Miliband’s reforms raise more questions than answers

Why “party supporters” should have no say over the Labour leadership.

They may have delivered him the crown but Ed Miliband isn't afraid of picking a fight with the trade unions. Today's Independent reports that the Labour leader is pushing for a cap on party donations of £500, significantly lower than the £50,000 proposed by David Cameron.

As part of Labour's evidence to the Committee on Standards in Public Life, the party's general secretary, Ray Collins, has said: "While some argue for a cap of £50,000, a much lower cap of around £500 would be more equitable, democratic and less susceptible to avoidance."

In tandem with this, Miliband is planning to reform Labour's electoral college by giving 25 per cent of the votes to non-party members who register as Labour supporters. This falls short of the one-member, one-vote system advocated by Alan Johnson but would still be the most significant reform since the introduction of the college in 1981. The MPs, affiliated trade unions and party members, who each enjoy a third of the vote, would be left with a quarter each.

But this reform, like the proposed cap on donations, raises more questions than answers. For a start, it creates a disincentive to party membership. One of the few reasons people still join political parties is to have some say (however small) over the leadership. Indeed, more than 30,000 people joined Labour during last summer's contest. The extension of the franchise to non-levy paying "party supporters" would surely prompt some to jump ship. Such a system would also be open to manipulation by political opponents. The supporters of the ill-fated "Conservatives for Balls" movement, for instance, would have leapt at the chance to vote.

The decision to come out against big donations also seems rather counter-intuitive for a party that was recently described by John Prescott as being on the "verge of bankruptcy". It was only big donations from the trade unions which ensured that Labour was able to run anything even resembling a general election campaign.

The brothers were responsible for 60 per cent (£9.8m) of all donations to the party last year, with Unite, Britain's biggest union, accounting for nearly 25 per cent (£3.6m). But combined with increased state funding (favoured by the Lib Dems), the reform could finally break the stranglehold of big money on British politics.

Miliband's stance challenges David Cameron, whose party remains reliant on a few lucrative donors, to take on the most vested interest of all. But on the electoral college, the Labour leader has a lot of convincing to do.

George Eaton is political editor of the New Statesman.

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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.