Political Party Funding: seeking the level playing field

Having won the last general election with the support of only 24.3% of registered voters, the Tories are looking to cement their hold on power by cutting off off trade unions’ financial support for the Labour Party. Only the unelected and unrepresentative House of Lords now stands in the way of enacting the Trade Union Bill which will achieve this end.

The £30.2m that Labour has received from the unions following the general election is about what the Tories get from a handful of wealthy individuals: £27.9m, or 62 per cent of the party’s total. 61 donors gave more than £50,000 at one go, qualifying them to mingle  socially with Cameron and his chums. A further 141 donors clocked up £50,000 with multiple donations but apparently don’t qualify for an immediate opportunity to rub shoulders at the trough.

The Tory party’s biggest individual donor is Michael Farmer who has made eight donations totalling £2,191,392.42. This explains why he is a Tory Party co-treasurer. He is the founder of the hedge fund RK Capital Management. Hedge funds are financial institutions which speculate on behalf of the super-rich. Collectively, they are major backers of the Tory Party and help to explain why the Tories are so relaxed about the decline in manufacturing and happy to ignore the potential for another financial crash.

Companies make up 25 per cent of Tory donations. The biggest corporate donor is JCB Research which has donated a total £1.4m since the election. Prem Sikka, the principled and celebrated professor of accounting at Essex University, has described JCB Research as a “black box” due to its status as an unlimited company with minimal reporting requirements.

What can be done to reform the financing of political parties when we eventually turf out the Tories? Fairness dictates that corporate donations should only be allowed when the majority of shareholders entitled to vote in UK elections approve them. Furthermore, those who do not vote for the resolution should be excused from contributing. Many donating companies are, however, privately owned by wealthy individuals, not all of whom are located offshore for tax purposes. The proposed reform, although essential, would not necessarily significantly dent the 25% corporate share of Tory funding. What is needed is a cap on all donations of, say, £500 per annum, with union donations treated as donations by individual members unless the individual opts out. This would, of course, bring forth squeals of anguish from all the major political parties who have become dependent on handouts from the rich. There would inevitably follow a demand for public funding to replace the ‘lost’ income. Such demands have to be dismissed. Provided deposits for standing in elections are scrapped, political parties can and should operate, as does the Communist Party, by relying on the modest donations and hard work of their members and supporters. Then we really would have a level playing field.

Report From the Croydon Communist Party

The Croydon Communist Party called for urgent action at its recent branch meeting to tackle the growing crisis in the British steel industry. It noted that the Tory Government was refusing to act, blaming the situation on Chinese ‘dumping’ and our membership of the EU whose competition and procurement rules, they say, prevents support for strategic industries. But, as the meeting noted, the UK imports seven times as much steel from other EU industries as it does from China; and EU members Germany, Italy, France and the Netherlands were successfully supporting their steel industries, with or without EU endorsement.

The meeting concluded that steel was too important to the UK economy to be destroyed by government inaction. The government could do much more to save the steel industry, but is trapped in a neo-liberal mind-set which requires everything to be left to the self-correcting ‘magic of the markets’. Steel is a foundation industry without which we can’t have a successful manufacturing economy. Its loss will be a tragedy, both for the current workforce, other companies in the supply chain and the wider economy. Restoration of a viable manufacturing economy, including steel, requires fundamental changes, including development and implementation of a joined-up manufacturing and industrial strategy, reduction of high energy bills for the industry (themselves generated by the monopoly action of the privatised energy utilities), ensuring all government-backed contracts buy British-made steel, and a transfer of power away from big business to ordinary working people. This is only possible with a left exit from the EU.

If you are interested in joining the debate, why not join the Communist Party? Contact us via this blog for further information.

Chris Guiton

Co-operative Bank

It is difficult to see the withdrawal of banking facilities for the Palestine Solidarity Campaign and the Cuba Solidarity Campaign by the Co-operative Bank as anything other than a nakedly political act. As the Daily Torygraph crowed on 29 November:

Activist group linked to Jeremy Corbyn has accounts closed amid fears it may be funding terrorism”.

