"Due diligence" and the Tories

That the Electoral Commission - despite a disgraceful boycott of their requests to interview senior Tories - has ruled that Lord Ashcroft's Bearwood company is entitled to pour money into buying the election in marginal constituencies does not absolve the party from the questions that arise after William Hague's astonishing admission on BBC Radio last night.

Hague effectively admitted that Lord Ashcroft had misled him - to put it politely - about his tax status. As Lord Turnbull, the former Cabinet Secretary, has indicated, ignorance is no defence when Hague had given clear undertakings as a condition of Ashcroft's peerage. The Electoral Commission maintains - despite their boycott of its interviewers - that the Tories had in all probability done their 'due diligence' over the Bearwood donations. Yet since Lord Turnbull is quite clear that Hague had not done his 'due diligence' with respect to Ashcroft's supposed willingness to pay his taxes as a UK resident, it is hard to see on what basis the Electoral Commission has decided to give his party colleagues the benefit of the doubt.

The facts appear to be these. Lord Ashcroft led Hague to believe that he would pay "tens of millions of pounds a year" in taxes if he entered the House of Lords. Ashcroft intended to do no such thing, preferring the congenial Belizean tax regime, and throwing a few quid to the Revenue as a non-dom instead. James Arbuthnot, a Tory chief whip, reached some side deal with Sir Hayden Philips, according to the Cabinet Office, that allowed Ashcroft to be declared a 'long-term' rather than 'permanent' resident, allowing his congenial Belizean tax regime to continue for most of Ashcroft's income. He presumably didn't feel it necessary to tell William Hague. As a result, Hague misled both Tony Blair and the Cabinet Secretary. And until a few months ago, neither Hague nor presumably David Cameron could be arsed to check what had gone one.

Of course, Ashcroft should be required to relinquish his role in the Tory party and his peerage. But isn't there also a big question over the judgment and competence of William Hague, and his ability to be Foreign Secretary if the Tories win the election, when he may be required to agree treaties and other matters with other countries? Presumably he won't be too bothered to check up on whether they keep their promises.

And I do so look forward to hearing David Cameron pontificating about cleaning up politics again.

Ashcroft tax bombshell makes case for party funding

Today's news that William Hague misled Tony Blair about Lord Ashcroft's willingness to pay 'millions' in taxes is a further example of the effects of relying on large private donations to fund our political parties. I've also just been reading Peter Watt's Inside Out and the thing that comes out clearly there is the absurd extent to which the Labour Party had to rely on a small number of private donors - and its impact on one of our great political parties - as well as some equally preening trade union leaders for its survival over several years. Such funding is unhealthy for democracy, and a distraction from the proper business of politics. Given that the state already funds political parties to a substantial extent - £4.8 million a year to the Tories and £1.7 million to the LibDems - it is hardly a great leap to increase that funding. There are several options. First, ban large costly political posters. Second, restrict funding and spending to £15 million a year. Third, allow small donations of up to £500 a year for individuals, and match fund them to encourage such participation. And fourth, provide a basic allowance for all parties, including the governing party, to allow them to maintain a reasonable structure, with the level of funding dependent on their votes in the previous general election, with a minimum threshold for funding within each UK nation. The idea that it is better for politics to have the pantomime of Hague's Ashcroft porkies or 'cash for honours' than to bite the bullet of state funding is simply laughable.

Pay more, end expenses

Gordon Brown is right to join David Cameron in apologising over expenses. But I see little point in adding to the synthetic outrage of newspapers over the whole saga. I trust no journalist who has written or pontificated on the issue has ever fiddled their expenses (and, in consequence, the taxman) in the past, and that the proprietors of newspapers filling acres of space on the subject wouldn't dream of finding ways to avoid paying taxes in the UK.

That said, the whole thing is an utter mess for MPs and very bad for the image of parliamentary politics. Like state funding of political parties, it is an example of where fear of a day or two's bad headlines has led politicians foolishly to opt for the worst possible solutions. MPs should be better paid - £100,000 a year, fully taxed, would be about what a GP earns - and get no living expenses beyond travel costs (through a railcard for all).

Political parties, already heavily funded by the taxpayer, should be largely funded by them with donations above £1000 banned. Those two simple measures might cause a day or two of synthetic outrage. But it would do more to clean up politics - and its public image - than any of the absurdly complicated alternatives being bandied about at the moment.

Time to revisit state funding of political parties?

As this blog has already noted, the real charge against George Osborne in the Corfu yacht saga is not about the donation that never happened, but the appalling judgment shown by the man who would be Chancellor.

However, as Martin Kettle persuasively argues in today's Guardian, the whole affair once again also raises the question as to why politicians don't bite the bullet and accept more state funding - after all, they already get far more than most people realise.

