The latest party funding figures tell us we can’t go on like this

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

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13 Responses to “The latest party funding figures tell us we can’t go on like this”

  1. Nick says:

    Why should I be forced to fund you by ‘short money’?

    No tax payers money should go to any political party.

  2. Nick says:

    So why is it that you need to stop borrowing and spending like mad, but you insist that you screw the tax payer over in the same way?

    Borrow and spend, to cure a recession caused by borrow and spend.

    Voodoo economics.

    What next, a seance to determine the manifesto?

  3. john P reid says:

    Who ever takes over as laobur leader after the elction Will not only have to deal with the Charlie whelans saying they’ll withdrawl funding if the Next laobur leader says ed balls is wrong if he thinks we can buy our way out of recession, but they’ll have the GMB and RMT withdrawling money if the enxt leader criticies the idea that we lost the 2015 election for not admitting we messed up the economy in 2010

  4. david patterson says:

    Hair-splitting arguments about party funding! You couldn’t make it up! What we need is a genuine people’s revolution. The new society we create will be more equal and funding issues will be moot anyway.

  5. The Future says:


    We are in financial trouble becuase of the financial mis-management of Tony Blair and many Gen Sec’s including yourself. First the overdrafts, then the off the balance sheet loans.

    Any chance of an apology for your part in that?

  6. John P Reid says:

    the future, One reason that laobur went into debt in 2006 was because of the Cash for peerages that saw doaners stop giving, of which the 4 People accused were cleared of selling Peerages for Money. if it wasn’t for that Labour was in the clear upto 2006 and It was Gordon and those who replaced Peter that got labour in debt, Big doners like Lord sainsbury stopped giving in 2010 ,when Ed decided to do things like to try to woo back RMT ,despite the fact they got themelves expelled for backing non Labour people.

    If anyone should apolgies its the Likes of Ed milband trying to get people to fund laobur like the RMT who also back non Labour representatives.

  7. paul barker says:

    Mr Watt, the solution is in labours hands. With all 3 major parties in trouble there is a possible deal on party funding/election spending limits. Cut spending limits, raise state funding & loosen labours links with the unions, something to please elements in all 3 parties.
    That window of opportunity is open now but it wont stay open.

  8. Peter Watt says:

    The Future – I see you have little grasp of who did what and when. But please don’t let that stop you!

  9. Rallan says:

    You have absolutely no right to taxpayers money. No political party deserves state funding. Tories and Labour don’t get enough donations because they are both unpopular. Whose fault is that?

    If you can’t get the support of the people that’s your problem. Get your snouts out of the national trough.

  10. Mike Homfray says:

    The answer is to downsize spending on politics for all parties.

  11. Rallan says:

    ‘ The answer is to downsize spending on politics for all parties.’

    Good idea. But if they did that then smaller parties would be able to compete with the discredited main parties. So it won’t happen.

  12. Peter Watt says:

    Paul Barker – I agree.

  13. Henrik says:

    Oh great, state-funded parties. Fantastic, I bet Nick Griffin is creaming- no, wait, what’s that you say, only the respectable parties will get more of my dosh? That’ll be the same 2 discredited and one utterly amateur ‘nice chaps’ parties’, then?

    Given just how massively unpopular politicians are, right this moment and how irrelevant the broad majority of folk find political parties, the prospect of direct state subvention of political parties is one which fills me with gloom.

    Here’s a thought – try to make an argument for folk to want to join, try to make an argument for folk to want to donate, try to make and argument for folk to re-engage in politics through parties. If you can’t, well, spend less and live within your means, or go broke, or, in the case of Labour, become whollythe unions’ creature. The latter course is at least in line with the Labour heritage.

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