Progress | Centre-left Labour politics

Why Labour needs to change its funding structure

Ahead of the upcoming report on the funding of political parties, Peter Watt looks at how changes to the way Labour raises money could bring about a stronger relationship with the trade unions and the public at large.

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The debate over the nature of the Party’s relationship with the Trade Unions has been on simmer for a while. The political establishment is awaiting the outcome of the Committee on Standards in Public Life enquiry into the funding of political parties. I gave evidence during the November hearings. The report is expected in the Spring of 2011 with the presumption that this will be followed soon after by the Government’s response. We know that they are committed to legislating on donation caps. Which is why it is all very interesting that the Independent has an article today that indicates that Ed Miliband is in favour of a donation cap of as low as £500 per year. Further, that he is in favour of this partly because this would have real implications for the future of the Party and its affiliated members.

Now I am a little sceptical about the article. It is based on the Party’s written evidence supplied by the General Secretary Ray Collins in which he reasonably says:

“While some argue for a cap of £50,000, a much lower cap of around £500 would be more equitable, democratic and less susceptible to avoidance.”

But I would suspect that the £500 figure is either a mistake or a negotiating position for use when the legislative horse-trading starts. Certainly the notion that the Party could be funded by small donations alone is a fantasy. There would presumably have to be some extension of state support by, say, matched funding or some such. But I want to believe that the fundamental basis of the article is true. That Ed Miliband really has decided to tackle the disgrace that is the current set of arrangements with our affiliates.

To be clear, whilst we talk up the opportunities for engagement with millions of working people across the country afforded by the link, on the whole it is a sham. The relationship is for the most part a relationship with a small and elite group of Trade Union officials. Whilst they don’t buy policies they certainly buy influence. And if you think that that is harsh just think about how often Trade Union colleagues complain that they don’t get as much for their affiliation fees as they would want.

The reality is in fact worse. The current relationship with the Trade Unions allows us to obscure the fact that we actively exclude the public in a systematic way from being involved in determining the policies or choosing the candidates that want to become their elected public servants.

Over the coming months, as party funding is being discussed, the nature of the relationship with the Trade Unions will be under scrutiny. For heaven’s sake let’s not delude ourselves about the reality of the current relationship. No one outside of the Party believes us, and in trying to defend it we will harm ourselves.

Instead, let’s think about what the relationship with the Trade Unions could be. It could be part of the answer as to how this Party reaches out into communities across the country. It could actually be about involving millions of working people in grass-roots politics. It could be part of the way that we move from being elite and out of touch minority to becoming a community based force for social good. It certainly can’t be any of these things whilst all we are worrying about are the implications of change on our moribund internal structures.

So I hope that the Independent article is broadly right. That Ed Miliband intends to open up the Party to the public and strengthen the relationship with the Trade Unions and Trade Unionists by weakening our dependence upon them financially. I hope that the Party gets ahead of the curve, embraces donation caps that include Trade Unions and changes the Leadership Electoral College to include the public. It is not a moment too soon.

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Peter Watt

is a former general secretary of the Labour party

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