If we had public funding for political parties, many but not all of these issues would shrivel. Without it we condemn politicians to solicit money from potential supporters and thus to encourage the destructive sanctimony of MPs and writers who make a living out of smugness. Do we really despise politicians so much that we insist they continue to behave in ways that make us despise them more, while refusing to do the one thing that might help us despise them less? If that is so - and it seems it is - it says more about us than the politicians.

The short term hit with public opinion couldn't be any worse than the constant stream of vitriol that they get over affairs such as this.

Our democracy needs a more honest funding system than this political football

Peter Hain was undoubtedly one of the most talented members of the Brown cabinet. But in the light of the Electoral Commission's decision to refer his late declaration of donations to his deputy leadership campaign to the police, he understandably felt he needed to resign as Work and Pensions Secretary. To a considerable extent, this government has been hoist by the petard of its own stricter rules for transparency. Hain is not the first talented minister to be forced to fall on his sword, and he won't be the last. Transgressions that were commonplace under previous governments - but which remained hidden from scrutiny - lead to regular resignations and media frenzies. Yet few believe that British politics is notably corrupt. Far from it: it is much cleaner than most countries, where the events that excite so much coverage here would be laughed off. Of course, it is right to have a system which seeks to ensure the highest standards of probity. But it should be about doing just that, and not an obstacle course designed to catch out the unwary or distracted politician like some sort of macabre version of musical chairs. It is time to reform the whole business. First, as I have argued before, we should bite the bullet on state funding for political parties. Sanctimonious opponents of change should be honest about just how much is already spent by taxpayers on honing the latest soundbite from David Cameron or sermon by Nick Clegg. And we should look at how much the Electoral Commission is costing taxpayers not to fund political parties. We should then restrict individual donations to £5000, with a lower individual threshold for donations made by agreement with members or shareholders by unions or public companies. We should then ban poster advertising for parties, which are surely nor more a wasteful eyesore. A single Commons and Commission register should proactively be updated every month, with each MP actively reminded to do so. The Tories may be gleeful now, but they will face the same problems if they are ever re-elected. For the sake our democracy, we need to get it right, and quickly.

It beggars belief that Cameron didn't know

News that David Cameron's own constituency party has had to return £7400 in illegal donations surely calls for an apology to the House of Commons. Francis Maude told the Commons on 4 December: "our donations have been properly made and properly declared, and all have been made by permissible donors." I trust that Maude will now apologise for misleading the House. After all, in the immortal words of Mr Cameron, it 'beggars belief' that he didn't know what his own constituency party was up to. And surely he would have shared such knowledge with his colleague before allowing him to mislead the House?

How to clean up politics

Gordon Brown has today appealed for cross-party support for his plans for a shake-up of the funding of political parties. At the end of a dismal week of media feeding frenzy, falling poll ratings and increasingly desperate media revelations - which Adrian McMenamin rightly puts in their proper context - I don't think Gordon goes far enough. We can't have any more half-hearted measures on party funding. It is time to limit donations to a relatively modest £5,000 rather than £50,000. It is time to stop the Tories from making a mockery of the current rules about constituency spending, and taking money from third party donors through the Midlands Industrial Council. It is time to put an end to the Liberal Democrats being bankrolled by £2.4m donations from the likes of Michael Brown that they still haven't returned: perhaps the sanctimonious Chris Huhne could let us know whether he plans to do so if he is elected leader. And it is time for Labour to stop relying on trade union millions. Instead, as Denis McShane says in an excellent piece for today's Telegraph, let's have some proper party funding from the state. And if we want to know how to pay for it, here are two ideas. First, slash the £26 million bureaucracy of the Electoral Commission (which can be done by focusing it on compliance monitoring alone). And second, ban political billboard advertising. Add in the millions that we already give the Opposition parties every year, and politics is cleaner at little extra cost to the taxpayer, and more affordable too.

Bite the bullet on state funding for parties

I have long argued that greater state funding for political parties is the only way forward, and the events of the last 48 hours have strengthened my view. It is true that at least we now know how the parties are funded. The Hong Kong fundraisers are at least a thing of the past (and long forgotten by holier-than-thou veterans of those days). But all the parties have come unstuck as a result of their reliance on large donors. Of course, there's a good case for capping the amount parties can receive from a single donor - and doing so closer to £5000 than £50000; just as there's a case for capping constituency spending all year round. But this inevitably descends into party political knockabout, not least when trades unions or the Ashcroft largesse are being discussed. Which is why greater state funding must be the answer. The government should have bitten the bullet on all this years ago; Gordon Brown should certainly do so know.

And for the benefit of those who think the taxpayer shouldn't fund political parties, don't forget they already do, and on a much greater scale now than before 1997. In 2007/8, according to the Commons Research Library(pdf, see Table 1), the Conservatives are receiving £4.5 million and the Lib Dems £1.7m in so-called 'Short money'. It is now worth three times as much per seat as it was in 1997. Of course, the money is to 'assist in the carrying out of parliamentary business' - but it certainly buys plenty of researchers who assist in the development of Tory and Lib Dem policies.