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Tuesday, 29 January, 2002, 17:18 GMT
A question of funding
Labour party conference 2001
Row over party conference sponsorship
Nick Assinder

The former head of Enron in the UK put it best when he said sponsorship and donations were now the best way to get access to ministers.

Ralph Hodge's comment suggested that any company wishing to lobby the government would be far more successful if it first handed over some cash or laid on a bit of a do.

Mr Hodge was not claiming that such contact would inevitably, or even necessarily, lead to a change in government policy.

Former British Enron chief Ralph Hodge
Hodge raised fears
And he was certainly not suggesting there was anything improper in the practice.

Indeed, most believe he was only spelling out the realities of the current nature of the relationship between governments and big business.

But his remark may have fed suspicions that "cash for policies" is a regular part of the political process - and that it has been going on for years and applied to governments from both parties.

Election spending

There is no doubt that there has been a huge growth in the amount of lobbying of ministers over the past couple of decades or so.

And, as the parties attempted to out do each other with increasingly flashy and expensive election campaigns, it was inevitable that business donations would become more and more important.

There have been attempts to combat this with limits placed on election spending and a register of political donations.

But the question now being asked is whether it has all gone too far and that the relationship between big corporate donors and political parties has become irredeemably tainted.

Enron headquarters
Enron lobbied ministers
Anyone who attends the party conferences each autumn is used to seeing advertisements for such and such a company sponsoring this or that event.

Probably the most popular are the receptions laid on for delegates, MPs and ministers by businesses, pressure groups and unions.

Big Mac row

Labour found itself embroiled in a bitter internal row after US beefburger giant McDonald's was set to sponsor a reception at last year's party conference.

But there has been previous disquiet over similar receptions laid on by the tobacco industry and others.

For many Labour activists, the sight of big business laying on lavish parties with the clear aim of meeting and lobbying politicians was deeply unpalatable.

The Tories, understandably, had less of a problem with the practice.

But they too have been caught up in the concerns over the alleged influence wielded by big sponsors who have always provided the majority of their funding.

It was once argued by critics that Labour was too beholden to the unions. But the union movement did give birth to the party and, in any case, Tony Blair has probably laid that allegation to rest.

Funding balance

Coincidentally, the latest row comes as it has been revealed that Labour's membership is on the slide - leaving another black hole in its finances.

And last year the huge GMB union announced it was chopping 1 million from its donation to the party in protest over Tony Blair's plans for the public services.

TUC logo
Unions financed Labour
In 2001 Labour drew 30% of its funding from the unions, 40% from members and small donors, 20% from large donors and 10% from its commercial activities.

Most expect that balance to have significantly shifted recently, with donations from industry becoming increasingly crucial.

Few believe there is any real corruption going on here but there is definitely scope for anyone open to such wrongdoing.

What a growing number of MPs are now beginning to accept, however, is that it is time for a proper and thoroughgoing review of the funding of political parties.

See also:

29 Jan 02 | UK Politics
Number 10 hits back in Enron row
29 Jan 02 | UK Politics
Labour's Enron difficulties
29 Jan 02 | UK Politics
Ministers' Enron meetings
28 Jan 02 | UK Politics
Downing Street rebuffs Enron claims
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