by Peter Watt
I’m on holiday at the moment and have both limited internet access and limited interest in all things political. Normal levels of political obsession will no doubt return once the holiday is over. One thing has caught my attention though this week and I felt the need to write about it. It’s an old favourite of mine, something I feel passionately about – party funding and the trade unions.
The Electoral Commission has published its latest quarterly report on the donations to political parties. The first thing to note is that overall levels of donations to all political parties were down almost £1 million when compared to the first three months of the year. The Tories were down £250,000 receiving £3.8 million whilst Labour was down £450,000 receiving just under £3 million.
So it’s clear that Labour, already receiving less than the Tories, appears to be feeling the squeeze even more. The detail of the figures goes on to show that that even more of party’s income is now derived from a single source: the trade unions. Of all of the donations received by Labour in this reporting period more than £2 million, or about 70%, came from the Trade Unions. And of this £2 million, Unite gave over £840,000 almost double that of the next biggest, USDAW, at £429,000.
Our opponents have once again tried to make mischief and claim that this means that 70% of our income comes from the trade unions. This is simply not true. As I have blogged on Labour Uncut several times before, the Labour party does not in fact 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;
- £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;
- £5 million or so from other things like commercial income, legacies and dinners.
So while the attacks of our opponents are an exaggeration, we should not pretend that they do not have a point. Labour’s financial position remains precarious and we need to face up to it.
To state the obvious, all three main income sources are under pressure. The trade unions are probably secure unless and until the rules on donations are changed. But the proportion of our income dependent on their remaining political goodwill could be seen as being a little scary for an organisation with fragile finances.
If we were to win the next election then we will lose all of the short money. And the trend for membership levels is that they are generally falling, occasional temporary rise not-withstanding.
Over the last few years we have managed to keep membership income stable by being more efficient and by putting rates up but you can’t keep doing this.
There is clearly scope to raise more income from hypothecated fundraising drives, from wealthy donors and from business. In fact, the more competitive we become electorally the more we are likely to attract financial support.
But our criticisms of the Tories current relationships with wealthy donors and business make this more difficult while hypothecated fundraising raises relatively little. It also seems that the party has run a deficit in the last year of well over £1.7 million despite still paying off historic debt.
The consequence is that, understandably, expenditure is being squeezed hard again with another round of voluntary redundancies hitting with many staff due to leave after conference.
Iain will no doubt be planning for a smaller and more efficient organisation that enables the voluntary party more than it directly delivers. And I am sure that this is the right approach. But this can surely only be a temporary fix?
To put it simply, the party simply cannot go on like this indefinitely.
Peter Watt was general secretary of the Labour party