How will Labour fund itself if the changes go through?

It’s beginning to look as though the biggest political fall-out from the “cash/loans for honours” affair is going to be on the way that political parties and future elections are funded. And the latest ideas coming out of the Sir Hayden Phillips inquiry look pretty bad for Labour.

For the idea is that every year each of the 3.5 million union members who opt to pay the political levy will have to be contacted and asked to give their written agreement to the £3 payment continuing. They will then be registered as donors to the party. At the moment the unions involved have to hold a ballot every ten years on whether the optional levy should continue.

The only positive element for Labour is that instead of the £3 payment individual union members will have the option of giving up to £50,000 each!

Clearly the cost of setting up and maintaining such a system to collect and record a mass of small amounts is going to be horrendous and it is no wonder that the unions themselves and many Labour MPs are up in arms about the plans.

This latest thinking from the inquiry is in response to the Tory move that on the face of it sounded quite reasonable – that a cap of £50,000 be put on all donations with each individual union being treated as just one entity. The problem is that the union movement has become much more streamlined in recent years and there are only 17 of them left which have the political levy.

An added dimension is the suggestion that Tony Blair is personally backing the Phillips plan as part of securing his “legacy” by severing the trade union tie with the party before he leaves Downing Street.

If the plan comes about then it’s hard to see how Labour will be able to go on funding itself.

Surely the best approach is not to limit donations but to put a cap on spending which would extend well beyond the current limits of just during election campaigns?

In the Labour leadership betting Gordon Brown can still be had at 0.21/1 – which in the absence of any credible alternative seems reasonable value.

Mike Smithson