Miliband moves on party funding: offers £5k cap including union donations (but what about members’ opt-in?)

Three weeks after the latest funding furore to hit politics — when Tory co-treasurer Peter Cruddas touted influence on government policy for £250k a pop — Ed Miliband has seized the initiative, proposing to limit all donations from individuals, organisations and unions to a maximum of £5,000.

Here’s the BBC report:

Labour leader Ed Miliband has offered to limit donations to his party from trade unions to £5,000, as leaders discuss how to change the system. He told the BBC this would remove the influence of “big money” on politics. The issue has been the subject of an ongoing row between Labour and the Conservatives. Labour argues that large businesses are providing too much of the Tories’ funding, while the Conservatives say Labour is itself too reliant on lump sums given by affiliated unions, such as Unite and Unison.

Credit where it’s due, this is a positive step by the Labour leader, both in principle and tactically. There’s a sticking point, though:

But Mr Miliband would keep the system where members of unions affiliated to Labour are asked whether they would like to “opt out” of giving the party a levy of £3 a year, rather than changing to an “opt in”.

As Mr Miliband puts it in his own press release:

The 3 million levy payers – nurses, teaching assistants, engineers, shopworkers – would continue to be linked to the Labour Party through the £3 or so they pay each year through their unions. There is the world of difference between a wealthy individual giving millions, and millions of trade union levy payers paying a small sum of money to affiliate to the Labour Party.

Hmmm, well up to a point. Of course in terms of scale and influence he’s right. But there is a fundamental principle which Labour likes to brush aside: that individuals should willingly opt-in to a political donation. Ed Miliband is hoping that the boldness of his £5k-cap offer will enable him to maintain the controversial opt-out political levy, the aggregate value of which is worth £millions to Labour.

Those who justify the current opt-out policy often make the claim that union members know their donations fund Labour and are content for their levy to be gifted to the party. Perhaps they are. There is of course an easy way to prove that’s the case: move to an opt-in system so that Labour knows the political levy is willingly gifted by everyone whose money they take.

Ed Miliband’s move is a welcome one. But until Labour shifts on the opt-in principle as well the suspicion will linger that self-interest is more at play here than a genuine commitment to reform party funding.

* Stephen Tall is Co-Editor of Liberal Democrat Voice, and editor of the 2013 publication, The Coalition and Beyond: Liberal Reforms for the Decade Ahead. He is also a Research Associate for the liberal think-tank CentreForum and writes at his own site, The Collected Stephen Tall.

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29 Comments

  • If my union affiliated to the Labour party then I would argue in favour of an opt-in rather than an opt-out. But isn’t the argument outlined above somewhat disingenuous? It is not Ed Milliband that decides a union’s policy on political donations but the members of that union. I don’t see what is liberal about the government forcing a particular policy on a union against the democratically expressed wishes of its members.

  • I’d like to know, Stephen, why you think opt-in/opt-out is a fundamental principle, as opposed to a minor technical concern?

    Where do you stand on political donations from companies that give their staff no say in the donation?

  • Andrew R – You might as well argue whats liberal about requiring members to take part in a secret ballot before striking, or not being allowed to take part in secondary picketing. The law is what parliament makes it and it applies equally to members of an union as to the bankers.

