Can the new leader solve the party’s financial crisis?

The overnight news that all challengers in the coming Labour leadership contests are going to have to pay the party a “tax” of 15% on the campaign funds they raise is a further indication of the serious funding problem that the party is now facing.

For a consequence of the “cash for honours crisis” is that big donors are, perhaps understandably, reluctant to make contributions and Labour has a campaigning machine that requires a lot to keep going. In the political arena, too, the big cash tends to move towards potential winners and Labour is looking less like that than it has done for a decade and a half.

So a major challenge for Gordon, or whoever succeeds Blair, is finding the sums, first, to pay off the big deficits and then to build up a war-chest to compete with what is likely to be a well funded Tory machine.

There is, of course, an inquiry into party funding going on and it’s highly likely that both the fund-raising and spending rules will have changed by the time of the next election. But getting the tax-payer to pick up a large part of the tab is not going to be popular and a gift for the Tories to make into an issue.

So how is Gordon going to do? Is he going to be able to raise the cash that Labour needs? Has he the personality to be a supplicant – to ask for money?

The role of the leader in this was touched on in a recent column by the Guardian’s Jackie Ashley.

This is what she wrote:“..It isn’t hard to imagine a different way of doing things. There should have been entirely separate party fundraising, with absolutely no connections to No 10. Donors would not therefore have had the personal touch from the most powerful man in Britain, and the fundraisers would have had a harder job. It would have forced them to reach down, below the fat cats, to party sympathisers and members. The galas, quiz nights, appeals, 0800 phone numbers and pestiferous mailshots used by charities would have been in play.”

This is just naive. My day job is as professional fundraiser and over the past decade or so my campaigns have produced more than the totals raised both the Labour and Tory parties added together. The reality is that small ticket fundraising of the type Ashley describes is likely to be be costly and is only going to produce a fraction of what’s required to feed a modern political machine.

You have to engage big donors and it is simply not possible to produce the sums required without them. The rub is that to persuade people to make the big gifts involves the leader. There is no way that the role can be divorced from the process.

If Gordon was an American politician seeking his party’s nomination to run for president then he would have got nowhere without getting closely involved in the fundraising process. From what I have observed of Brown he does not look like a natural – in fact rather the opposite. Whatever his success in this area could be a key factor if he wants to stay in the job after the next election.

Latest Labour leadership betting is here.

Mike Smithson