Posts Tagged ‘party funding’

Time to learn from the union link in funding politics

29/03/2012, 07:18:41 PM

by Ian Stewart

Every time there is a donor scandal in British politics, Whether its Ecclestone or an oligarch’s yacht, the same old arguments for state funding rise, Lazarus-like from their tomb. No doubt since Sunday, Lib Dems have been muttering to their dwindling band of friends that all this will go away if we had a system like Germany.

It is a tempting argument, well made by Mary Ann Sieghart earlier this week in the Independent. Many inside progressive politics are no doubt swayed by its siren call. Yet like so many centrist arguments favoured by political nerds, this one has some gapng holes:

Hole 1:  Germany has had state funding since the 1950s, yet corruption and bribery still happen. The massive “Lockheed scandal” of the 1970s forced politicians and Luftwaffe Generals to resign over the purchase of the starfighter warplane. Germany now apparently requires companies to state what they have spent on buying political influence, so that they can levy a “bribes tax” (hmm… thinking about this one…)

Hole 2:  The old Soviet Bloc had state funding for its token “Opposition” parties in the GDR, Poland et al. Anyone see any good that came of that? No? Lets move on…

Hole 3: Politicians are about as popular as leprosy. Do we want more of our taxes spent on them?

Hole 4: The state is not always neutral. State funding of political parties could take away some of our independence and ability to propose radical new policies.

Hole 5: Why should a Labour supporter help fund the LibDems/Tories/UKIP/BNP/Respect… or indeed anybody else? Why should a Scottish Labour supporter fund the SNP? That’s what Brian Souter is for.

Hole 6: For Labour, it further weakens the trades union link, and Progress are in favour of it.


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Time for Ed and Cam to grow up on funding

28/03/2012, 07:00:23 AM

by Peter Watt

The cringe inducing video of Peter Cruddas promising supper with Sam and David with comic buffoonery was still leading the news.  The nod and a wink about the promise of policy input into (something called) the number ten policy committee of course took this to another level.  At a stroke it went from being just another “cash for access story” to “cash for policy” – the real daddy of political sleaze.  Having said that, I was actually still quite optimistic on Sunday, maybe this time there would be a political deal; maybe this time our politicians will sort it out; maybe this time there would be legislation fundamentally reforming the funding of political parties?

But by Monday evening the optimism was dashed.  Once again the ugly head of tribal politics intervened.  Ed Miliband and Francis Maude stood at the respective dispatch boxes and shouted at each other.  It was horrifically depressing.  Neither of them in my view did politics any favours, despite the supportive bellowing from their respective benches behind them.  The public, to the extent that they were watching, must have thought, “WTF was that” because it certainly wasn’t edifying.

None of the parties has much to boast about here.  Each has their list of scandals involving party and MP finances.  It is all too easy to get dragged in, as I very well know. Some scandals involve people trying to personally gain while some involve mistakes, or are the result of playing within the rules but not within the spirit of them.  All though, involve a further nail in the coffin of the reputation of politics, as a sceptical public do not draw any distinction as to the motives.  I know that I certainly regret my part in the succession of stories that have damaged politics.

Now if someone decides to feather their own nest and act corruptly there is probably not much that we can do about it, but there is something that we can do to reduce the risk of other funding scandals.  Because the harsh truth is that the current system encourages the parties to push at the boundaries of the legislation passed ostensibly to clean up politics.  Just as people perfectly reasonably employ accountants to help them avoid tax, so political parties employ people to maximise the income that they can receive.  After all, why should they turn a gift horse away?  So loop holes are found and exploited.  Legal?  Yes.  Acceptable?  Certainly not to the public.


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The false debate over the public funding of politics

27/03/2012, 09:00:15 AM

by Atul Hatwal

Here’s a question: who is Labour’s biggest donor under Ed Miliband?

Is it Unite? Unison? Maybe the GMB?

Answer: none of the above.

An Uncut analysis of donations to the Labour party since Ed Miliband became leader reveals that the biggest single donor is the House of Commons, giving £9.6m. This so called “short money” is a stipend paid to the opposition to balance the advantage a government gains from the enormous resources of the civil service.

Roll in the funding the opposition receives from the House of Lords, the Scottish Parliament and grants from the Electoral Commission for policy development and Labour has banked almost £11.3m from public funding sources since October 2010. That’s more than the combined donations to the central party (as opposed to individual constituency parties) from the all of the unions.

This isn’t a recent a development either. A decade ago, when the Tories were at their nadir, what was their biggest source of funding? Was it Lord Ashcroft? Or a.n.other city gent, eager to run down his bank balance?

Of course not. In 2002 the total donations from individuals to the Tories came to £2.3m. In comparison the amount the Tories drew from public funds was nearly double at £4m.

