Should political parties get rid of their dodgy donors?

If this week’s revelation that HSBC covertly helped wealthy clients in Switzerland evade tax on their assets wasn’t scandalous enough, the news that numerous Swiss account-holders also happen to have made sizeable donations to UK political parties was bound to spark debate.

Sure enough, during prime minister’s questions on Wednesday, an especially inflamed exchange between Labour leader Ed Miliband and Conservative prime minister David Cameron was heard on that very matter.

In an otherwise undignified clash, the two leaders both made speculative remarks about the credibility of donors to each other’s party. However, the fact remains that no hard evidence has yet emerged to support either party’s speculations that HSBC abetted donors in evading tax.

Nevertheless, the debate has allowed room for one particularly important, if not entirely new, question: could democracy in the UK benefit from alternative methods for political party funding? How can the problem of “dodgy donors” be eliminated from the equation?

In recent years, certain scandals have given rise to questions over the security of a political system in which wealthy individuals or trade unions offering sizeable donations could potentially influence party policy.

In 2012, former Tory treasurer Peter Cruddas was filmed offering undercover journalists from the Sunday Times, who were posing as potential donors, private access to David Cameron and the chancellor George Osborne.

The paper was later ordered to pay £180,000 in libel damages to Mr Cruddas, however the “dinners for donors” scandal did little to ensure the confidence of the British public.

A 2014 public survey by the Electoral Reform Society revealed that three in four believe big donors hold too much influence over political parties. Furthermore, 61 per cent of people surveyed believed that the current party funding system is corrupt and ought to be overhauled. But what are the alternatives?

One recent suggestion, made by former Tory chancellor Ken Clarke, involves state funding and a cap to party donations by individuals.

Speaking to the Observer, Clarke said: “It puts everything above allegations of conflict of interest if the parties are not beholden to individual people, individual interests, for large sums of money.”

In a report published in November 2011, the Committee on Standards in Public Life proposed similar changes, namely a £10,000 donation cap for individual donors, increased public support, cuts to campaign spending, and an opt-in clause for trade union members.

“All three main parties,” it said “depend for their funding on a relatively small number of individuals, trade unions or other organisations. This dependency cannot be healthy for democracy”.

So, even if allegations of “dodgy donors” seem premature, if not entirely unfounded, the current “dodgy system” which even risks allowing wealthy business-people and trade unions a chance to cosy up to politicians seems untenable and serves to undermine the confidence of British voters.

While state funding might not seem like an attractive solution, it could create a more levelled playing field for political parties to operate on, eliminating the risks to democracy posed by wealthy individual donors, and thereby remedying the growing public cynicism that surrounds UK politics.

Eoin O’Sullivan-Harris