William V Shannon
William Shannon

Fellowship Title:

Money and Politics

William Shannon
February 18, 1970

Fellowship Year

Contemporary Britain has the cleanest politics of any of the major democratic countries. In the 20th century, it has never had the messy financial scandals which were almost routine in French Government during the Third and Fourth Republics. No British ministry has experienced in recent decades a case of serious corruption such as the Teapot Dome oil lease bribery in the Interior Department during the Harding Administration or the tax-fixing and influence-peddling in the Justice Department during the Truman Administration.

Like so much else in contemporary Britain, the integrity of public life was an accomplishment of the earnest, aspiring Victorians. Eighteenth century British politics was as gamy as anyone could desire. Corruption in contracts, payroll padding, the sale of Army commissions, the bribery of voters, nepotism, sinecures—every form of political corruption was rife. During the last century, a succession of high-minded political leaders like Peel and Gladstone gradually constructed an impartial civil service and insulated it from corrupting influences. Ultimately, politics was transformed from an aristocratic game of individuals and cliques into a contest between mass-based parties competing in programs and issues.

This historic accomplishment, however, does not mean that there are no tensions between money and politics in Britain’s public life.

When political parties have to raise large sums to finance their activities, the questions inevitably arise. Where does the money come from? Who gives and with what purpose in mind? As long as men in public life have families to support and children to educate, they will seek to acquire more money than a public salary provides. Since members of Parliament are, like members of Congress, free to have outside sources of income, there are problems of “conflict of interest.”

The British are less troubled by the relationship between politics and private interests than Americans are. In the United States, most Republican candidates are heavily dependent upon businessmen to finance their campaigns and most Democrats outside the South are dependent upon labor unions. But the Corrupt Practices Act of 1925 and other Federal laws forbid corporations and trade unions to contribute funds openly to political campaigns. Businessmen therefore resort to subterfuges such as contributions in cash, which cannot be traced, and contributions by corporate officials who are reimbursed by their corporations through “Christmas bonuses.” Similarly, unions evade the intent of the law by setting up Political Action Committees and Political Education Leagues which are nominally independent but which actually advance the unions’ “educational” purposes in politics. The theory underlying the laws is that campaigns should be financed by small donations from many ordinary citizens but a campaign in which a majority of the funds are raised in that way is the exception rather than the rule.

The British have no truck with such subterfuges. Businesses are free to donate corporate funds to a party, usually the Conservative Party. The trade unions openly support the Labor Party. Although the figures fluctuate a little from year to year, the two big parties receive only 10 to 25% of their funds from rank-and-file members. Only the Liberals, the weak third party, depend wholly on individual giving. As might be expected, the Liberals are chronically in the red and depend in crises on substantial donations from several wealthy patrons.

Individuals who join any one of the three parties pay dues at the local level. A portion of these dues is sent to the central party office in London. In addition, the Conservatives have a quota system under which a constituency is assessed money depending upon the size of the Conservative vote in the last general election. The flow of money is not all one way from the local to the national level. Both national party headquarters subsidize weak constituency parties in areas where the opposition is strong. They also invest money occasionally in a marginal district if they see a chance of scoring an upset.

Both major parties try to encourage individual giving, but the Conservatives work at it more intensively. One of their pamphlets on fund-raising suggests among other techniques that potential donors should be invited to dinner at the home of a member of the nobility or some other leading citizen. “The approach will be made informally and tactfully, but none the less firmly, during the course of the evening. Cheque blanks can be immediately available if needed. When one guest gives handsomely it is difficult for others not to follow suit.”

As in the United States, political funds move through several channels. In an ordinary year, the corporations and the unions raise roughly the same amount, about L 900,000 ($2,160,000) each. But only half of the money raised by the corporations goes directly to the central headquarters of the Conservative Party. The rest is drained off by right-wing propaganda organizations such as British United Industrialists, the Economic League, Common Cause, and Aims of Industry. These organizations themselves make contributions to the Conservative Party treasury, particularly in election years, and their propaganda generally promotes Conservative programs. But from the viewpoint of the hardheaded party realists, a lot of the money is wasted on preaching to those already converted or in pushing ideas that are too abstract or esoteric to be politically effective.

