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Only if you have been travelling in the remotest parts of Outer Mongolia for the last 12 months could you have missed the succession of media stories over political fundraising. Why would any sane person, you might conclude, ever want to risk being in the public eye by contributing significantly to a political party. So you may be shocked to read that in the last quarter of 2007 the Tories received almost £10m in donations, Labour around £5.5m and the Liberal Democrats about £950,000. In fact, despite the allegations and media coverage all three political parties have raised much more money at the mid-term of this parliament compared with the midway point between the 2001 and 2005 general elections. However, despite continuing to rake in the cash, politicians are worried about fund-raising. Labour's problems have been the most acute and the most publicised with three police investigations in two years into the handling of its finances. But the Tories are also vulnerable. George Osborne, the shadow chancellor, is under investigation from the House of Commons authorities for an alleged non-declaration in the members' register of interests. David Cameron has been rebuked by the Electoral Commission for a late donation and the money that Michael Forsyth channels to Conservative marginal constituencies is proving controversial. The new Liberal Democrat leader, Nick Clegg, has also been told off by the Electoral Commission for declaring donations too slowly and the party was severely embarrassed by the arrest of Michael Brown after he had donated £2.4m to them at the last election. So what's the answer? Interestingly, all three parties are adopting similar tactics. They are focusing on small donors and trying to move away from an over reliance on big donations. Last year, including public funds, the Tories relied on 1,047 donors to raise £26.4m, Labour gained £20.8m from just under 1,400 donors and the Liberal Democrats £5.6m came from 676 supporters. In order to broaden their appeal David Cameron has created Conservative Friends – where you can register your support for the party by donating as little or as much as you want. Gordon Brown is trying to avoid being thrown back into the arms of the unions by targeting owners of small businesses. And the Liberal Democrats continue to focus on individuals because they have not got many options to do otherwise. But the problem for all three parties is that there is no incentive for people to contribute the funds that sustain the political activity that is the bedrock of our democracy. So here are two practical suggestions for change. First, instead of the state giving taxpayers' money direct to political parties – which it does through a variety of means – all donations to political parties up to, say, £10,000 per year should attract income tax relief. Political donations would be on par with those given to a charity. Lord Neill's Committee made a similar proposal in 1998, but recommended a paltry £200 per year as the limit. No action was taken on their recommendation. This change would make it respectable to be a donor and incentivise parties to garner small donations. The second change would be more radical. Every year when we receive our electoral registration form we could be invited to tick an additional column if we wanted to be registered as a supporter of a recognised political party. There would obviously be no compulsion. The lists of registered supporters would be publicly available and would provide the basis for political parties to contact their supporters and ask for funding. The lists would also empower the parties to hold primary-style elections when choosing their candidates and so inject the vigour and vitality into the political process that we have seen in US presidential primaries. This change could even see the state paying local authorities to provide facilities for such elections, either by funding postal ballots or by holding full-blown local primary elections as they do in parts of the US. This might pose some interesting challenges for local authorities and electoral registration officers, but if we value our democracy then, like everything else in life, we should be prepared to invest in it. Robert Hill is a former political secretary to ex-prime minister Tony Blair and now works as an independent consultant

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WHITEHALL

Every little helps

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