The Communist Party judges the funding of political parties on the basis of whether it enhances or impedes the ability of ordinary working people to participate in decision making which affects their lives. The question cannot be taken out of context from the existing political and social system, in which wealth buys influence both with political parties, and with the mass media.

Q1. What are the benefits and disadvantages of the current financing arrangements?

We understand the question to refer both

(a) to the finance which parties raise by their own efforts and

(b) to the state funding of political parties.

The major funding for political parties is under (a). However, the Political Parties, Elections and Referendums Act 2000 (PPERA 2000) considers subscriptions and donations of members and affiliates, and donations by non-members and businesses, to be in the same category. Although there is a requirement to declare individual donations over £1000 (and smaller ones from the same source which could aggregate to that), we regard it as profoundly undemocratic to categorise membership subscriptions in the same terms as donations from outside sources.

The ability of wealthy individuals and companies to donate large sums of money to political parties is a major disadvantage of the current system, as such financing inevitably buys influence (on pain of not donating in future or of donating to political opponents). In practice, since both the Labour and Conservative Parties receive such donations, the interests of wealthy people and businesses are reflected in the policies of both parties, so a change in government makes little difference to the mass of the electorate.

It is profoundly wrong to categorise the donations and subscriptions by trades unions to the Labour Party in the same terms as business donations. The trades unions founded the Labour Party, are required by law to maintain separate political funds (unlike businesses) and in many cases are affiliated to the Labour Party. Affiliation gives membership status to the individual members of those unions, and the political funds are under democratic control. In return for affiliation, the trades unions" members get representation within the democratic structures of the Labour Party, and the opportunity in principle to influence policies through those structures. The federal structure of the Labour Party is therefore one benefit of the present system which can enhance the participation of ordinary working people in politics.

With regard to (b), the state funding of political parties, the background paper has identified the following broad areas within Great Britain:

(i) direct finance for parliamentarians: Short and Cranbourne monies, support for parties in devolved assemblies, and Westminster policy development grants; (ii) donations in kind: broadcasts, free postage and distribution of election material, and free use of public buildings for meetings; (iii) salaries and expenses: special advisers to ministers, state security at conferences etc and local councillors" allowances.

Given the advantages of any governing party at Westminster in access to the civil service and mass media, and the payments for special advisers under (iii), the direct finance under (i) does go some way towards redressing the balance. However, all of this is within the terms of, firstly, the considerable barriers for minority parties to get elected and, secondly, the antidemocratic unelected nature of the House of Lords.

The main barrier in elections is the procedure of "first past the post" as the requirement of success. This means that the minority are not represented or eligible for funding and the status quo is maintained. Proportional representation in multi-member constituencies, in the form of the single transferable vote (STV), would help to overcome the existing limited democracy in both the parliamentary and local authority processes. The list system, as in elections for the Scottish Parliament and the Welsh Assembly, is a small but insufficient step in this direction.

The non-elected nature of the House of Lords, and the consequent Cranbourne funding, also serves to maintain the status quo.

In the past, if proportional representation by STV had been in existence, the Communist Party would have gained a significant number of seats on such elected bodies as the Greater London Council, retained a parliamentary presence at Westminster and thus established a successful electoral basis.

The allocation of broadcast time also serves to maintain the status quo. Although parties contesting more than a certain proportion of seats do qualify for election broadcast(s), the time awarded still discriminates in favour of those with substantial votes at the previous election. Likewise the party political broadcasts at non-election times also discriminate. Given the coverage of the major parties elsewhere on television and in the millionaire press, the failure of public service broadcasting to provide a balance in airtime for smaller parties is a violation of democracy. In addition, as the Communist Party has argued in the past, the participation of election candidates in such broadcasts discriminates against other candidates in the same constituencies.