These figures expose one of the myths in the political debate on funding – that the public will not accept state funding of politics.

Newsflash: they already have.


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The Kelly proposals: eminently sensible and workable

26/03/2012, 02:08:13 PM

This post by Peter Watt was originally published on 24th November 2011. David Cameron could have done with reading it back then, might have saved himself a spot of bother. But at Uncut we believe in giving people second chances, so here it is again.

The reaction to the report “political party funding – ending the big donor culture“, by the committee on standards in public life, chaired by Sir Christopher Kelly, has been depressing if not surprising.

I feel strongly about this issue. I was caught up in “cash for honours”. I had to instigate swingeing budget cuts and redundancies to avoid bankruptcy at the Labour party. I was part of Labour’s negotiating team in the failed Haydn Philips inter-party talks on party funding in 2006 and I was embroiled in a pretty major funding scandal that lead to my resignation as general secretary and another police investigation. I also gave evidence to the Kelly enquiry.

So let’s start with some cold hard facts.

  1. Politics is expensive. Staff that run campaigns, develop policy and arrange conferences, plan strategy, engage the public and design materials, websites and videos cost money. And there’s everything a reasonable sized organisations needs:  advertising, membership systems, property, cars, travel, hotels, publications, professional services like accountants and lawyers, furniture, computers, software licenses, insurance and stationery. This does not come cheap and it all needs to be paid for.
  2. Politicians are generally shallow and fear failure. This means that they don’t care all that much about where the money comes from to pay for those things that they think that they need to maximise their chances of winning. They will dress it up as wanting to win to do good things, and there is obviously some truth in that. But fundamentally they want the glory; and they need funds to achieve it.
  3. Politicians do not get involved in fundraising. They, rightly, fear being tainted by the “dirty” business of fundraising. So while they demand that the funds are there when they need them, they generally don’t lift a finger to raise it unless absolutely forced. The result is that those charged with raising funds are put under enormous pressure and are given very little support to raise the necessary cash.
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The Kelly proposals: eminently sensible and workable

24/11/2011, 08:00:40 AM

by Peter Watt

The reaction to the report “political party funding – ending the big donor culture“, by the committee on standards in public life, chaired by Sir Christopher Kelly, has been depressing if not surprising.

I feel strongly about this issue. I was caught up in “cash for honours”. I had to instigate swingeing budget cuts and redundancies to avoid bankruptcy at the Labour party. I was part of Labour’s negotiating team in the failed Haydn Philips inter-party talks on party funding in 2006 and I was embroiled in a pretty major funding scandal that lead to my resignation as general secretary and another police investigation. I also gave evidence to the Kelly enquiry.

So let’s start with some cold hard facts.


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To boldly go… Ed’s relationship with enterprise

11/10/2011, 10:09:15 AM

by Rob Marchant

It’s been an eventful couple of weeks. So, the ship has now set a course and we’ve done the crew changeover. It may be a course that not everyone’s happy with, but let’s face it: they never are, are they? And at least there is a course.

The Tory conference wasn’t a failure, but it wasn’t exactly a runaway success, either. What with Teresa May’s cats and Cameron’s dogs, it seemed sometimes that it was raining very hard last week. And the mess now being caused by Liam Fox has helped us. So let’s be thankful for small mercies and look to the future.

In a year’s time, we’ll be looking to the completion of the policy review. We will be practically at the electoral midpoint, and will know for sure whether regaining the London mayoralty was a real possibility or a pipe-dream (the tea-leaves, admittedly, do not look good on this one). We will then be able to start setting out broad policy lines and start long-term planning for the next election. Things aren’t so bad, right? (more…)

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Tuesday News Review

30/08/2011, 06:56:01 AM

Housing crisis

The National Housing Federation said the number of property owners will drop to just 63.8% as house prices soar, compared to 72.5% in 2001. The study says rising prices, the need for huge deposits and a tightening of lending criteria will force ownership numbers down. It also predicts prices in the rental market will increase sharply as people struggle to own their own home. The group, which represents housing associations in England, says a shortage of homes in the UK is also to blame. Housing minister Grant Shapps said the government is aiming to deliver on its promise of 170,000 new homes in the next four years, coupled with encouragement of lenders to help first time buyers. However the NHF chief executive David Orr says the market is “dysfunctional” and warned: “Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy.” – Sky News

The housing market is in crisis as house prices soar and ownership levels tumble, a forecast warned yesterday. Ownership in England will fall to 63% in the next decade from a 2001 peak of 72.5%, the National Housing Federation, which represents housing associations, said. It blames an under-supply of homes, big deposits and stricter lending rules. Oxford Economics, which was commissioned to produce the forecasts, expects a 20% rise in house prices, to £260,304, and private rents, to £582 a month, by 2016. About 4.5 million people are on waiting lists for social housing and only those in desperate need have a chance of being allocated a house. Federation chief executive David Orr demanded more Government investment to build affordable housing. – Daily Mirror