  • Dave Eastham 15th Apr '12 - 2:06pm

    Why must this debate just focus on alleged undue financial influence on Labour Party policy by Trade Unions or alleged Tory corruption in “selling” policy influence, or at least the a “perceived” influence by the donor (which is probably worse)?. Also, let’s not forget the odd “hiccup” in the past with the sources of some Lib Dem funding.
    Lib Dems at least would do well to avoid getting involved by proxy in the partisan squabble between the Tory’s and Labour, trying to undermine each others funding. Which they have been doing for years.
    It’s worth remembering that the establishment of the Trade Union’s political levy for Labour Party funding by Trade Unions, was the result of legal action taken by Walter Osborne, a Liberal Trade Unionist, in 1908 leading to the House of Lords Judgement in 1909 (see http://www.historyandpolicy.org/papers/policy-paper-96.html) and the setting up of political funds under the Trade Union Act of 1913.
    It is also worth remembering that “political” activity by trade unions, is not exclusively defined by various subsequent tinkering with the law, as Unions just giving money to the Labour Party. Various other activities seeking to influence “public” activity can be defined as “political” and should be funded by political funds, though this is often a grey area. Nonetheless, several unions that are not affiliated to the Labour Party maintain political funds because of this. Some, like Unison, who are a Labour affiliate, maintain an affiliated and non affiliated fund so that Unison members, who may not be Labour supporters but do support various campaigns, can contribute to campaigning activity.
    In fact, current Lib Dem policy encourages the setting up of affiliated and non- affiliated funds. So calls from within the ranks of Lib Dems calling on the Labour Party adopt opt-in for the political levy is a bit bizarre. Firstly, the Labour Party as such, has no role in the internal democracy of individual Labour affiliated Trade Unions and certainly none whatsoever in the non affiliated unions. And secondly, current Lib Dem policy does not call for it. On the very sensible grounds that it is not for the Lib Dems to interfere and try to micro-manage the internal workings of Trade Unions. I am therefore a bit puzzled. In what way does it show Ed Milliband’s “commitment”, to call for something he has no power to deliver and is not part of Lib Dem policy (and therefore presumably our negotiating stance in cross party talks), anyway?.

  • I think the ‘political fund’ that does not go to Labour should become a ‘campaign fund’ with an opt-out, and any money going to Labour should require an opt-in. What about the Co-operative Party, shouldn’t society members opt-in.

  • Stuart Mitchell 15th Apr '12 - 2:37pm

    This isn’t really much different from what Labour have been proposing since 2010. In fact in their submission to the Committee on Standards in Public Life in October 2010 they suggested that an even lower cap (£500) might be “more equitable, democratic and less susceptible to avoidance”.

    “…the suspicion will linger that self-interest is more at play here than a genuine commitment to reform party funding.”

    We have a situation at the moment where the two ruling coalition parties want to “reform” party funding in such a way that the only significant opposition party would lose 85% of its funding, condemning it to bankruptcy.* In the interests of democracy, I would hope that Miliband fights for Labour’s self-interest here as hard as he possibly can.

    * http://www.guardian.co.uk/politics/2011/may/29/tories-want-to-cripple-labour

  • I am a member of a Labour-affiliated trade union, and the opt-out is never advertised. It takes forever to get hold of the paperwork you need to opt out, then you are told to send it back to someone whose details (name, address) you’re not given. Finally, there’s no actual confirmation sent to tell you it’s happened.

    Apart from naked self-interest, what can be the Labour party’s argument for this system to continue in its current form? What is so wrong with asking people whether or not they want money deducted from their pay to go to the Labour party’s bank account?

  • Stuart, where, on a hierarchy of seriousness, would you rank the opt in/opt out issue of a £3 levy compared to people donating £5k-£50k or people donating over £50k?

    Which sum do you think has the greatest potential to distort politics in favour of the rich?

  • Paul McKeown 15th Apr '12 - 4:39pm

    Why not simply collect through PAYE or annual tax return, opt in with nominated party, with a £500 cap on any individual’s donation? Then arguments about state funding are irrelevant, large organisations or wealthy individuals can’t buy influence. Everyone is given the opportunity to become (slightly) active in their choice of politics.

  • Paul McKeown 15th Apr '12 - 4:43pm

    I think besides trying to prevent businesses, lobbying and advocacy groups, trades unions and wealthy individuals from buying undue political influence, government should be trying to encourage some degree of individual political engagement, as political parties are bleeding membership and the proportion of people voting is inexorably declining, decade by decade.

  • Paul McKeown 15th Apr '12 - 4:46pm

    And the opt in via PAYE or tax return would prevent Labour gaining unfairly from being the sole recipient of opt in donations, as every tax payer would have this option, rather than just trades union members.

  • Paul McKeown 15th Apr '12 - 4:54pm

    So what I’m saying is that Miliband is partly right, but he must extend the opt in to all tax payers rather than solely members of trades unions. People get to choose on their tax form whether to donate or not, how much they would like to donate, whether monthly through PAYE or annually with their tax return, and which organised political party should receive that donation. Most people will say, “Naff orf”, but many will still choose from the political party with which they identify – without the effort of actually visiting the website, phoning or going to the local association. Membership of all parties should actually increase.

