Labour-Tory funding gap at record level

There is now an unarguable case for state funding

David Blunkett has emerged as a refreshingly blunt figure in recent weeks. After first admitting that Labour had to be careful to avoid bankruptcy after the election, he declared that it would be a "miracle" if Gordon Brown beat David Cameron (it would be, but senior MPs aren't meant to say this sort of thing).

Now he's revealed that Labour needs to raise £10m in just three months to give it a chance of competing with the Conservatives' £18m war chest. As I reported earlier this month, donations from the rich individuals who bankrolled election campaigns in the past have all but dried up, leaving the party increasingly dependent on the trade unions for money.

By contrast, in the 2005 election, Labour spent a record £17,939,617 -- £87,000 more than the Tories' £17,852,240. The Conservatives outspent Labour in 1997 and 2001, but only by about £2m. Data on election spending since 1910 suggests there has never been a funding gap this large between the two main parties (see graph below).

 

Election spending graph 

As I've argued before, Labour should run a John Major-style soapbox campaign in response to this disadvantage, resurrecting the effective slogan "Not flash, just Gordon".

In the longer term, however, there is now an indisputable case for state funding. The situation may not be as troubling as the US, where Michael Bloomberg spent $100m of his personal fortune to win a third term as mayor of New York, but it's still unsustainable.

It is unhealthy for Labour to be so dependent on a few big unions (Unite accounted for 25 per cent of all the party's donations in 2009), but it's also unacceptable for the Tories to rely on a figure as dubious as Lord Ashcroft.

Unfortunately, in the wake of the expenses scandal, almost no politician is willing or able to make an effective case for state funding.

 

Follow the New Statesman team on Twitter

George Eaton is political editor of the New Statesman.

Getty Images.
Show Hide image

Forget gaining £350m a week, Brexit would cost the UK £300m a week

Figures from the government's own Office for Budget Responsibility reveal the negative economic impact Brexit would have. 

Even now, there are some who persist in claiming that Boris Johnson's use of the £350m a week figure was accurate. The UK's gross, as opposed to net EU contribution, is precisely this large, they say. Yet this ignores that Britain's annual rebate (which reduced its overall 2016 contribution to £252m a week) is not "returned" by Brussels but, rather, never leaves Britain to begin with. 

Then there is the £4.1bn that the government received from the EU in public funding, and the £1.5bn allocated directly to British organisations. Fine, the Leavers say, the latter could be better managed by the UK after Brexit (with more for the NHS and less for agriculture).

But this entire discussion ignores that EU withdrawal is set to leave the UK with less, rather than more, to spend. As Carl Emmerson, the deputy director of the Institute for Fiscal Studies, notes in a letter in today's Times: "The bigger picture is that the forecast health of the public finances was downgraded by £15bn per year - or almost £300m per week - as a direct result of the Brexit vote. Not only will we not regain control of £350m weekly as a result of Brexit, we are likely to make a net fiscal loss from it. Those are the numbers and forecasts which the government has adopted. It is perhaps surprising that members of the government are suggesting rather different figures."

The Office for Budget Responsibility forecasts, to which Emmerson refers, are shown below (the £15bn figure appearing in the 2020/21 column).

Some on the right contend that a blitz of tax cuts and deregulation following Brexit would unleash  higher growth. But aside from the deleterious economic and social consequences that could result, there is, as I noted yesterday, no majority in parliament or in the country for this course. 

George Eaton is political editor of the New Statesman.