In England, 67.8 per cent of people currently own their home. London will see the biggest drop over the next ten years, from about 50 per cent to 44 per cent in 2021, while the North-East will be the only region to see an increase, rising from 66.2 per cent to 67.4 per cent. Today, the typical first-time buyer has to save £26,346 to get a mortgage – the equivalent of 20 per cent of the value of their home – according to the Council of Mortgage Lenders. Four years ago, they needed only a deposit of 10 per cent. However, Mr Orr blamed builders, not banks, for the housing crisis. ‘Despite the overwhelming need to increase supply, house building has slumped to a 90-year low, plunging the country even deeper into the mire,’ he said. House prices and rent are both predicted to rise by about 20 per cent over the next five years.  This would mean the average tenant paying £1,152 more per year. – Daily Mail

Crossrail delay to stop another Bombardier

Britain’s next train manufacturing contract could be awarded to a UK-based business after the £16bn Crossrail project delayed a competition to build new carriages. The move reduces the chances of a repeat of the Bombardier row, where the company’s Derby factory missed out to a German rival for a £1.4bn government contract. As a consequence of the delay, the Crossrail tender will include recommendations from a government review of public procurement that was announced in the wake of the Bombardier decision. Crossrail said the primary reason for pushing the award of the carriage contract from late 2013 to 2014 was to save costs, but said it would also allow “the conclusions of the government’s review of public procurement to be taken into account”. In a carefully worded statement, Crossrail indicated that a UK-based business will be in a stronger position for the new contract than it was in the Thameslink contest. – the Guardian

Cash for access returns

David Cameron has been accused of holding “cash for access” meetings with the head of a public affairs firm. As Tory leader he pledged to end the “far-too-cosy relationship between politics, government, business and money”. But since becoming Prime Minister he has twice held private talks with Conservative Intelligence boss Tim Montgomerie without any officials present, previously secret records show. The company charges clients up to £2,500 a year for advice that includes briefings on government policy and the “dos and don’ts” of tapping-up ministers. The talks came to light when Mr Cameron was forced to publish details of all his meetings at the height of the phone-hacking row. Labour MP John Mann said: “This revelation totally shatters his promise to clean up Westminster. It is old fashioned cash-for-access and lobbying dressed up in a new guise.” – Daily Mirror

Funding cap would ruin Labour

Labour could face financial ruin under plans being developed to cap the biggest donations to political parties, a Guardian analysis shows. The independent standards watchdog is said to have agreed to recommend a new limit on donations, introducing an annual cap with figures ranging from £50,000 to £10,000 being considered. Such a move, in an attempt to clean up political funding, would end the six- and seven-figure donations to the Labour party from its union sponsors, as well as the Tories’ reliance on the richest city financiers. An analysis of five and a half years’ worth of donations to the parties reveals the move would most dramatically affect Labour’s funding base. If the £50,000 limit had been in place over the period, Labour’s donations would have been reduced by 72%, the Conservatives‘ by 37% and theLiberal Democrats‘ by 25%. – the Guardian

Japan’s new PM

Japan’s parliament elected Yoshihiko Noda as the country’s new prime minister Tuesday, making him the country’s sixth new leader in five years. Noda won 308 out of 476 possible votes. The prime minister-elect will officially take over his new post after a ceremonial endorsement by Japan’s emperor, which is expected to happen Wednesday. Ahead of the vote, former Prime Minister Naoto Kan officially submitted his resignation, as did his Cabinet, clearing the way for Noda’s election. The Democratic Party of Japan, the country’s ruling party, picked Noda as its new leader on Monday. He served as finance minister in Kan’s cabinet. In his first speech as party leader, Noda called for party unity to tackle Japan’s massive problems. – CNN

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We need to diversify our funding base

09/06/2011, 07:00:50 AM

by Peter Watt

We recently saw the publication by the electoral commission of the list of donations by all political parties in the first quarter of 2011 (Q1). The Labour party received £2,882,765 of which £2,507,372 was from trade unions. This means that almost 90% of Labour’s donations in Q1 came from affiliated trade unions. Now whichever way you cut that, it cannot be a good thing. There are two aspects that are specifically worthy of scrutiny. One is political and the other is financial.

Politically, it is a mixed picture. We share history, and over the years the trade unions have proved that they are more than fair weather friends. The affiliated trade unions are members of the party in their own right. Their membership (affiliation) fees mean that trade union members are in theory a constituency of millions of working people with a stake in the party. These members should act as a constant reminder of life in the real world. And, of course, their organisations and ours are enshrined in our constitution with ties at every level of the party.

