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Kelly report: attacking Labour’s politics, not just its funding

£20 notes hanging on a line with the Houses of Parliament in the backgroundThe Kelly report may have been subtitled “Ending the big donor culture” but what it would most effectively stop is the money Labour receives from millions of Britain’s smallest donors, trade unionists who, according to TULO, mostly pay between £5 and £8 per year to their union’s political fund, who can already choose not to do so (as do 23% of members of unions with a political fund). And yet, Kelly proposes no action to give shareholders the right similarly to opt out of company political donations. In reality, this is as much an attack on Labour’s politics, the commitment to representing working class people, which has been integral to the party-union link since its foundation, as it is an attack on the party’s funding.

It’s an attack on that politics that suits not only the Tories and Lib Dems, but also the Blairites amongst us. Peter Watt, former party general secretary, accepts Kelly’s view “that trade union money is different if, and only if, each individual trade union member payment to the party is made more transparent.” Ray Collins, in his evidence to Kelly when he was still the party general secretary, also accepted a cap on donations (of £500, not £50,000 as Kelly recommended) without any proviso about trade unions.

The politics of those who fail to distinguish between trade unions and companies are those that fails to value community, solidarity, collective action and mutualism. An organisation of equal individuals that seeks to defend or promote the common interests of its members is wholly different from a company that exists to enrich its shareholders. Many organisations of individuals seek to influence the political process in addition to promoting their common interests in other ways: pensioners groups, tenants and residents, rail passengers, hospital patients and other service users. Trade unions are rarities in being able to raise the funds to launch and sustain a political party. But they are not alone. The Carlton Club — yes, the one that only opened its doors to women members in 2008 — managed to give £844,635 to the Tory party over the last 10 years, but, oddly enough, it’s only trade unions who have to have complex ballots to create political funds and donate to politica parties.

Who minds if MPs are influenced by pensioners or tenants, cancer patients or rail unsers? Is it not perfectly legitimate for such groups to ask MPs to speak on their behalf ? Provided they are not wholly funded by SAGA Insurance or a pharmaceutical company, that is. Why should it be different for trade unions? How can one draw an absolute line between what are “political” activities and what are not? And why should affiliated unions have to give their entire political fund to the party when non-affiliated unions who have political funds (like PCS, NUT, NASUWT, UCU, FBU and RMT) can spend their funds on a whole range of causes?

This threat to Labour may not come to anything now, but it will return. Labour should make clear that, if it does, Labour will legislate on its first return to government to force companies to deduct the cost of any political donations from dividends subject to the active consent of all shareholders, and, in the case of shares held through pension funds, insurance companies and other intermediaries, of all ultimate stakeholders. That would be fair and reasonable. Unlike when I joined my trade union, I gave no consent for the benefit of my funds to be used to assist the Tory party when I took out a pension or when I’ve bought insurance policies.

And as for the other measures proposed, we’d support tighter limits on spending. There is no need for political parties to spend vast amounts on advertising (especially when it is unfairly targetted at marginal constituencies) when they receive free post and free broadcasting worth £140million. But state funding is an unreasonable  barrier to the entry of new political parties and the evolution of old. We should not forget that Labour was born, in part, as a breakaway from the Liberal Party. Political parties will continue to evolve. Kelly is able to propose this obstacle to such evolution because he has the backing of smaller parties like the Greens and Plaid Cymru — but only because they are now sufficiently established not to be disadvantaged. State funding is also a centralising force, strengthening the power of leader and reducing that of party members. The public will not support it, and we should accept that.


  1. Chris says:

    They can make the law, but in this case they can’t make it a legitimate law. No government has any moral right to do this.

  2. Syzygy says:

    We should be emphasizing the anti-democratic attacks of the right … including the right of the LP. Just because Peter Watts et al pay their LP dues, it does not mean that they are ‘Labour’ or IMO in the right party.

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