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11 February 2011

Party funding fears expose Labour tensions

“Ed’s effectively buying goodwill among members of the shadow cabinet.”

By Dan Hodges

Ed Miliband’s plans to reorganise his party’s support structures have been rebuffed by Labour MPs after they were each asked to contribute £8,000 from their own office cost allowance. The proposed levy would have been used to establish a Parliamentary Resource Unit, based in the House of Commons, to provide research, speechwriting and other services.

The proposal received the cold shoulder from the PLP amid growing concerns from within the party about the way opposition “short money” – the funding officially allocated to enable the opposition to fulfil its parliamentary functions – has been allocated following the leadership election. “I saw the request and just put it in a bin,” said one MP. “I thought it was a joke.”

According to some sources, there is surprise that Labour’s parliamentary funds have been concentrated almost exclusively within the leader’s office and individual shadow cabinet teams, rather than used to expand central campaigning, research and press facilities at the party’s Victoria Street headquarters.

One source described as “madness” the way that money had been used to expand the offices of individual shadow cabinet members significantly, instead of consolidating the party’s central structures. “Ed’s effectively used it to buy goodwill amongst members of the shadow cabinet,” said a party insider, “but what he’s done is create a number of individual fiefdoms, rather than create a resource accountable to the entire party.”

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Another insider claimed the Leader’s office had deliberately vetoed plans for an expansion of the Victoria Street staff. A number of job adverts placed in the immediate aftermath of the leadership election were said to have been withdrawn at the request of Ed Miliband’s team. Victoria Street officials are viewed with suspicion by the Miliband camp, who regard them as hostile to the leader’s plans to reform the party.

In return, many central staffers are privately critical of Miliband’s leadership and what they perceive to be a failure to get to grips with party management. Head-office staff voted by a wide margin for David Miliband in last year’s leadership contest.

The tensions are exacerbated by the dire state of the party’s central finances, which have been further eroded by the loss of key donors and a string of expensive by-elections. According to one insider, the internal financial crisis prevented the party from conducting a comprehensive polling analysis of the reasons for the party’s defeat in the general election.

Another source said Victoria Street staff have reportedly been banned from ordering business cards, shadow cabinet advisers have been told they cannot accompany shadow cabinet ministers on visits unless they meet the costs themselves, and that shadow cabinet staff have been told to meet their own travel and accommodation costs for attending party conference.

In the Oldham by-election, financial constraints meant only one focus group could be conducted for the entire campaign. Proposed policy consultations have been scrapped and party managers are considering closing one wing of the Victoria Street offices as a way of making economies.

The squeeze is also creating tensions in the run-up to next May’s local, Scottish and Welsh Assembly elections. Scottish officials have reportedly been informed that only one additional party staff member will be seconded for the Scottish campaign, with all additional capacity being directed to Wales, where it’s believed Labour may secure an outright majority.

Labour’s Scottish election campaign has suffered an additional setback after the manifesto was produced without costings; it has also had to undergo a comprehensive rewrite. The Rutherglen and Hamilton MP, Tom Greatrex, has reportedly been granted special dispensation by party whips to base himself in Scotland to assist in managing the campaign.

Ed Miliband is also facing criticism in some quarters for failing to support the party in fundraising. He is said to have told Labour officials he is unwilling to host tables for high-value donors, has vetoed knighthoods and peerages for senior party fundraisers, and has also vetoed peerages for senior figures in the trade union movement. According to one source, “It’s all right being squeaky clean, but we’re a modern political party and we need money to operate. Everyone knows how the fundraising game is played, but Ed refuses to play it.”

A Labour insider said, “There was a time when the highest-paid member of the party was the general secretary and no one earned more than the MPs. Now you’ve got the leader’s staffers being appointed on these huge salaries whilst the party is going broke. The whole thing’s unbalanced.”

However, another party source rejected claims of divisions over funding. “There were some tensions, but these have now been resolved. The distinction between the leader’s office and the party is a false one.

“It’s wrong for people to see it as two separate functions. There’s only one Labour Party.” They also denied there was any reticence on the part of the Labour leader to engage in fundraising.

“There’s no reluctance on Ed’s part. There are a number of big donors ready and waiting to contribute to the party. David Sainsbury’s recent donation of £100,000 to Movement for Change is proof of that.”