  • Ian W.
    Don’t agree. The ‘liberal’ state still has a role to play in securing people’s fundamental rights. So, for instance, it is right there is legislation in place to ensure unions conduct secret ballots because people should able to vote freely without threat or fear of coercion. But as long as people don’t have to pay the political levy I don’t see what business it is of the state to mandate the precise mechanism by which it is collected. It’s not a matter of fundamental right whether the mechanism is an opt-in or an opt-out.

  • I would call their bluff and add a simple rider to the agreement. This would enforce unions to provide a verifiable, communication to each member offering that opt out on a regular (my preference would be annual) basis.

    Not ideal but a start……

  • @G – Sure, £3 per person doesn’t sound too much, but that’s probably £3 multiplied by a few million people; that’s suddenly quite a tidy sum… and I am not calling for the mechanism to be abolished, merely for people to be asked if they want £3 taken from their pay to go to the Labour party. Why is asking someone if they want to do it so outrageous an idea?

  • Stuart Mitchell 15th Apr '12 - 6:07pm

    @Stuart
    It just took me precisely 30 seconds to get hold of the paperwork required to opt out of your union’s political levy. All you need to do is write a letter to your union with a statement as per that shown at the top of page 9 here :-

    http://www.bis.gov.uk/assets/biscore/employment-matters/docs/10-817-trade-union-political-funds-guide.pdf

    @Paul
    It’s worth pointing out that Labour has no divine or legal right to be the “sole recipient” of union donations. Any other party could try reaching out to union members for their support. So why don’t they? Perhaps it’s just easier to chase a small number of affluent individuals for large donations.

    The system you describe is certainly an improvement on wealthy donors (but note that Labour have been doing something very similar for decades). But it wouldn’t be as perfect as you make out. You’d have a large underclass of people who would not be involved since they don’t have jobs. Rather than pandering to wealthy individuals, parties would end up having to pander to comparatively wealthy sub-groups within society, who would obviously be more likely to pay.

    I personally prefer state funding. I find the concept as unappealing as anybody else; but in the spirit of good old pragmatism, the advantages would be worth it. It’s the only way in principle in which we can solve the kinds of problems of influence that everybody seems to agree exist.

  • Stuart, the point is that the individual donation is £3. Not £5,000 or £50,000.

    It’s no different from a group of bankers clubbing together to form an industry body that levies £3 from each member that is used to fund the Tory party.

    It is, however, different from an individual banker giving a £250,000 donation to the Tory party.

    I thought everybody would agree that the last example is far more egregious, and damaging to the reputation of politicians, than the previous two.

    Perhaps I’m wrong.

  • I would have thought the LD would welcome one of the other parties agreeing to cut the maximum donation size from individuals and institutions (I expect this cap would also apply to businesses). Instead we get all this griping abou the unions.

    Trades Unions have been one of the great motors for social change and seem to have redound themselves after some difficult decades. I would have hoped for the so-called liberal party to support the involvement of people in cooperative bodies to get their voices heard. The discussions around opting-in or out seem to be a little churlish and actually are used to hide the real agenda of opposition to workers’ engagement in politics. Of course some reform may be needed and discussed but that is for future discussion

    As seems to be the case now LD fire is focused on the detail of aLabour proposition rather than the on the Tories who try to undermine any changes by using the unions as an excuse for doing nothing or trying to compare apples with pears

    Another example of the new Tory-lite LD party. The FDP of the UK. Why not now say on the doorsteps you are now a centre-right libertarian party with no interest in the social democratic part of your history any more. As one of the posters on here keeps posting you are considered to be centre-left by the electorate but this is no longer the case in reality.

    Can we start seeing a bit of honesty about your true positioning please?

  • ….. now LD fire is focused on the detail of aLabour proposition……..

    I’m starting to believe that, if Labour came up with a pill that cured the common cold, LDV would complain about the colour of the pill.

  • @bazzasc

    More worker involvement in politics would be good. You, however, are assuming that an opt-out system of automatic donation to the Labour Party is a remotely effective way of getting workers involved in politics.

    It isn’t. It merely subsidises the careers of those who most loudly pay lip-service to the idea.

