Ed’s funding proposals: Nearly but not quite

by Peter Watt

Yesterday morning Ed Miliband used his slot on the Andrew Marr show to outline some eye-catching new proposals on funding political parties.  It sounded good and it almost was, but it could end up being a disaster.

First let’s expose some myths.

The Labour party does not receive the majority of its income from the trade unions.  In an average, non-general election year, income comes roughly from the following sources:

  • £8  million in affiliation fees from trade unions;
  • £7 million from the tax payer in Short money and so on;
  • £5 million from individual membership subscriptions.

This gives a “definite” income of about £20 million per year.  In addition the Labour party gets:

  • £2 – 5 million in donations from individuals, companies and trade unions; and
  • £5 million from other things like commercial income, legacies and dinners.

This gives a potential income of £27 – £30 million per year.  Clearly in the run up to an election you would expect an increase in donations.  So Ed’s cap of £5000 per year will hurt. Under his proposal this will impact between £2 and £5 million per year and more in the year before an election.

For instance, in 2010 the party received approximately £8.1 million in donations with the unions giving £3.8 million of this and individuals and companies giving a further £4.3 million.

In 2011 the party received £2 million in donations with the Unions contributing £1.3 million of this and individuals and companies giving £700,000.

Ed’s proposal was certainly a big step, as it would all but stop the unions giving donations over and above affiliation fees.

Out would go the nearly £4million given in 2010 and the £1.3 million given in 2011.  And it would obviously reduce the overall level of donations received.  It will also undoubtedly seriously irritate the trade union general secretaries who will see their largesse reduced.

In fact, it gets worse for the beleaguered general secretaries as Ed also talked of greater transparency over the affiliation levels.  So those unions that are less than accurate over affiliation levels, raising or lowering them as they see fit, will further see their wings clipped.

And, implicit in what Ed is saying is that the party would need to be able to communicate directly with individual affiliated members.  Again not something welcomed in the upper echelons of the affiliated section.  It could be an excellent way for Labour to make a reality of the affiliated link and really forge relationships with millions of working people across the country.

All in all it is politically brave, potentially hugely significant for the future of the party and should therefore be hugely welcomed.  David Cameron’s offer of a £50,000 per year to take the big money out of politics suddenly looks very much like the suggestion from the leader of a party with lots of rich backers.   The prime minister should be sweating as he seems seriously outflanked.

Except he isn’t.

Because, although Ed goes some way to addressing the “big money” issue, he does not go far enough; leaving a critical opening for the Tories to run through.  For that reason, Ed’s proposal could well be politically disastrous.

While Ed proposes greater transparency he specifically rules out changing the “opt-out” option.  The presumption is that I will want to pay some money to the Labour party when I join an affiliated trade union unless I specifically choose not to.

At a stroke it makes a total nonsense of the greater transparency Ed proposes.  The Labour party cannot seriously claim to have 3 million affiliated members when many don’t know that they are a member and significant numbers probably wouldn’t be if they were asked.

A tick box offering an opt-out on a trade union membership form does not constitute being asked.

The Tories will rightly say that Ed wants his cake and wants to eat it.  He wants to protect the £8 million of affiliation fees and anyway, the trade union bosses won’t let him go further.

The impression will be therefore that his offer is a sham.

And the public will not care that the £8 million is affiliation fees as opposed to donations or that Labour will take some pain.  Ed could well end up simply looking shifty, self-interested and in the pockets of the trade unions, the exact opposite of what he intended.  And as Ed has in all likelihood already seriously upset the trade union bosses it will be a lose, lose situation for him.

What he should have said was that in addition to greater transparency on the affiliation level he would be happy to accept an “opt-in” option for affiliated members.

In not doing so he has left himself needlessly exposed and made a deal with the other parties that’s much harder.  And with the perilous state of Labour party finances, never mind the risk of yet more scandals, he badly needs a deal.

It will not end well unless he changes his position quickly.

Peter Watt was general secretary of the Labour party

Tags: , ,

9 Responses to “Ed’s funding proposals: Nearly but not quite”

  1. Nick says:

    Short funds. Where is my opt out/opt in choice?

    Affiliation fees. Why should money be funnelled through unions? The result is that the union leaders wield considerable power over Labour, and that has the same problems as large donations to the Tories, or fraudsters donating to the Lib Dems.

    Where is the opt out/opt in choice?

    The fundamental problem is this.

    No one likes you as a politician because

    a) Over 50% of MPs commit fraud
    b) Over 50% of MPs were not prosecuted (the cover up)
    c) You don’t do what you say in your manifestos
    d) You do things that weren’t in your manifestos
    e) You stick two fingers up to the public
    f) You repeatedly lie over the state of public finances
    g) You have ripped off 12K a year from the pensions of a median worker

    Not surprising then that the public won’t fund you.

    That’s the real message. People are so hacked off with political failure they won’t give you cash.

    So if you don’t have support, then perhaps you should be resigning.

  2. Charlie Mansell says:

    Not sure the opt-in makes sense for what is an ‘affiliation’ with associated rights to participate as an organisation as a whole. After all unions are not simply a Labour Party ‘lower type of membership’ collection agency, which is what ‘opt-in’ would in effect make them. A better solution along the Ed’s transparency lines would be
    1. The ballot on Affiliation should be held every 5 years;
    2. There should also be an annual vote at each affiliate conference to confirm the affiliation (if lost it triggers a members ballot)
    3. A figure such as 5% of the membership can petition to call for an earlier ballot too.
    This tri-partite approach to ensuring members can democratically end the affiliation if they so wish combined with the right to opt-out for those with any serious personal objection would make affiliation a ‘live’ aspect of the union, rather than something taken for granted.

  3. Richard says:

    “A tick box offering an opt-out on a trade union membership form does not constitute being asked.”

    Well it seems to be good enough for government electoral registration forms if you do not want to be included in the register available for sale.

  4. Richard says:

    Armchair general Peter Watt knows better again – tedious.

  5. Peter Watt says:

    The armchair general will be out delivering my leaflets this afternoon Richard! Now that really is tedious.

  6. paul barker says:

    Well, good as far as it goes but your article fails to mention a whole series of ways that unions fund labour, lending paid staff, offices, equipment & transport for example or running political campaigns during elections in parallel to the labour ones.
    Your suggested concession on the opt-in doesnt go far enough. Right now the money is taken anyway, the only choice is whether to give it to labour or a charity. To be a real choice people must have the option of keeping their own money.

  7. Peter Watt says:

    Paul – I agree on the choices that should be available should more explicitly say that you don’t need to pay into political fund at all. The extra staff, premises etc do all get declared as notional donations and are included in the post.

  8. john P Reid says:

    After the People were cleared of the cash for peerages, we should have campaigned hard for investment or done lots of fund raising,all that’s happened is Ed’ s put us in the hands of the unions who will swing us to the left and make us unelectable

  9. Forlornehope says:

    Here’s a thought, keep the opt-out rule but require an independent poll of members who have not opted out to determine their voting preferences. Then distribute the money collected in accordance with the contributors’ choice of political parties. Could be awkward if quite a few opt for UKIP and BNP but hey, that’s life.

Leave a Reply