Cameron will survive the #PanamaPapers tax farrago — because of our electoral system

The Panama Papers have led to protests and political upheaval in two Western European countries — Iceland and the United Kingdom. But the outcome of these protests is already very different.

It’s difficult to see what separates the accusations levelled at Sigmundur Davíð Gunnlaugsson and David Cameron. Neither is accused of illegal behaviour, although Gunnlaugsson’s activities through his wife’s offshore company Wintris appear to be a more serious conflict of interest. Yet Gunnlaugsson is already gone — turfed out of power less than 48 hours after the Panama Papers were first published.


By contrast, David Cameron survives, and is likely to leave his post at a time of his own choosing. By his own admission he has handled this week’s revelations poorly. Anyone who has worked in PR or public affairs can see the truth of that: a cardinal rule in such situations is to “get everything out there” at the first opportunity, as Ben Rathe showed this week in a blog post that was both spot-on and very amusing.

Instead, Cameron equivocated and obfuscated for four days — in four separate statements — before coming clean. He has now attempted to defuse the story further by publishing more information about his tax affairs, although it should be noted that the documents are not his actual HMRC returns. As Fraser Nelson comments today in the Spectator, this might just raise more questions than it answers.

But it will blow over. And the reason is our electoral system.

In Iceland — often considered the oldest parliamentary democracy in the world, having established the Althing in 930AD — the government is formed by multiple parties on the basis of proportional representation elections. The current government there is an almost equal coalition between the Progressive Party and the Independence Party, both of which won 19 seats in the 2013 election. Both parties won around a quarter of the popular vote, and the Althing has 63 seats, so they were only slightly over-represented.

That means that power is genuinely shared, and when there is a serious breach of trust at the highest level of government, pressure can immediately be exerted.

In the Westminster Parliament— wrongly considered the “Mother of Parliaments”, a serious misquote that misrepresents John Bright’s great liberal intentions—the government is usually formed by a single party on the basis of “First Past the Post” elections. The current government is formed solely by the Conservative Party, which won 330 seats in the 2015 election. The Conservatives won 36.8% of the vote and the House of Commons has 650 seats. That means they won 50.7% of the seats, so they were enormously over-represented.

That means that the Tories have to answer to nobody but themselves when things go wrong. Sure — perhaps the media will give them a rough ride for a few days. But imagine if they were still in coalition with the Lib Dems. The junior party probably wouldn’t demand resignation, but it could say that without reform on tax havens, it would remove its support for other government policies.

Why does this matter? Because the “First Past the Post” system favours parties that have strong clusters of support rather than support that is spread widely across the country. This, in turn, encourages the formation of parties that represent particular groups of people in their policies. Convince enough people in the places that most reflect your party to vote for you, and you’ll always be a large party, assuming you are strongly associated with a large enough group. (This explains why the Labour Party is still a thing, despite treading water ideologically and rhetorically for the past six years.) Convince enough waverers to join your loyal core vote, and you have a decent shot at a majority.

Cameron will survive because his supporters, and probably even the waverers, expect the Conservative Party to represent the interests of the wealthy. They do not care one jot about the Prime Minister’s tax arrangements; if anything, they probably think all these demands for “transparency” and “accountability” are a disgusting intrusion into a gentleman’s private affairs.

Edward Snowden doesn’t know much about British politics but he inadvertently put his finger on this problem with this tweet:

It shows the dismissive attitudes that pervade UK politics. If you don’t align with our interests — whether they are protecting unearned wealth, keeping foreigners out, or breaking up a successful supranational institution — then keep your mouth shut and don’t expect us to do anything to make your life better.

So the protesters outside Downing Street were wrong. They shouldn’t have been demanding David Cameron’s resignation. They should have been demanding real change — to an electoral system that would prevent people like him arrogantly arrogating power on the say-so of their cronies.

Nothing in British politics will really change until that happens. Everything else — including the EU referendum — is a side-show.


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