Catching the Wrong People

We have a trap for MPs, not a watchdog on political financing

Up until the 1990s, news reports on politicians’ financial wrongdoings were rare. It took major investigative work to find evidence and reckless editorial bravery to print the allegations.

Journalists relied on informers and leaks, and had little more than Companies House records to go on. All of that started to change in the late 90s.

From 1998 onwards, the Register of Members’ Interests began to be published online. In 2001, the Electoral Commission was established and it began to publish not just donations to political parties but donations to the local constituencies of MPs and local party accounts. If you were running for a position in your party, such as leader, and you raised any money for that campaign then you also had to register as a ‘regulated donee’.

With an internet connection and a few quid, you could put together a wealth of information on any MP’s finances. Add to this the material you can gather from other public sources, like Companies House or the Land Registry, and it was a simple process to do a hatchet job on any sitting MP.

First, the sheer amount of data that MPs had to register about their financial comings and goings made it almost inevitable that they would make mistakes.

Second, the accounts are rarely filed by the MPs themselves and often must be recorded by several different people in different ways. MPs might complete their own financial records for the Register of Members Interests but this was supposed to be consistent with the Land Registry papers filed by their solicitor, the accounts filed to Companies House by a company secretary or director, and their local party accounts, which would have been filed by whoever volunteered to be their local party treasurer. If they ran in a leadership or deputy leader campaign then all donations should have been recorded by whoever managed their campaign. For a prominent politician, it is typical that there might be at least five different types of financial data filed by five different individuals. Yet they are the ones held accountable.

Finally, it is very easy to trigger an investigation. The Parliamentary Standards Commissioner is obliged to investigate an MP whenever he receives a complaint that is properly made. It does not matter whether the case has any weight or even if the case is clearly politically motivated, it only needs to be filed correctly.

So it is easy to make a mistake, often it is not your fault, and regardless of whether it’s serious, you can find yourself being investigated and splashed across the headlines.

In the summer of 2009, when the Telegraph broke the expenses story, it focused on the Labour Cabinet. We needed to balance up the coverage of the expenses scandal, so we carried out a fairly low grade hit on George Osborne. After trawling through the publicly available resources and poring for days over his accounts, we finally found a minor discrepancy.

According to the receipts in his expenses, Osborne was claiming allowances for interest on a mortgage valued at £449,995.

However, Land Registry documents showed that the home was purchased for £445,000.

He had been claiming interest on an additional £4,995. It was most likely an accounting error. The benefit he accrued was less than a few hundred pounds. Nonetheless, on the back of this relatively minor anomaly, we could put a formal letter into the Parliamentary Standards Commissioner and, because it was filed correctly, the Commissioner had no alternative but to open an investigation. We then tipped off the Evening Standard and the story made the splash.

These are the rules. This is how it works.

Those who have argued that investigations into election spending are ‘politically motivated’ have a point. It tends to fall to one political party to do the legwork on the investigation on another.

It is also the case that the degree of financial transparency to which our MPs are exposed is so huge that the level of bureaucracy has grown too great.

The losing candidate in the US presidential election spent more in a single day than all of our parties will spend on their entire campaigns in this election. We do not live in a democracy that is polluted by cash to extinction. However we have placed our MPs under such great and complex financial scrutiny that it is hard to argue the system wholly serves us well. It has become a game, where the slightest mis-step in reporting results in a loss of public confidence as if every MP was on the take.

Nonetheless there remain serious tests that all parties should pass. Election spending limits are chief among them. There must also be a high degree of transparency around donors such that the public can be convinced that influence is not being bought. It was right that this was investigated, even if we do not think it was investigated well.

Whenever the Electoral Commission and other Parliamentary bodies have come up against real tests, they have frequently failed. On all the major funding scandals, it has been left to the media to carry out investigations. It is hard to point to examples of where the Commission have handled cases well.

The answer is not, as some this week have wildly threatened, to scrap the Electoral Commission. However a broader review should be welcomed. We need to streamline the various and complicated processes and bodies that exist to monitor the finances of our parties and politicians so that it is a simpler and easier process for them to get right, rather than complex web in which to entrap them.

Not only should we combine the financial monitoring obligations of the Electoral Commission and the Parliamentary Standards Commissioner, we should give them powers to investigate. If they are capable of investigating, rather than merely monitoring, they will be able to dismiss vexatious and ‘politically motivated’ attacks more quickly and also tackle more substantial concerns more capably and seriously.