Labour needs members not funds from the state

ONE NIGHT in 1908, near the Bezdany bridge over the river Niemen, the Vilnius mail train screeched to a halt. A whiskered man and a girl called Alexandra leapt on board and removed a small fortune in used rouble notes, which they flung into a waiting speedboat. For the next few years, the finances of the Polish Socialist Party were secure.

The man, Jozef Pilsudski, later married the girl and led his nation to independence. Down in Georgia, a certain Djugashvili, alias Stalin, was covering the expenses of the Russian Social Democratic Party by 'expropriation' - bank raids. Such were the patterns of party financing in the Russian empire: crude, but at least avoiding some of the classic problems. Their methods were the ultimate in 'pay but no say'.

The financing of modern political parties, the background to the Mates- Nadir uproar, is a problem of democracy which remains unsolved and is growing worse. It was discussed 10 days ago in the House of Commons, in one of the most disgraceful, bone-headed debates to waste the pages of Hansard. Margaret Beckett and Chris Mullin, for Labour, managed to ask a few sane questions about Conservative funding before they were screamed down. But most school debating societies would have shed more light.

Running political parties and fighting elections are growing rapidly more expensive all over the world. The communications explosion that began in the 1960s means that ways of producing and distributing propaganda multiply every year. So do the fees of the widening circle of media experts, publicity consultants, spin-doctors and image stylists who claim to be indispensable to operating this new technology.

This creates a coarse but obvious problem for democracy. The more politics costs, the greater the advantage of parties of the rich over parties of the poor. How can this be corrected? If this is an abuse of political equality, how can it be restrained?

In an ideal world, there has always been an answer. If parties are funded by the state, then in theory the imbalance between parties of the rich and the poor is corrected, and parties are no longer tempted to sell policies for fat cheques. It cannot be said that state funding has never worked. There are, as one might expect, some Scandinavian precedents. But experience with state funding in Western Europe has been bad. In Germany, a cleanish country compared with some of its neighbours, state funding has simply encouraged parties to spend more, to demand more and to develop paranoid suspicions that the government in power is manipulating funding in its own favour. Neither has it prevented massive scandals - like the Flick affair of the early Eighties - over illegal private donations. In Italy, state funding did not check the gigantic tangentopoli corruption that penetrated all parties and governments. In the United States, where it currently costs about dollars 70m to run seriously for President, Clinton and Bush got dollars 55m each from public funds for their last campaign, but 'political action committees' still raise private donations from individuals, corporations and lobbies.

Where does this leave Britain? Parties are not subsidised by the state here, apart from help with parliamentary expenses and a few 'negative' subsidies like free party political broadcasting time. Parties are treated as private voluntary groups rather than - as in many Continental countries - limbs of the constitution. But that is hypocrisy and fiction. In the Commons debate, David Hunt said for the Government that 'the integrity of our system shines through': a remark of insulting complacency. The fact is that in Britain, where a party with a minority of the popular vote can hold a monopoly of government in a parliament with absolute power, the party is more dominant than anywhere else in Europe. And it follows that no other electorate has so strong a right to know where its parties get their money from.

It is easy to list some of the reforms needed. There should be compulsory disclosure of donations above a low threshold - say, pounds 1,000. There should be lower ceilings on political spending during elections. There should be legislation to ban all company donations which have not been approved by a majority of shareholders - just as union donations must be approved by union members. Many reformers, including the Labour Party, would add that no money should be accepted from foreigners - but why not? This is chauvinistic. There is no real difference between cash from a banker with a vote in Surrey and cash from a banker with a vote in Bavaria.

And yet these reforms do not reach the heart of the matter. Although Europe is less class-divided than it was, there are everywhere parties which represent the few and powerful, and parties which represent the many and weak. If the party of the few often gets more votes than the party of the many, this is partly because the few use their wealth to reward those who guard their interests.

In the past, the left had a way to compensate for its lack of money. Conservative parties were rich but small. Socialist or social democratic parties had few millionaires, but instead they had numbers: huge mass memberships whose individual subscriptions and fund-raising narrowed the gap. In Britain, the trade unions provided most of the infantry of 'the Labour movement', and most of the money.

Now that way seems not to work any more. The old working class political culture is vanishing. In France or Germany, membership of left parties shrinks down towards the level of centre or right parties. In Britain, union membership is a shadow of what it was. Many constituency Labour parties are empty husks whose members include imaginary 'dead souls'. After 14 years of Tory government, the many in Britain have never needed a vigorous, well- resourced party as badly as they do now. Where can its money come from?

There is a straight answer, and a wriggly one. The wriggly answer is reform: full disclosure of who gives what and a limit on all party spending (not just on elections). That would make the contest more even: the wealth difference less important. But the straight answer - for the Labour Party - is that the party has to be turned into something worth joining.

There was never a time since 1945 when there was so much to talk about in Britain. A feeble government presides over a one-party state in which central power is swelling like an uncontrolled cancer. The state itself, archaic and authoritarian, has to be broken down and replaced by a modern, open system - with or without a monarchy. At the same time, there was never a time when there were so many ways to make meetings interesting. A political party branch, organised by people with fun and fire, could broaden into a social focus where citizens meet, enjoy each other's company and launch every kind of project from civic action against local crime to debating our democratic crisis in local schools.

Can the Labour Party become a party of mass individual membership, raising serious money from a million pockets? If it can renew itself into a radical democratic movement, I believe that it can. That renewal, coupled with those basic reforms of party funding, would make British politics not only cleaner but fairer.