On the other side of the fence, there are 108 unions, which levy political assessments on their members. Only 68 of these are affiliated with the Labor Party, although these include all of the larger and most of the medium-sized unions. Only L 300,000 of the L 900,000 goes directly to Labor Party headquarters in London. The unions use some to underwrite local party activities in constituencies where an individual union has many members. The rest is retained in reserve funds, some of which are turned over to the national Labor Party when a general election is near. Because the unions have this financial stranglehold over the party, and particularly because the unions provide both the money and the political activists in most safe Labor constituencies, the Wilson Government last year had to abandon its effort to impose a mild reform of trade union practices. Unrest among backbench Labor M.P.’s who feared the bill would wreck the party forced the Government to retreat. The bill was popular in the country because, regardless of its specific contents, it was viewed as an attack on union irresponsibility. Wildcat strikes and jurisdictional disputes are unpopular with some rank-and-file unionists as well as with most middle class voters. In offering the bill, the Prime Minister was responding to this sentiment. But in the heat of battle, he had to retreat. Like every successful politician, he found there was a point beyond which he could not go in risking his party’s hard-core support for the sake of wooing the marginal voter. With a general election then only a year away, the necessities of political fund-raising were probably an important factor in Mr. Wilson’s thinking.

Comparable pressures exist on the Conservative side. For example, Conservative Party policy favors more amicable relations with Rhodesia and South Africa. A sizable bloc of Tory politicians and campaign contributors have substantial investments in Rhodesian and South African mines and real estate. (In passing, however, it has to be noted that except for diplomatic coolness, the Labor Government has done nothing to jeopardize British trade and investment in South Africa. Since Britain has a severe balance-of-payments problem, there are close limits on the extent to which any British Government can express its moral disdain for a wealthy trading partner.)

Although the corporations and the unions raise approximately the same amounts of money for political purposes each year, the central headquarters of the Conservative Party actually has at its disposal more than twice as much money as the Labor Party. In 1967, Conservative central office spent L 1,071,000 ($2,568,000), Labor spent L 404,000 ($970,000), and the Liberals spent L 130,OOO ($312,000). The outlay in 1968 was almost identical.

These were the first years in which the Conservatives ever made public any statistical information on their party’s finances. There is no legal requirement that the parties do so, and no restr1ctlons on the size of individual or corporate contributions. In 1967, Parliament did enact the Companies Act which, among other provisions, required corporations for the first time to report publicly their political contributions. But the information is not reported to a central register. It has to be compiled from thousands of company reports. As a result, only digging by Labor Party researchers makes it possible to get any indication of corporate contributions to the Conservatives, and the picture is inevitably incomplete. The unions’ interrelationship with the Labor Party is clearer because unions have long had to report their activities to the Chief Registrar of Friendly Societies.

The discrepancy in financial muscle between the two big parties is not as great as annual spending by the two national headquarters would make it appear. The unions devote more of their funds to work at the local level than do their rivals, the corporations. Moreover, in an election year, the unions contribute heavily from their reserve funds to the national Labor Party to finance the nationwide campaign.

What do the parties spend their money on? Research, publicity, advertising, and aid to local parties. The British parties do much more research and issue more policy statements than their American counterparts. The Conservatives and, to a lesser extent, Labor provide their local adherents with pamphlets, posters, leaflets, and background materials. These materials try to develop a common theme and create or sustain a party image. Thus, the Conservatives have for the past year been pushing the theme, “Britain would be better off with the Conservatives.” Their publicity items feature a young family of four—father and son in clean white shirts, mother neatly dressed, and young daughter clutching a doll—and each issue is keyed to this model family. On taxes, for example, the campaign literature shows them and states: “This family pays too much tax!”

Labor uses full-page newspaper ads and billboards featuring Prime Minister Wilson—who is personally more popular than his party—and stressing two slogans: “Labor’s got life and soul” and “When it comes down to it, aren’t Labor’s ideals yours as well?” These slogans have evoked much merriment and parody. They are aimed not at winning the doubtful independent but at reviving the dormant loyalty of down-the-line Labor voters who have been unhappy with the Government’s deflationary economic policies and have been causing by-election defeats by staying at home. Despite the sophisticated ridicule, these appeals to old ideals and sentiments may prove effective in the course of a long campaign year.

Americans usually have the misapprehension that British campaigns are much shorter than our own. But this is more nominal than real. It is true that a candidate for the House of Commons cannot officially start campaigning until an election has been called and then he has only two to three weeks until polling day. The normal practice, however, is to choose a “prospective parliamentary candidate” months or years in advance of the next general election. This prospective candidate begins nursing his constituency with visits once a week or more often, makes public appearances at all kinds of charitable and civic functions, and, in fact, is canvassing all the time. When an election is finally called, that marks the ninth inning not the beginning of the ball game.

The distinction between the short campaign and the long pre-campaign build-up is financial. Before an election is called, a prospective candidate can hold as many public meetings and get-acquainted teas as he wishes as long as he does not actually ask those present to vote for him in the next election. If he does, the cost of that meeting is charged against his allowable expenses in the actual campaign. (Each party has one or two of its own people attending the public meetings of the opposition so a candidate’s indiscretion would not go unnoticed.) Since the best kind of campaigning in any country is the kind that does not look like campaigning, politicians abide by this custom.

