Big money is trashing trust in British politics. ‘Democracy vouchers’ could be the solution

After Partygate and a series of other scandals, it will come as no surprise that trust in politics is at an all-time low. A recent Ipsos poll found that barely one in 10 people in Britain trust politicians to tell the truth – the lowest level since the survey began in 1983, and less than half the proportion who say they trust estate agents.

This is not only a matter of concern for political commentators. A recent report from centre-left thinktank the Institute for Public Policy Research (IPPR) found that for most of 2022, lack of faith in politics and politicians was considered a more important issue facing the country than immigration levels. And there is a growing appetite for change: the same report found that nearly three in five think our political system needs to be reformed “completely” or “to a large extent”, while just 6% are happy with the status quo.

Labour’s deputy leader Angela Rayner recently set out plans to “clean up politics”, which include an end to second jobs for MPs, a five-year ban on former ministers taking on lobbying roles, and a new integrity and ethics commission with the power to initiate its own investigations and impose penalties.

But there is a deafening silence around perhaps the most egregious problem with our current political system: the role of super-wealthy donors in funding political parties.

Unlike many other countries, the UK has no cap on political donations. The predictable result is that our politicians are beholden to a small and deeply unrepresentative donor class. According to researchers at the University of Warwick, just over 100 “superdonors”, making gifts of nearly £450,000 on average, were responsible for nearly half of all donations to political parties in 2019.

Thankfully, despite having no ceiling on donations, strict spending limits during campaigns mean the total volume of money in British politics is relatively low – the major parties spent less than £50m during the 2019 election, compared with more than $14bn spent by parties and their supporters during the 2020 US election.

But the fundamental problem remains: we have designed a political system where rich donors can, in effect, buy political influence. The Conservatives’ secret Advisory Board is reported to offer regular meetings with cabinet ministers in return for donations in excess of £250,000, while Labour’s Rose Network offers privileged access to “key politicians” via webinars for as little as £100 a month. The public are not naive about the consequences: 90% think MPs “very often” or “sometimes” decide what to do based on what donors want, rather than what they really believe.

What can we do? In 2011 the committee on standards in public life recommended a £10,000 cap on donations – a significant improvement, but an amount that would still be high by international standards and out of reach for all but the very wealthy. If we are serious about getting private money out of politics we should adopt a threshold closer to the €500 cap in Belgium.

Corporate donations should be banned outright, though we could continue to allow membership organisations such as trade unions to aggregate individual donations and affiliation fees, on the condition that individual members opt in (rather than opt out, as is currently the case).

Any cap would need to come hand in hand with a substantial increase in public funding. Even a relatively high limit of £10,000 would hit party finances hard – cutting off about three-quarters of current Conservative party donations, and half for Labour (assuming trade union affiliation fees were still permitted). Small donations simply won’t fill this gap.

The UK has one of the least generous systems of public funding in Europe, spending about £13m in 2022-23 – around 25p for each registered voter. Replacing current private donations would cost about £50m a year, bringing total public spending to just over £1 for every registered voter – still significantly less than the approximately €3.50 spent on each voter in France, or the €5.50 spent in Spain.

At a time when trust in politicians is so low, spending more on politics isn’t an easy ask. But there is no other way to end the big donor culture while making sure that parties have the resources they need.

The key to persuading a wary public is to put public funding directly in citizens’ hands. In 2017, Seattle adopted the world’s first “democracy voucher” scheme for municipal elections: every resident is given four $25 vouchers each election cycle, which they can donate to the candidate of their choice, while candidates must agree to limit other private donations in return. The scheme has led to more people contributing to political parties (using their vouchers), especially from underrepresented groups, and more competitive elections.

There would obviously be details to work out – unused vouchers, for example, could be distributed in proportion to those who use their vouchers, or to votes in the most recent election. And, as in Seattle, we could trial vouchers at the local level first. But the idea is hard to argue against – democracy vouchers simply put into practice the basic democratic principle that everyone should have an equal chance to influence politics, irrespective of wealth. It would also help to create a political system focused on solving the country’s problems – a message that resonates with voters.

The main challenge would be cost: a scheme as generous as Seattle’s seems unlikely, but a voucher worth £25 for each voter over a five-year election cycle would be large enough to get people interested, at a cost similar to existing public spending in Spain.

This is unfinished business for Labour, whose Political Parties, Elections and Referendums Act 2000 dragged our system for party finance into the modern era by introducing limits on national spending in elections, bringing in transparency requirements for large donors and creating the independent Electoral Commission. While clamping down on second jobs and lobbying would be a further step in the right direction, a cap on donations combined with democracy vouchers would capture the widespread desire for fundamental reform and get private money out of politics once and for all.

• Daniel Chandler is an economist and philosopher based at the London School of Economics, and the author of Free and Equal: What Would a Fair Society Look Like?

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