The free distribution of candidates" addresses at general elections, and the free provision of public rooms for election meetings, do at least go some way towards providing equal opportunities for all candidates. Nonetheless some inconsistencies remain: some local authorities, for example, allow election posters to be fixed to lamp-posts whereas others prohibit it. Furthermore, fly-posting of all kinds often leads to prosecution whereas in many European countries political fly-posting is accepted as an essential part of the election process.

The exclusion of local elections for free distribution of material is becoming problematic in those authorities where postal voting has been promoted or made universal. Since residents can post their votes well before the official "polling day" there is a significant chance that some will not have received all election addresses before they decide. This too tends to reinforce the status quo.

Provision of electoral registers is essential where, as currently, nomination papers require proposal, seconding and assent from registered electors. However, deposits of £500 or £5000 can still make participation in elections prohibitive for small parties.

The allocation of public funds for special advisers to ministers appears profoundly undemocratic. Political advice is properly the responsibility of parties themselves.

We do not support the assertion that politicians' salaries represent state funding of political parties. However, the high level of the salaries does tend to maintain the status quo, since they are so far removed from the wages, salaries, pensions and benefits of the overwhelming majority of the population, that there is a tendency for MPs to identify the interests of the wealthy as those of society as a whole.

Time off for councillors to undertake civic duties can in no way be regarded as public financing since generally it is the councillors, employers, or the councillors themselves, who have to cover the cost

Q2. What would be the principal advantages and disadvantages of extending or reducing the public funding of political parties?

With certain exceptions, the existing provision of funding arrangements should be continued because in a limited measure the democratic function is assisted. However, we argue that the following extensions should be made, to improve that function: (1) Free distribution of addresses in all elections. (2) Abolition of deposits in all elections in favour of the existing nomination system. (3) Greatly expanded access by minority parties to radio and television broadcasts, including satellite broadcasters. (4) Universal recognition of the right to fix election placards to lamp-posts and to fly-post on derelict buildings, site hoardings etc.

The argument has been put (para 4.1 in the background paper) that public funding might "purify" the political process by reducing the reliance of political parties on the large donations of private individuals, corporations or organisations. As pointed out above, there is a significant difference between trades unions, which are already affiliated and have democratic rights in the Labour Party, and private companies which have no such status. The buying of influence by wealth is an issue which needs to be dealt with by other means (see below). The issue of the massive but unequal spending at general elections by the major parties (para 4.3 in the background paper) also needs separate treatment, by severely limiting overall campaign expenditure (see also below).

On the other side, the background paper (para 4.11) quotes William Cash MP to the effect that racist or explicitly anti-democratic parties should in principle not receive public funding, and including the Communist Party in that description. We completely reject this assertion. The Communist Party is an open democratic party with a programme for change in Britain which involves both contesting elections and extending democracy, including repeal of undemocratic anti-trades union laws and genuine equal rights to women, gays and minority communities. Explicitly racist and fascist parties like the National Front and the British National Party are the enemies of democracy and should be dealt with both politically and by the dissolution of such organisations.

In fact the Communist Party opposes any other further public funding to the major political parties because they have enough already to operate in the democratic function of office, as opposed to the campaigning or maintenance of their political party. If this funding were further extended, it would begin to replace the funding of a political party by its supporters.

We call for the cancellation of all Cranbourne money since it exists to sustain an essentially undemocratic body, the House of Lords, which in fact should be abolished.

We suspect that the issue of the extension of state funding for political parties arises partly out of the escalating costs of elections but mainly out of the growing disillusionment of the electorate with the main political parties and consequent reduction in their financial support. Political parties may be looking for another source of income. The turn-out in many working class areas at the last general election was very low. The last thing such non-voters want to see is an increase in hand-outs to parties in which they have no confidence.

The Labour Party is losing business backers because of embarrassment over press claims that they are buying favours. At the same time some trades unions are withdrawing their funding. The "New Labour" trend may also wish to find a way of breaking the links with the trades unions and may be looking for an additional source of funding. State funding would therefore have the effect of reducing the participation of working people, via their trades unions, in politics.

