By taking the high ground on party funding, Miliband has walked into a Tory trap

With the aid of the Lib Dems, the Tories plan to deliver an even bigger financial hit to Labour than that which will result from Miliband’s trade union reforms.

After the Conservatives entered power in 2010, chastened by their failure to win a majority against one of the least popular prime ministers in modern history, they identified three ways in which they could tilt the electoral landscape permanently in their favour.
 
The first was reform of the parliamentary boundaries. By equalising constituency sizes at roughly 76,000 voters, the Tories aimed to reverse the electoral bias in favour of Labour and improve their standing by up to 20 seats. This gambit was foiled when Conservative backbenchers sabotaged House of Lords reform and Nick Clegg responded by vetoing boundary reform, as the measure would have hurt his party disproportionately.
 
The second was Scottish independence. Were Scotland to secede from the UK, Labour would be stripped of 41 seats while the Conservatives would lose just one (as the joke in Westminster runs, Scotland has more giant pandas than Tories). Few doubt David Cameron’s sincerity when he vows to defend the Union with “every fibre” in his body, but not all in his party share his commitment. A Conservative MP recently told me: “If we’re close behind Labour in 2014, plenty of Tories will be crossing their fingers for a ‘Yes’ vote [to independence].” However, while the result will almost certainly be closer than most assume, even a campaigner as adroit as Alex Salmond will struggle to reverse the doubledigit poll lead the unionist side has held since the start of 2012.
 
The third was party funding reform. It is here that the Tories are now displaying their political muscle. In a remarkable act of chutzpah shortly before the summer recess, the party announced that the bill to introduce a statutory register of lobbyists would also include new curbs on political campaigning by “third parties” – read: trade unions. Masterminded by George Osborne, the legislation is designed as a pre-election gift to Tory candidates who have long complained about the union-funded phone banks, leaflets and adverts enjoyed by their Labour counterparts.
 
The bill will reduce the total cap on third party expenditure in the year before a general election from £989,000 to £390,000 and the cap on constituency spending to £9,750. It will also broaden the definition of spending to include staff time and office costs, rather than merely the “marginal cost” of leaflets and other materials, and regulate all activity that may affect the result of an election (such as criticism of government policy) even if it is not intended to do so.
 
Behind the legalese, the implications are significant. The TUC has warned that it could be forced to cancel its 2014 annual congress and any national demonstrations in the 12 months before the next election to avoid breaching the spending limit. In a signal of the Tories’ intent, the bill is being pushed through parliament with unusual haste. It will receive its second reading on 3 September and will begin its committee stage the following week, coinciding with Ed Miliband’s speech at the TUC conference.
 
When Miliband addresses the union gathering in Bournemouth, it will be as a reformer determined to “mend” his party’s relations with the unions by ensuring that all members formally choose whether they wish to affiliate themselves to Labour.
 
In so doing, a close ally of Osborne’s told me, “He has walked into a trap.” While Miliband’s proposed reforms will require trade unionists to opt in to donating to Labour, they will not affect unions’ political funds, which support campaigning activity and pay for large, one-off donations to the party. In theory, this could allow unions to make up some of the estimated £7m Labour will lose in automatic affiliation fees by increasing their other contributions to the party.
 
Yet the Tories have spied an opportunity to challenge Miliband’s reformist credentials. With the support of the Lib Dems (“They want to make every party as poor as them,” one Labour MP quipped), they plan to amend the bill to require all trade unionists to opt in to paying the political levy as well as their donation to Labour. Having argued for democracy and transparency in one area, on what grounds will Miliband oppose the extension of these principles?
 
The Conservatives gleefully point to polling by Lord Ashcroft showing that only 30 per cent of Unite members would contribute to the union’s political fund under an opt-in system. An even more significant change, as floated by Clegg, would be to allow trade unionists to choose which parties they support. Again with reference to Ashcroft’s recent survey, the Tories note that 23 per cent of Unite members would vote for the Conservatives in an election tomorrow and that 7 per cent would vote for the Lib Dems. Armed with this evidence, the coalition parties are conspiring to deliver an even bigger hit to Labour funding than that which would result from Miliband’s reforms.
 
In response, although the Labour leader can point to the hypocrisy of a Tory party that believes in limiting donations from all but its millionaire supporters, he has no means of effecting change. As a Labour MP lamented to me, “We had our chance to introduce funding reform when we won three majorities after 1997. But Blair was too busy wooing the super rich.” In the absence of another funding scandal, there’s no prospect the Tories will agree to Miliband’s proposed donation cap of £5,000.
 
With his reforms to union funding, Miliband has sought to take the moral high ground. He has sacrificed millions in donations and one of his party’s main bargaining chips without securing any concessions in return. Now the Tories are intent on maximising the damage. As one Conservative MP said of the bill when I spoke to him, “Labour should remember that nice guys finish last.” If Miliband is to triumph in 2015 against a bareknuckle Conservative Party, he will need to disprove that adage.
Ed Miliband delivers his speech on reforming the Labour-trade union link at The St Bride Foundation in London earlier this week. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

This article first appeared in the 02 September 2013 issue of the New Statesman, Syria: The west humiliated

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John McDonnell praises New Labour as he enters conciliatory mode

The shadow chancellor sought to build a bridge between the past and the present by crediting the 1997 government. 

Ever since Jeremy Corbyn became Labour leader, John McDonnell has been on a mission to reinvent himself as a kinder, gentler politician. He hasn’t always succeeded. In July, the shadow chancellor declared of rebel MPs: “As plotters they were fucking useless”.

But in his Labour conference speech, Corbyn’s closest ally was firmly in conciliatory mode. McDonnell thanked Owen Smith for his part in defeating the Personal Independence Payment cuts. He praised Caroline Flint, with whom he has clashed, for her amendment to the financial bill on corporate tax transparency. Jonathan Reynolds, who will soon return to the frontbench, was credited for the “patriots pay their taxes” campaign (the latter two not mentioned in the original text).

McDonnell’s ecunmenicism didn’t end here. The 1997 Labour government, against which he and Corbyn so often defined themselves, was praised for its introduction of the minimum wage (though McDonnell couldn’t quite bring himself to mention Tony Blair). Promising a “real Living Wage” of around £10 per hour, the shadow chancellor sought to build a bridge between the past and the present. Though he couldn’t resist adding some red water as he closed: “In this party you no longer have to whisper it, it's called socialism. Solidarity!”

As a rebuke to those who accuse him of seeking power in the party, not the country, McDonnell spoke relentlessly of what the next Labour “government” would do. He promised a £250bn National Investment Bank, a “Right to Own” for employees, the repeal of the Trade Union Act and declared himself “interested” in the potential of a Universal Basic Income. It was a decidedly wonkish speech, free of the attack lines and jokes that others serve up.

One of the more striking passages was on McDonnell’s personal story (a recurring feature of Labour speeches since Sadiq Khan’s mayoral victory). “I was born in the city [Liverpool], not far from here,” he recalled. “My dad was a Liverpool docker and my mum was a cleaner who then served behind the counter at British Homes Stores for 30 years. I was part of the 1960's generation.  We lived in what sociological studies have described as some of the worst housing conditions that exist within this country. We just called it home.”

In his peroration, he declared: “In the birthplace of John Lennon, it falls to us to inspire people to imagine.” Most Labour MPs believe that a government led by Corbyn and McDonnell will remain just that: imaginary. “You may say I'm a dreamer. But I'm not the only one,” the shadow chancellor could have countered. With his praise for New Labour, he began the work of forging his party’s own brotherhood of man.

George Eaton is political editor of the New Statesman.