Campaign Reform in Britain: Saying No to Foreign Money

Britain's political parties are to face Draconian new laws banning gifts from foreign donors and setting tight limits on what they can spend on election campaigns.

More than 100 proposals by the government-appointed Committee on Standards in Public Life call for tough action over a wide field. The reforms are seen as the biggest shakeup in party funding in more than a century.

Unlike in the United States, where campaign finance reform stalled in Congress this year, the package of measures is certain to become law. Prime Minister Tony Blair is pledged to institute the new rules, and his huge parliamentary majority ensures that he can override opposition Conservative Party objections.

Committee chairman Lord Neill's proposals include:

* A national spending cap of 20 million ($33.8 million) by any party in both general elections and elections to the European Parliament, the legislative wing of the European Union.

* Parties to disclose all fund-raising and sponsorship activities.

* Disclosure of the source of all donations of more than 5,000 ($8,450).

* Tax breaks for small donors giving up to 500 ($845).

* Appointment of a national elections commissioner to police the new system.

Neill, a senior judge, has rejected suggestions that Britain follow the lead of Germany, France, and other countries where political parties receive government funding. The proposals in his report, published Tuesday, are set to be enacted into law well ahead of Britain's next general election, which must be held before 2002.

Neill's committee was formed in the mid-1990s when John Major's former Conservative administration became enmeshed in a series of political scandals involving illicit big-business payments to government ministers and senior members of Parliament. Mr. Major asked the committee to keep a close eye on all forms of political corruption.

When Mr. Blair's Labour Party came to power last May, the new prime minister asked Neill to produce a formula that would make it impossible for politicians to milk the parliamentary system. He also authorized Neill to investigate charges that, while in office, the Conservatives accepted large donations from millionaires in Asia and other parts of the world. It has long been Conservative policy to refuse to say who the party's big-money donors are.

Neill's report confirms that before the last general election both the Conservatives and Labour accepted several donations of 1 million ($1.69 million) or more. Between 1992 and 1997 the Conservatives received 17 donations of more than 1 million, nine of them from overseas. Labour received six 1- million-plus gifts, all from within Britain.

Neill recommends that foreign donations should come only from people with a right to vote in Britain.

One Labour donation caused Blair acute embarrassment earlier this year, when it was disclosed that Bernie Ecclestone, head of Formula One motor racing, was a 1 million donor. The sport derives much of its income from tobacco advertising, and Mr. Ecclestone was accused of trying to persuade the government to take a lenient view of such ads. Amid the uproar, Labour returned his donation.

Britain already has tight laws limiting how much individual parliamentary candidates can spend on electioneering. Unlike in the US, political parties are banned from buying advertising time on TV and radio. But broadcasting companies are required by law to give the main parties free air time to explain their policies.

Although electioneering outlays by British political parties are modest by US standards, the recent trend has been sharply upward. In last year's general election, spending by the main political parties totaled 57 million ($96 million) - twice as much as in the 1992 campaign.

Neill's report recommends tax breaks for individual small donors, as currently happens in Canada. Under the Canadian system, party supporters donating $100 receive a $75 credit against their tax bills.

It is hoped this will boost individual party membership in Britain and reduce reliance on big cash donors.

Neill's report also contained a major surprise - on the funding of referendum campaigns. The committee proposes that the government be banned from spending public money to publicize its own policies in a referendum campaign.

Blair's government is contemplating referendums on the single European currency and on reform of the British voting system in general elections.