Q.3 What impact would enhanced public subsidies, donation caps and spending caps have on the finances and organisation of political parties?

The use of the term "enhanced" in the context of "subsidies, donation caps and spending caps" is a little strange, but we take it to refer only to subsidies.

In general terms, increased subsidies would certainly improve the finances of political parties, reducing the need for them to raise their own funds. Insofar as that is regarded as a bureaucratic exercise, it could be argued that it would free up the party organisations to engage in politics. However, in fact the opposite is the case. Fund-raising is intensely political since it forces parties to communicate directly with supporters and convince them of the need to donate. We have argued above against any increase in such subsidies.

Donation caps currently do not exist. Were they to be introduced at even a modest level (e.g. £5000 per single donor), the finances of the major parties would, given their present orientation, become so depleted that they would unite in favour of increased state funding.

We have made the case above that businesses (but not democratic affiliated organisations such as trades unions) should be excluded from political donations because this undermines democracy. Outside that, it is more important that there should be openness in donations rather than that they should be capped. Wealthy people will in any case always find a way round capping. If a political party accepts a large donation from a single individual, and is forced to divulge it, then that becomes a campaign issue and voters will be able to draw their own conclusions.

The Communist Party has nothing to hide in terms of the source of its donations. Like the bullk of the minority parties, our income " whether generally or at election times " comes almost exclusively from membership subscriptions and relatively small donations by members and supporters. The PPERA 2000 requirements do however place a relatively heavier organisational burden on minor parties than on the major ones. There should be a total income level, e.g. £200,000 p.a., below which detailed accounting is not a requirement, being replaced instead by an annual audit. At a minimum, the current threshold for reported donations should be raised. At present there is a requirement to record sums of £200 in case they could aggregate to £1000 in the year. That figure should be raised to £400 at least.

Spending caps do already exist. We do not see that enhancing them will have any impact on the finances and organisation of political parties. In our own case expenditure is well below the cap whereas the major parties will simply spend up to whatever limit there is, and raise the money in advance or borrow it from the banks if necessary. It is more important that spending is limited, so that elections become a genuine test of the popularity of ideas, rather than (as at present) of the ability to buy more advertising space.

Q.4 Which international models and arrangements, if any, do you think provide useful lessons or contributions for our review of party financing and public funding?

The various international models and arrangements are summarised in para 5.1 of the background document, but vary significantly from one country to the next. As made clear, the frequency of elections and their type influences the specific arrangement applied, and in any case it is not possible to make a mechanical transfer to circumstances in Britain. We do, however, think that the disclosure limits, bans on foreign and corporate donations, and campaign spending limits in a number of countries are arguments in favour of the same approaches here. We are resolutely opposed to the further commodification of politics by the extension of paid advertising into the broadcast area, as allowed in a few countries.

Most areas of public political funding in Britain seem to have parallels elsewhere, but some countries also give tax relief on political donations. We completely disagree with this, as it allows wealthy people and businesses to have an even more excessive influence on politics. The same in fact applies to "small" matching donations, which are given, for example, in Germany " "small" is a relative concept and even the £6700 disclosure limit in Germany would be high for many working class people, but perhaps small in relation to what millionaires could easily afford.

Q5. Which factors would or would not be relevant in determining eligibility for, or use of, any grant system of public funding.

The major factors which have been applied, in Britain and abroad, have been: (i) the percentage of votes cast, or MPs elected, at the previous election; (ii) the ability to raise funds in the first place; (iii) the expenses of engaging in informed political debate with the government, e.g. through research centres or political advisers.

As we have pointed out, items (i) and (ii) essentially maintain the status quo, although in a limited sense the democratic function is assisted. They should therefore not be the sole arbiter of eligibility. It would be much more appropriate to move towards model (iii) with particular reference to the establishment by political parties of research centres and publishing houses which should be eligible for awards, without political discrimination, of project funds directed towards the analysis of current political, economic and social issues. Other democratic organisations, like trades unions, should also be eligible for such awards.