The Hayden Phillips Report recommendations on capping donations to political parties which receive government funding should be accepted and enforced.

The problems of funding political parties are a symptom of the problems which parties have in modern society.  The great majority of people do not want to give money to a political party.  They may support it at an election but they are not even prepared to give it annually the cash equivalent of the cost of a DVD (for instance the Conservative Party annual subscription is normally £15).  If political parties cannot get money from a wide proportion of the population then they are forced to go to specific funders.  

Party political funding is a major concern of voters.  There is a huge suspicion that those donating large sums are able to influence party policies.  This thesis has credibility given the concentration of power in the party oligarchies with few checks or balances.  The lack of any independence among MPs and any proper independent scrutiny by either Select Committees or Departments leads to the suspicion that party leaders can have their view of an issue changed by a donor and that it will then become law.

Examples of controversial high value donations have included the affair of Bernie Ecclestone, head of Formula 1, where it emerged that he and Max Mosley met Tony Blair on the 16th October 1997 to argue for a proposed ban on cigarette advertising on racing cars to be lifted which it subsequently was.  This appeared to be linked to a £1 million donation to the Labour Party.  In March 2006, it was reported that the House of Lords Appointments Commission had blocked three Labour Party nominations for peerages (Dr Chai Patel, Barry Townsley and Sir David Garrard).  In April 2006 Tony Blair became involved in the 'Cash for Peerages' police investigation.  In November 2007 it surfaced that Labour had received £650,000 from businessman David Abrahams who used 'friends and colleagues' to donate the money to protect his privacy.  The Electoral Commission announced a formal investigation and the Labour General Secretary Peter Watt resigned.  

The Conservative Party has been embroiled in similar scandals. In January 2006 it emerged that Boris Johnson had not declared donations to his campaign for Mayor of London to the Registrar of Members Interests, although they had been declared to the Electoral Commission.  George Osborne, the Shadow Chancellor, admitted that he made a 'mistake' in his dealings in Corfu on the yacht of Oleg Deripaska, the Russian billionaire, who was also visited at the same time by Peter Mandelson.  The House of Lords Appointments Commission investigated Robert Edmiston, a Conservative Party donor and chairman of the Midlands Industrial Council, who was nominated for a peerage.

Lord Hameed was nominated for membership of the House of Lords by the Liberal Democrats after sitting on the boards of companies associated with Alpha Healthcare, which had given them £400,000 in donations.  The Liberal Democrats were also tainted by the £2.4 million they received from the financier Michael Brown whose company was ruled by the High Court to be fraudulent.

As a result of the furore surrounding the 'Cash for Peerages' scandal, in March 2006 Tony Blair announced that there would be a review of the funding of political parties to be conducted by Sir Hayden Phillips, a retired civil servant. The key provision of the Hayden Phillips Report in relation to donations was that donations to political parties from any individual or organisation should be capped at £50,000 by 2012.  Any amount donated over that limit would have to be returned to the donor, or forfeited to the Electoral Commission if this was not possible.

The Hayden Phillips Report also addressed the issue of trade union donations.  It saw it as legitimate for unions to make donations on behalf of their members as long as those members were aware of this and had the right not to pay.  The Hayden Phillips report therefore recommended that for the 3.5 million union members who currently pay into a political fund, the Affiliation Fees paid by trade unions will be treated for the purposes of the cap as individual donations of the members.  The Hayden Phillips Report also noted that with this increased transparency and choice for trade union members the ten-year review ballot on the existence of the political fund, which trade unions currently have to conduct,  will no longer be necessary and should be removed.  These provisions seem eminently sensible and the three major political parties, if motivated by the national rather than partisan interest, would have accepted them.  

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