Ed Miliband took us all by surprise this morning when he went on the Andrew Marr show with a genuinely new proposal to reform party funding. The individual cap on donations should be set at £5,000, he said, way below Cameron’s preferred level of £50,000, and half of Sir Christopher Kelly’s proposal of £10,000.
Significantly, the Labour leader said this cap would include union donations. But, as always with this debate, the stumbling block is what happens with the levy – the automatic £3 that members of some unions pay to Labour as part of their subscription fees. At the moment, members may opt out of making such payments, but the Tories want them to back Sir Christopher’s proposal of having to opt in instead, something likely to have a significant impact on Labour’s coffers.
The row now turns on how much Labour actually makes from one-off union donations, which would be included under Miliband’s proposed cap, against how much it makes from the levy, which wouldn’t.
The Tories claim that only 1 per cent of the £10m Labour took from the unions last year actually came from one-off donations, rendering Miliband’s proposal little more than a “smokescreen”.
Labour have hit back, claiming the £100,000 figure is wrong (although they are still trying to work out what the actual figure is) and pointing out that one-off union gifts are much larger before an election. Party sources say they received closer to £9m through this route in 2010, and would not have been able to fight the election that year if not for that money.
So is Labour really proposing something that would see it unable to fight elections? Of course not.
The £5,000 cap would go hand-in-hand with another proposal: a much tougher limit on party spending, and one that applies for a whole parliament, not just in the run up to an election. Although Miliband hasn’t made a concrete suggestion as to what the limit should be, it presumably would be low enough to largely negate the impact of Labour losing its union donations.
So what would it mean for Labour to lose these one-off sums? Hopi Sen, the former party official, points out that it would give union bosses far less clout over the leadership, as the only bargaining chip they would have with the party is to disaffiliate altogether – a card that, once played, cannot be used again.
Further talks between the three parties will take place next week. The Lib Dems’ initial response is that they welcome Miliband’s move, but like the Tories, they want union members to opt in to the levy.
Seeing as Labour will refuse to do that, Miliband’s proposal is unlikely to make any significant difference to those talks. But what it will do is paint the Labour leader as the driving force behind funding reform, which is the entire reason to have made such a move in the first place.
Jim Pickard
Kiran Stacey