Time for Political Financial Fair Play rules?

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May 11, 2014 by Paul Goldsmith

Manchester_City_getty

So Manchester City have won the Premiership. Well done to them. But the Champions League isn’t likely to be a particularly fruitful hunting ground for them next year. Because they’ve broken the “Financial Fair Play” (FFP) rules created by UEFA they have been fined £50m and restricted to a squad of 21 players next year (instead of 25). The rules, created in the words of the UEFA General Secretary in March to stop  “greed, reckless spending and financial insanity”, aimed to force clubs to break even. This simply wouldn’t happen without those rules, because without them clubs would compete by throwing money at success, given the estimated 90% correlation between wage bills and achievement that exists in football. So it can be said that the FFP aims to be in the clubs’ interests as it reduces the incentive for them to risk financial explosion just to compete. 

The same could and should be true of political party funding. Given the fact that party membership (formerly a vital proportion of party funding) has fallen off a cliff, and state funding not being particularly high, the pressure is on political parties in this country to rely on donations. This has led to repeated scandals including “cash for peerages” as well as many questions about who is actually controlling policy within the parties – the Conservatives accusing Labour of being controlled by their “union paymasters” and Labour accusing Conservatives of being influenced too heavily by business interests.

But political parties need to have funding. They provide and train representatives of the people and they need to fight elections in order to become representatives. They have to do significant research before coming up with policies and they need to communicate those policies to the general public in order for us to have a well informed electorate and the successfully functioning representative democracy that we have. There have thus been many arguments put forward about the need for some “financial fair play” in political funding – some involving transparency, others involving capping donations and some saying that political parties should only be funded by the state and donations shouldn’t be allowed.

I think the fair play rules are compelling, because, quite simply, without them parties, who can benefit hugely from any differences between them in funding, will continue to search for donations and then come under pressure for policies to suit those donors and appear to be under that pressure too. So properly applied financial fair play rules will benefit all parties and be for their own good and for the good of democracy.Just as UEFA’s financial fair play rules should be for the good of football in the long term.

After all, so many people bemoan the over a billion spent on each US election, but until rules are made and enforced on that the two main parties have no choice but to compete dollar for dollar – with all the complications and compromises that entails. Sadly, due to the “Citizens United” ruling in the USA (that there should be no prohibitions on donations from anyone – including companies (who count as ‘people’), this will only get worse – which means that democracy in the USA will only get more influenced by money. Luckily – we don’t have these issues and so we should consider fair rules.

As to what those rules should be…I will write about that in the future, because one thing is for sure – this election year will throw up many issues around funding, allowing me to talk about those issues with suitable context. So watch this space!

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