Over the years, our opponents have unfairly characterised the relationship as one of master and servant, with Labour’s union paymasters demanding and getting their policies. The reality has been somewhat different. In fact, as one union general secretary said to me recently, “if that really was the case then the pound for pound return has been pretty fucking poor”. No. Affiliated trade unions are members of the party because they continue to believe that a Labour government will, on balance, always be better for their members than the alternative.

But we need to be honest. The relationship between the party and the unions has not been right for some time. It isn’t really a direct relationship between the party and millions of trade union members. The relationship is mediated by a small group of senior figures. While for many in the party, the trade union link is just a source of patronage and funds when they are seeking selection. Which comfortable status quo means that millions of trade union members are mainly represented by the millions of votes cast on their behalf by trade union general secretaries at party conference.

With 90% of all donations now coming from trade unions, it is simply not credible to claim that they are not in a stronger position to demand greater compromise on party reform and on policy. If they pushed hard enough, it would be all but impossible for Ed to refuse. And if Ed wanted to do something that they really they didn’t want him to do then could he just ignore them? No.

Meanwhile, our opponents have done a very good job in the minds of the public of painting us as a party of the trade union vested interest. And they have linked this to notions of political extremism and economic excess. Whether this is fair or not is one thing. Another is why are we not capable of attracting a broader base of financial support in the first place? Why are successful companies and individuals not beginning to support us again? Because while it is great news that 70,000 new members have joined leading to an extra £1 million or so into the coffers, that is simply not enough to arrest the long term decline in our income. Particularly when you think that the party costs roughly £25 million per year to run.

Which leads to the second issue worthy of scrutiny – the financial implications of the party receiving 90% of its donations from the trade unions. The first thing to say is that it is simply not sustainable.

Remember that we are committed to paying off £2 million a year in debt before we pay anything else. Of the £2.8 million received between January and March this year, £1 million came from Unite, £500,000 from GMB and £400,000 from Unison. In other words, it would only take a decision by one of their conferences to withhold or reduce funds and the impact would be pretty serious. Any organisation with the levels of debt that the party has, and that is so reliant on a single source of funding, can only be described as vulnerable.

Second, the overall reduction in the amount we have available to spend each year because of our narrow funding base is being masked. It is being masked by the tax payers’ money that we now receive because we are in opposition. A combination of Short, Cranborne and Scottish Parliamentary money took our income from £2.9 million to £4.6 million in the first quarter of this year, meaning that we will be in receipt of the best part of £7 million this year from the taxpayer. So while our income this year is likely to be about £23 – £24 million in cash terms, without the taxpayer we would be looking at income of about £17 million. In other words, we can barely afford to fight an election and we almost certainly can’t afford to win one.

Finally, and most seriously, there is the threat of party funding reform. Quite simply, if the government decides to implement its proposed cap of £50,000 on all donations to political parties, then the Labour party is in dire trouble. The money received from trade unions would go from £8 – £10 million per year to a maximum of £750,000. And yet there is every sign that that is exactly what the government is going to do. And I’m not sure that another “defend the link” campaign is going to be enough on this occasion.

So all in all, 90% of donations to the party coming from the trade unions exposes some pretty serious political and financial weaknesses that we need take seriously. If it’s not happening already, I hope that we are talking to the other parties about agreeing some sort of consensus on party funding reform. I hope that we are looking at why we don’t appear to have been able to diversify our income and attract back large numbers of successful wealthy individuals and companies. And I hope that we are looking at how we can further increase the amount that our members give.

If not, then we may well have a bit more to worry about than Refounding Labour and poor attendance at local party meetings.

Peter Watt is a GMB member and former general secretary of the Labour party.

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Labour’s relationship with the unions is not set in stone, says Peter Watt

21/10/2010, 09:00:42 AM

As Tony Blair once said, “I didn’t come into politics to change the Labour party. I came into politics to change the country.”

And that is why opposition sucks.  We all joined the party so that we could play our part in turning our values into practical policies. We want to actually be able to improve the lives of people and their families, raise aspiration, work to strengthen the economy and so on. And you can only actually do that in government. For 13 years we felt that we were making a difference – making a difference at our local party meetings, making a difference at national policy forums and making a difference at party conference.

Oh I know that we complained that we were ignored (and probably we were, although not as much we claimed) but ministers of the crown came to our fundraising dinners, spoke at our events and circulated around the policy discussions and fringe at our conferences. It felt that we were both important and that we were involved in doing something important. And I guess that we can admit this now – we enjoyed it. Even the wine was better at conference when we were in government. (more…)

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