Miliband’s funding proposals: Labour will take a hit but the Tories will be hit harder

Ed Miliband this morning made a bold intervention over funding for political parties, claiming that donations should be capped at £5,000 – a figure that is one tenth of the cap of £50,000 that David Cameron has previously put forward. The really headline-grabbing move though, is that Miliband signalled that trade unions will also be subjected to this cap, a move that he claims could deprive the Labour party of millions of pounds.

Before considering the issue of the trade unions, it is worth dwelling on the significance of the £5,000 cap itself. Miliband is quite right to highlight that a cap of £50,000 would still be ludicrously high; it is, as he points out, ‘twice the average annual wage’. If the aim is to genuinely crack down on attempts by the wealthiest to influence policy then a £50,000 cap simply wouldn’t achieve that. Yes, it would deprive all parties of a lot of the funding they currently get, but a cap that is twice the average annual wage still offers plenty of opportunity for the richest to separate themselves from the pack.

Of course, if we’re being brutally honest, so too does a cap of £5,000. Cameron might regard donations of any less than £50,000 as insignificant, but then we all know that he exists in a slightly different world to the rest of us. The thought of donating £5,000 per year, let alone £50,000, to a political party is laughable to the vast majority of the population. Why anyone would want to donate 5 grand of their hard-earned money to a political party is hard to understand – unless you’ve got so much that it really is just loose change.

Loos change to most Britain’s is more like £3. Which brings us rather nicely to the trade unions; £3 is what around 3 million workers in Britain give to the Labour party every year, in the vague hope that one day the Labour party might start to remember who it is that it is supposed to represent. Yes, the Labour party gets millions of pounds each year from the unions, who happen to be comprised of millions of ordinary working people. Quite what it is about this relationship that the Tories find so objectionable I’ve never quite understood; millions of pounds from millions of members, or millions of pounds from Lord Ashcroft. Do we really need to have an argument about which one of these set-ups provides greater political equality?

Miliband’s intervention this morning doesn’t attempt to alter this part of the relationship with the unions; union members will continue to have the option of donating a small amount each year to the Labour party. What it does do, though, is cap at £5,000 one-off donations from the unions that are particularly important to the party at election time. A lot of people within the Labour party will no doubt be unhappy about this proposal; after all, those one-off donations are still essentially funded by union members, and thus there is a very good argument that provided the total donation doesn’t amount to a donation of more than £5,000 per member (of course they are nowhere near that amount), the donation shouldn’t be seen to break the cap.

Yet, this is where the politics comes into play. Miliband knows the Tories and Lib Dems will never agree to a deal on party funding that continues to allow the unions to pour millions into the Labour party whilst simultaneously cutting off the supply of most of their funding. But in being first out of the blocks, proposing a deal which puts a limit on union contributions whilst maintaining the link between the unions and the Labour party through contributions by members, Miliband has put the coalition on the back foot. No doubt, conflicting figures will be put out by both sides over the coming days with the coalition claiming that this is a proposal that favours Labour whilst Labour will insist that they will lose out heavily. The coalition will be right; a cap of £5,000 would cripple the funding of both the Lib Dems (not that anyone really funds them anymore anyway) and the Tories, and whilst the Labour party will lose money as well, I find it very hard to believe that proportionally they will be worse off than the Tories.

Cameron won’t want to agree to this deal; but if he rejects it, he’ll once again look like he’s defending the right of the rich to influence politics. Miliband’s proposal might not be perfect, but politically it looks like a potentially astute move.

Posted on April 15, 2012, in Comment, Conservative Party, Labour Party, Party Politics and tagged , , , , , , , . Bookmark the permalink. Leave a comment.

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