Once a general election is called, a constituency party is strictly limited in what it can spend. The formula is that every local party can spend L 750 plus one shilling for every six voters if it is a county (i.e., rural and small town) seat or one-shilling for every eight voters if it is a borough (i.e. urban) seat. The limit is higher for a county seat because a candidate has to travel greater distances and has to advertise his meetings in scattered places, while the voters in the densely-populated borough seats are easier to reach. Under this formula, a small urban seat with 40,000 people would have a limit of L 1,000 ($2,4OO) and a district of the same size in the country would have a limit of L 1,083 ($2,600). Similarly, in a big district of 70,000, each party could spend L l,187 ($2,848) if it were in the city and L 1,333 ($3,200) if it were in the country. (In principle, every constituency has the same number of voters but between each reapportionment some constituencies gain in population and others lose.)

This financial formula is set forth in a law called the Representation of the People Act, which is periodically revised. A new act was passed last year, the first since 1949, and it not only revised the limits upward slightly to take account of inflation but also for the first time provided that candidates can list their party affiliation on the ballot and that money can be spent on musical bands, banners, and flags, items previously banned. In fact, few local parties are likely to spend money on bands or banners. Most campaign money is spent on leaflets and on advertising in the local newspapers to inform voters when and where public meetings are to be held.

There is no limit on what the central headquarters of a party can spend during an election except that it cannot propagandize on behalf of specific candidates. It can only use a nationwide, party-wide appeal such as “Vote Labor” or “Vote Conservative.” If the party were to advertise for a particular candidate that expenditure would be charged against his local party’s legal spending quota.

Critically important in the low-keyed week-in, week-out campaigning in the years between elections is the local party agent. He is a full-time party functionary who is expected to know all the local people, arrange meetings, keep the local activists interested and busy, and smooth out the personal and organizational tangles that inevitably occur. Good agents build parties in constituencies or portions of constituencies where previously only apathy had existed. They also recruit people to serve as local councilors and aldermen, which are unpaid jobs.

If money and organization alone could win an election, the Conservatives would never lose. They have over 400 of the 630 constituencies covered by a full-time agent. Only the hopeless seats are left uncovered. Labor has 270 agents and the Liberals fewer than a dozen. To an American outsider, the dedication of these party agents is astonishing. They attend meetings evenings and weekends and, like an old-fashioned General Practitioner, are always on call. Yet they are meanly paid. The average Conservative agent earns only L 1,500 ($3,600) a year.

Allowances for his car and his business lunches bring him perhaps another $1,000 annually. And Tory agents are the aristocrats of their tiny profession. Some Labor agents are paid as little as L 900 ($2,160).

An agent provides the backbone of a local party, but even the best agent cannot succeed unless he has money to advertise meetings, to pay for the rent, the postage, and the telephone, and to arrange public forums. This can be regarded as political hackwork—or as vital service to grassroots democracy. John Pardoe, Liberal M.P. for North Cornwall, recently pointed out, “People often complain that the parties and the politicians never get across the real facts about the big issues. ‘Give us the facts about the Common Market’ is a common cry today. Some two years ago, my constituency association conducted a two weeks campaign on the subject. Pamphlets were delivered to every household, and some 30 meetings were held in towns and villages. It was a great success but it cost the association L 100 ($240). I hold seven ‘surgeries’ in seven different towns each month in my constituency, and even to advertise these fairly modestly throughout the year would cost L 500 ($l,200). So of course the political parties at the local level are not doing an effective democratic job at all, and the political debate is conducted in slogans.”

Pardoe, formerly treasurer of the Liberal Party, is in favor of direct Government subsidies to the political parties. But, as in the United States, this idea has found little favor. The British system, however, does provide for one major public subsidy to the political parties. That is free television. Several times a year, all three television channels carry at the same time a ten-minute broadcast produced by one or another of the three parties. Not only is the time free, but so are the facilities. The BBC makes available a studio for one day full staffed and builds whatever sets or props the party specifies.

Professional critics complain that the parties misuse this time and often produce wildly amateurish productions. But whether the ten minutes is devoted to a straight talk by a party leader, a conversat1on between, two or three leaders, or a short film dramatizing an issue, the effect is to engage the viewer’s serious attention. Parties are not allowed to purchase television time. 30-second and 60-second “spot” announcements are unknown.

By contrast, in the United States where political costs have soared into the stratosphere, about two-thirds of the tens of millions spent in campaigning is spent in buying TV time and of that amount, probably three-quarters is spent on “spots”—time segments so short that rational discussion is impossible and the only purpose is to brainwash the viewer by relentless repetition.

(A subsequent report will discuss conflict-of-interest problems in the House of Commons.)

Received in New York on February 18, 1970.

Mr. Shannon is an Alicia Patterson Fund award winner, on leave from The New York Times. This article may be published with credit to William V. Shannon, The New York Times, and the Alicia Patterson Fund.

© 1969 William Shannon