This would only be true if by “terrorism” they meant standing up to the illegal occupation of the West Bank by Israel and the illegal blockade and harassment of Cuba by the USA.

The Co-operative Bank itself responded much more diplomatically than the Torygraph. In a letter to me in response to my complaint about their action, they said they had withdrawn banking facilities because PSC and CSC “sent money to high risk locations [requiring] high diligence checks to ensure the funds do not inadvertently fund alleged or proscribed activities” and “after quite extensive research [they] did not meet our requirements”.

The Palestine Solidarity Campaign has launched a legal case against the Co-operative Bank claiming that the Bank’s decision is discriminatory and contravenes sections 13 and 29 of the Equality Act 2010. ITN solicitors, acting for PSC, said the Bank’s failure to explain its actions or provide appropriate disclosure led it to believe the decision was based on PSC’s defence of Palestinian rights, including the right to oppose Israel’s illegal occupation of Palestine and its violations of international law. We wish them well, but whether they will secure adequate compensation remains to be seen. Don’t hold your breath.

There was once a good reason to bank with the Co-operative Bank and its internet banking arm, Smile. While never a true co-operative, it was owned by the Co-op and therefore arguably part of the co-operative movement and apparently distinct from the capitalist banks that had held the nation to ransom in 2006. The Co-op Bank was very appealing to socialists for their personal banking and indeed anyone who wanted to disassociate themselves from the bangsters. It was for this reason that we continued to bank with it, not its always somewhat specious “ethical” banking policy. Unfortunately, this appeal has vanished: the Co-op had its own problems requiring it to sell off businesses and the Co-op Bank engineered its very own and quite separate mini banking crisis, necessitating a “rescue” in 2013-14 to address a capital shortfall of some £1.9 billion. As a result 80% of it is now owned by the worst type of predatory capitalist: hedge funds. In theory the ethical banking policy remains as a marketing ploy, but who are they trying to kid? It was never much of an attraction and their decisions on PSC and CSC shows it up for the sham it always was.

Legislation requires financial advice to be surrounded with such weasel words as

Information on this website should not be taken as financial advice or seen as an endorsement of any particular product. We’ve provided information so that you can make an informed choice about where to move your money, and if necessary, you should consider speaking to an independent financial advisor.

Take that as read – provided you understand that a so-called Independent Financial Adviser is actually a salesman who earns commission from the businesses he/she recommends. But what you should do if you still bank with the Co-operative Bank or Smile is to dump them just as they dumped PSC and CSC and switch to a building society such as Nationwide that offers banking services. But don’t prevaricate like the Co-operative Bank itself did: tell them exactly why you did it.

The Next Financial Crisis

News that the Financial Conduct Authority (FCA) have scrapped their inquiry into the ‘culture of banking’ came as no surprise. The Independent (sic) Inquiry into Banking chaired by Sir John Vickers had already ducked the issue in 2011. In July this year George Osborne sacked the FCA chief executive Martin Wheatley because he was upsetting the banks by talking too tough. We don’t however need an inquiry to establish what is the prevailing “culture” of banks and bankers. It was and remains that:

Greed is Good;

notwithstanding the 2007 bail-out by tax payers, banks are free from any social                 responsibility or obligation;

a near total contempt for the essential business of providing cash transmission and deposit        services for ordinary working people;

a hunger for short-term speculative profits; and

a belief that banking elites (but not, of course, the people who clean their offices), are                 entitled to a cut of these speculative profits even when they subsequently prove to be      illusory.

Vickers’ abject report, the firing of Wheatley and scrapping the inquiry demonstrate that nothing has been learnt from the financial collapse of 2006-7 or even the various mis-selling scandals and Libor manipulations that have been uncovered. Osborne is gambling on reflating the UK economy before the next financial crisis hits us. He may, or may not, achieve this. Two things are, however, certain: the next financial crisis is already coming down the track; and when it arrives we won’t be suckered this time into protecting the speculators and making working people bear the cost.