    Opt-in would be better for democracy and better for the Labour Party. OK, it might hit their headline revenue figures, but it would connect them to their alleged grassroots in a way they currently are not.

  • Offering all employees the right to opt in to a £3 a year political donation to a party of their choice is a very good idea. This could also be offered to the self-employed, via self-assessment, and to pensioners, via their pension, and to those on means-tested benefits, via the benefits system.

    Or we could do it for taxpayers via PAYE, and benefit recipient via their benefits? Then your firm would not have to know who you were donating to. Of course, firms and unions could lobby their workers and members to urge them to support a party, if they wanted to.

    We should try it for a year. If it raises a decent sum of money for a variety of then it would be MUCH easier to curtail all other donations (businesses, trade unions) and to cap individual donations at £5000 or similar.

    Once people opt in, they would remain in unless they say otherwise. This stops it all being too bureaucratic.

  • I still don’t understand why individuals should be allowed to donate thousands of pounds to a political party. A cap of a nice round figure of £5.00 per person sounds fine. Affordable for almost everyone and no-one gets the chance to buy a knighthood. Ban corporate donations. Why would a company donate money to a political party except in return for favours? I am not sure that there is a lack of interest in politics. Campaigning organisations and trade unions still attract millions of members. It is political parties that atttract decreasing interest from the public. That is because the major political parties are perceived to offer little and take much. Hence, why George Galloway gets elected.

  • A couple of points about this, its not just the opt in/out thats crucial. Right now the money is taken anyway, even if a union member takes up the opt out they are only offered the alternative of the money going to charity. A real choice must involve keeping the money.
    Second the distinction between affiliated & non-affliated unions is largely academic, both groups frequently give labour money by other means, all completely legal. They can “lend” offices, staff (on full pay), transport etc or, they can run campaigns at election time which co-incide with labours campaigns, using similar slogans. As long as labour isnt mentioned none of this counts as election expenditure.

    It actually makes more sense to think of the labour movement as all one thing, the different parts controlled by overlapping groups of activists & staff.

  • Stuart Mitchell 16th Apr '12 - 7:31pm

    Paul Barker: “Right now the money is taken anyway, even if a union member takes up the opt out they are only offered the alternative of the money going to charity.”

    According to the government’s guide to political funds (see link in my earlier post), that would be illegal. May I ask, which union is it? If you opt out, you should get a reduction in your subs.

  • T-J

    The point about opt-in or out as I said before is one that can be argued. Both sides have fair pints to make

    I am not talking about the unions or Labour though, I am talking about the continued knee-jerk anti-labour rhetoric coming from senior LD.

    How about seeing some balance regarding the abject response from your new pals. They are the ones recently caught out but no criticism. Also the approach from the LD helps support the ideological attacks on the unions from the right

    The LD are becoming more and more bag carriers for the Tories and I anticipate carnage at the next GE.

  • Richard Swales 16th Apr '12 - 11:11pm

    Presumably when you join a union (something I would never do) there is a form to fill in. There should be Yes/No tickboxes on it, rather than a separate form. Then we’d only be arguing about the ones who didn’t tick either box.

  • And, bazzasc, junior Lib Dems – see Richard Swales’s point here – join a Union? Something I would Never Do. I assume you are a Lib Dem, Richard? But why make a comment like that??

  • @Bazzasc

    I think the problem is that nobody here in Liberal Democrat circles sees any particular need to point out that the Tories don’t want to play fair on party funding, because we all already know that. Labour are more likely to don the mask of political progressiveness.

    That’s not to say we shouldn’t turn the guns on the Tories from time to time, of course. Perhaps such an article would be useful in the near future.

  • Richard Swales 18th Apr '12 - 11:46am

    @Tim13, because I am a man, and like anyone to whom that term could properly be applied in its fullest sense I stand on my own two feet and deal with companies for myself and in my own name and not for anyone else.
    I am no longer an employee, I do business for myself now, and for the same reasons I would never join an industry association, a cartel, a lobbying group, a wage fixing agreement, a blacklisting system, a price fixing agreement or an employers’ association.
    The Lib Dems asked for some money for renewal from me a while back and I didn’t send it as I have discovered on this board that the other members don’t think like me. Whether or not I am still considered to be a member at the present time would depend on the operation of party rules which I am not totally familiar with.

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