a whipped party MP (who does not rebel) can not do.

So, what is the solution to party funding? To my mind, the situation we have already is ok. Britain has some of the cleanest politics in the world. The Political Parties, Elections and Referendums Act generally took the view ‘sunlight is the best disinfectant’. That is why it required donations to be registered. The furore over the David Abrahams case shows that people tried to circumvent this. This should be cracked down upon, as provided for in the Act.

There is no reason to change legislation and impose new rules. I think open funding from institutions – be they trade unions or companies – is fine. People know who is giving what. And it is, also, I feel the only way of enabling parties to be adequately funded without state funding (which would prove very unpopular).

Additionally, the talk of a £50,000 cap under Hayden-Philips is also dangerous to the Labour Party in particular. While a company intending to give more than £50,000 to a party can form countless subsidiaries and do it that way, the ability of union’s political funds to do this would be much more limited. As such, it would break the organisational link between Labour and the trade union movement – something that has been integral to the party from the start. It is something some on the right of the party are keen on, but I think it would be highly dangerous.

It would make Labour still more dependent on wealthy individuals or it would lead to the decay of the party and make it impossible for trade unions who wished to to set up a new left-wing party. I think the left of the party and the trade union movement need to stand firm on the need to defend the trade union link.

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This is a guest post. Vino S blogs here.